Investors are waiting on Xiaohongshu to raise funds

On Xiaohongshu and Douyin, there is a group of accounts with a strikingly unified persona. The scene is like this: a young woman in a white dress is dancing in a noisy factory workshop.

The playback volume easily exceeds tens of millions.

Do you think it's just a beauty blogger trying to gain traffic? Actually, it's the second - generation factory owners trying to get orders for their family's lime factory.

Data released by Xiaohongshu shows that the "post - 95s" second - generation factory owners are flocking to the front stage.

For example, A Panda, a second - generation furniture factory owner, is one of the first graduates of the e - commerce major. In 2023, he moved the operation of his brand, Sinaibo Furniture, to Xiaohongshu. He built a live - streaming team from scratch, driving the annual sales of Xiaohongshu e - commerce to double.

Similarly, Boss Zhou, the principal of LAOBANZHOU, also a second - generation factory owner, set the new product launch venue on Xiaohongshu e - commerce. He launches 20 new products every week at a high frequency. The principal participates in Xiaohongshu e - commerce live - streaming and has also set up a fan group chat. In 2024, the brand's performance soared, with annual sales exceeding 150 million yuan.

While people are still studying how the second - generation factory owners get orders for their cement and paper mills, investors are also frequently appearing on Xiaohongshu. However, what the second - generation factory owners don't know is that this group of investors is not only looking for projects but also a large number of them are here to raise funds.

"Please introduce someone," an IR said bluntly. "We really need the 'big shots'."

IRs are lurking in the live - streaming rooms

Raising funds has become increasingly difficult in recent years.

"The due diligence for fundraising is now more stringent," an IR from an institution in central China said. "Apart from more detailed in - depth due diligence and management work, and a slower approval process, the work records also need to be more detailed. All these make LPs more cautious in their investment decisions and require more explanations."

Even top - tier GPs need to be repeatedly scrutinized by state - owned LPs.

A GP said bluntly on Xiaohongshu, "The whole world is in the same difficult situation."

On the other hand, state - owned capital dominates. Where can we find funds with relatively fast investment decisions and less complicated procedures?

Individual LPs are quietly returning to the fundraising table of GPs.

In a rapidly changing environment, the market has set higher and higher requirements for GPs and their teams, forcing GPs to be more rational and find a way to survive that suits them.

Putting it elegantly, it means that in the past, GPs went to high - end office buildings in Beijing, Shanghai, and Shenzhen to find financial institution LPs. Now, they have to go to industrial parks in Dongguan, small commodity cities in Yiwu, and leather streets in Wenzhou to knock on the doors of manufacturing families.

"The so - called 'industrial capital' that has frequently emerged this year is different from the past. Now, it includes those in the milk tea business, parts manufacturing, and even traditional industries like cement and paper - making."

An IR who has been involved in raising funds for RMB funds for a long time visited dozens of manufacturing enterprise owners in Dongguan for three months last year. Most of the people he met when he entered the door were not the bosses themselves but their children in their twenties or thirties.

Some of them just returned from the UK after obtaining a master's degree in finance and are sitting in a shabby office on the second floor of the factory. One day, they might be promoting products for their family's factory on Xiaohongshu, and the next day, they transform into interviewers with GPs.

The first question is: "What was your DPI in the previous period?"

This is the new reality that GPs are adapting to. The group of high - net - worth individual LPs, which was once ignored, is becoming the most important fundraising direction for small and medium - sized funds.

How did the first - generation bosses' money disappear?

Around 2013, it was the era when manufacturing bosses were most active in making investments.

When GPs visited Zhejiang and Guangdong, after a meal and with the introduction of acquaintances, 5 million yuan would be transferred without any questions about the fund terms.

The investment logic of this generation of bosses is very simple: they trust people rather than contracts. Who introduced you and whether you are reliable are more important than any due diligence.

Manufacturing bosses, real - estate bosses, coal bosses, and various private capitals flocked in, vying to be LPs. A GP recalled that at that time, after a trip to Wenzhou, Dongguan, and Yiwu and a few meals, a commitment of 100 million yuan from LPs could be secured. Sometimes, there was no need to read the contract carefully; trust was the contract.

At that time, GPs didn't need to prepare thick IR materials or explain what DPI was. The most concerned questions of high - net - worth individual LPs were: When will this project go public? And how much money can be earned after the listing?

Interestingly, some individual LPs would even actively recommend projects to GPs. "I have a friend who runs a company. I hope you can go and take a look."

Fundraising, investment, and exit formed an almost self - running closed - loop during the years when the Growth Enterprise Market had the best liquidity.

Then they started to lose money.

During the crazy market period, there were a group of fraudsters who mixed in. Under the guise of high returns, they didn't invest the money in private equity but instead invested in assets like P2P, and a part of the investment went into a large number of projects that went bankrupt.

There was another group who were not deceived but were trapped. The funds invested from 2015 to 2018 reached their maturity, but the DPI couldn't be achieved. The GPs said to wait, wait for the IPO window to open, wait for the invested enterprises to exit through mergers and acquisitions... After waiting for three to five years, the money was still tied up.

At the peak of the market, the fundraising scenes of some wealth management institutions were still very shocking. At the count of 3, 2, 1, the scramble began. Looking back now, most of the high - net - worth individuals who invested in these institutions still haven't received the DPI they expected, and some haven't even received any dividends in ten years.

This is the real reason for the large - scale silence of high - net - worth manufacturing LPs. It's not just about having no money; it's about losing confidence, which was shattered by real losses.

The second generation plays a different game

But today's second - generation factory owners are different.

Some people believe that the money is back, but it has become smarter and more selective than before.

Different from the first - generation entrepreneurs who built their empires through hard work and the opportunities of the times, they can't understand today's hard - tech era and the AI industry.

However, their carefully - nurtured children, who have just returned from studying abroad, have seen more smart money in the market. When they decide to invest, every penny is considered from an industrial perspective. A very typical question is, "Can the technology of the project you invested in be applied in our factory?"

An IR said bluntly, "The current second - generation factory owners are really too strict."

"They can ask accurate questions. For example, a partner left your team last year. What happened?"

This generation of investors graduated from prestigious universities, and some of them have worked in US - dollar funds or investment banks for a few years before returning. They won't invest just by listening to a story.

"They are younger and richer than you, and they are scrutinizing you."

A GP who manages a consumer - track fund in the Yangtze River Delta said that among the new individual LPs they have added in the past two years, the second - generation factory owners account for a relatively large proportion.

This group has several common characteristics. The investment scale ranges from 1 million to 5 million yuan, which is not a large amount, but the decision - making is extremely fast. They don't require reinvestment or a specific registration location, and the contract negotiation takes half a day instead of half a year. They ask about DPI directly instead of IRR.

Moreover, their understanding of the industry is surprisingly deep. They don't just ask about the investment track but about whether the company you invested in has any intersection with their family's industrial chain.

This last question is the key.

The first - generation bosses invested expecting financial returns. The second - generation factory owners invest to buy a front - row ticket to the industry.

They learn how to sell factory products to consumers in the live - streaming rooms, and at the same time, they learn how to understand the technologies and companies that may change the manufacturing landscape through the funds.

The two things are not contradictory but are actually two sides of the same anxiety.

This generation of manufacturing successors is answering the same question in their own way: Can the factories built by their fathers survive in the next ten years?

Some GPs have already figured out this logic and started to adjust their communication strategies. When talking to government LPs, they talk about industrial policies and reinvestment ratios.

When talking to second - generation factory owner LPs, they say: Among the hard - tech projects we invested in, some are potential suppliers for your factory, and some are potential competitors. By becoming an LP, you won't be the last one to know.

This statement is more effective than any IRR figure.

I went to northern Jiangsu to raise funds

If in the past, the fundraising battlefield was in top - tier lounges in Lujiazui or private clubs on the Bund.

Now, the business - trip destinations are the places where high - net - worth individuals are most concentrated - northern Jiangsu.

Jiangsu's GDP in 2025 reached 14.2 trillion yuan, accounting for nearly one - tenth of the country's total. Suzhou continued to rank first in the province, Changzhou performed excellently in the new - energy industry, Huai'an had excellent growth rates for two consecutive years, and Xuzhou was just one step away from becoming a city with a trillion - yuan GDP.

Looking closely, northern Jiangsu is very eye - catching.

Northern Jiangsu is the abbreviation for the northern part of Jiangsu Province. It is located in the Yangtze River Delta centered around Shanghai, with a vast northern Jiangsu Plain and is adjacent to the sea and lakes. Northern Jiangsu includes five prefecture - level cities: Xuzhou, Lianyungang, Suqian, Huai'an, and Yancheng.

In the GDP ranking of the 13 cities in Jiangsu in 2025, the general framework of southern Jiangsu leading, central Jiangsu following, and northern Jiangsu catching up still remained.

There are countless wealthy people from northern Jiangsu.

For example, Sun Piaoyang of Hengrui Medicine and Zhong Huijuan of Hansoh Pharmaceutical are a legendary couple from Lianyungang. At the peak of their wealth, their combined wealth exceeded 250 billion yuan.

Zhu Gongshan, from Funing, Yancheng, is the founder of GCL Group. He started his business in photovoltaic silicon materials and is known as the "King of Silicon in the World". Poly GCL under GCL is the world's largest manufacturer of polysilicon and silicon wafers. His wealth was 28 billion yuan according to the Hurun List in 2022.

More well - known is Liu Qiangdong from Suqian.

In the updated list of the Forbes Rich List in January 2026, Liu Qiangdong's personal wealth was estimated to be 62 billion yuan, firmly ranking among the top 50 richest people in China.

This is just the tip of the iceberg. There are more factories hidden in the industries of northern Jiangsu. These factories may seem unremarkable, but they are a treasure corner of northern Jiangsu's manufacturing industry.

"The real battlefield is no longer along the Huangpu River."

There was a time when the fundraising reports of top - tier VC/PEs frequently made media headlines. At the craziest time, an IR said, "I would feel anxious when I saw others raising funds."

Now, the phrase "raising funds against the trend" hasn't been seen for a long time because everyone is anxious.

Zombie funds are being cleared, and it's difficult for small and medium - sized institutions to raise funds. Even top - tier GPs need to plan carefully before taking action. Only after finding a stable foundation and a registered location for the fund can they breathe a sigh of relief.

In such an environment, high - net - worth individuals in northern Jiangsu and the second - generation factory owners hidden in the factories are becoming their targets. And Xiaohongshu is just one way for them to find these second - generation factory owners.

This article is from the WeChat official account "Rongzhong Finance" (ID: thecapital), author: Abu, published by 36Kr with authorization.