I'm a first-level investor and have had my salary cut for four consecutive years.
“I just received a notice about salary re - evaluation. My salary has been cut again this year. Our institution has cut salaries for four consecutive years.” Han Han (a pseudonym), an investment director at a VC institution, told the FOF Research Center.
This wave of salary cuts in the private equity investment industry continues.
Han Han said that in 2021 and 2022, only the year - end bonuses were lower than expected. Since 2023, the basic salary has been continuously cut: “Last year, the Beijing Fund Industry Association released a ‘Salary Research Report on PE/VC Institutions’, which showed that the overall annual salary in the industry in 2023 decreased by 20% - 40% compared with the previous year. Although the full - industry statistics for 2024 have not been released, our feeling is that the downward trend of salaries continues, and some even experience a ‘halving’. It's simple. There is no new money flowing into the industry, and it's difficult to raise new funds. The management fees of old funds are already low during the exit period, and it's also hard to get returns due to difficulties in exiting. Our institution is among the top 30% in the industry, and our salary cuts have been relatively moderate. Some institutions have laid off 20% of their staff every year for three consecutive years.”
“As a leading first - tier investment institution, we are in a relatively better situation. Our basic salary remains unchanged, but the year - end bonuses have been greatly reduced. The situation varies among different industry groups, with an average reduction of nearly half,” said Xiao Zhang (a pseudonym), a VC investor, to the FOF Research Center.
“In the past few years, VC/PE firms expanded too rapidly. After the rapid expansion, with the current slowdown in investment, personnel optimization and cost optimization have naturally become necessary,” said a partner at a VC institution in Beijing.
The FOF Research Center learned that a leading institution has not only laid off staff and cut salaries but also demoted employees. According to the latest performance evaluation system, some senior executives will be slightly demoted within their job titles. For example, from managing director to executive director.
State - owned funds have also been deeply affected. “As a former state - owned investor, I was laid off in October and still haven't found a job. The state - owned enterprises are no longer the so - called ‘iron rice bowls’ as people imagined. Due to poor past investment performance, the investment department of my former company was completely laid off.” Zhao Zhu (a pseudonym) told the FOF Research Center.
Coincidentally, Xiao Li, a VC investor, also said: “Our investment positions have been cut, but fortunately, the employees were not directly laid off. Those of us who used to be in investment positions have been transferred to other departments. For example, I was transferred to do back - end operations.”
The FOF Research Center noticed that since last year, some state - owned enterprises have shrunk or even abolished their investment departments because they had difficulty exiting previous investment projects and couldn't recover their principal. Some state - owned enterprise investment departments “exist in name only” - “The department still exists, but it hasn't made any investments throughout the year. It's not that there is no money, but they are afraid to invest and there are no projects to invest in. They spend every day dealing with various post - investment issues of previous projects.” Sun Fang (a pseudonym), a state - owned investor, told the FOF Research Center.
“I actively chose to transfer from a market - oriented institution to a state - owned platform. Although my salary has decreased, I valued the advantage of less capital pressure of state - owned funds at that time. The pressure to raise funds is small, and there are real opportunities to make investments. The market - oriented institution where I used to work had been trying to raise funds for more than a year without any success, so I chose to go to the state - owned platform. But after I came here, I found that although there is money here, it's also difficult to make investments. The decision - making process and investment logic are completely different from what I was used to,” said Jiang Yi (a pseudonym), an early - stage fund investor.
Moreover, some state - owned institutions have implemented a “last - place elimination” system - “Those who fail the performance evaluation three consecutive times will be dismissed.”
“State - owned funds are far from being the so - called safe havens as people imagined. Moreover, we have already recovered previous salaries according to the salary cap order. As far as I know, many other state - owned fund peers have also encountered the same situation,” an investor at a state - owned fund told the FOF Research Center.
The so - called “salary cap order” refers to the “Notice on Further Strengthening the Financial Management of State - owned Financial Enterprises” (hereinafter referred to as the “Notice”) issued by the Ministry of Finance in August 2022. According to the Notice, financial enterprises should include all wage - related income in the total wage management and shall not list any wage - related expenses such as allowances and subsidies in any other form outside the total wage.
The Notice puts forward relevant requirements for state - owned financial enterprises to optimize the internal income distribution structure, scientifically design the salary system, reasonably control the grade difference in position distribution, and establish and improve the deferred payment and accountability and salary recovery mechanisms for salary distribution.
For senior management of financial enterprises and employees in positions with direct or significant impact on risks, the basic salary generally should not be higher than 35% of the total salary. The performance - based salary should be paid in installments according to the assessment of the business income and risks they are responsible for. More than 40% of the performance - based salary should be paid in a deferred manner, and the deferred payment period generally should not be less than 3 years to ensure that the payment period of the performance - based salary matches the risk - duration of the corresponding business. If there are other regulations of the state, they shall prevail.
Moreover, financial enterprises should formulate a system for recovering performance - based salaries. For senior management and employees in positions with direct or significant impact on risks who fail to fulfill their duties diligently within their responsibilities, resulting in major illegal and irregular behaviors of the financial enterprise or causing major risk losses to the financial enterprise, the financial enterprise should recover part or all of the performance - based salary that has been paid within the corresponding period and stop paying the unpaid part or all of the salary after following the legal and regulatory procedures and the corporate governance process. The recovery period of the performance - based salary should generally be consistent with the period when the relevant responsible person's behavior occurred. The regulations on recovering performance - based salaries also apply to retired or former employees.
“We have implemented this notice very well. There are indeed cases of salary recovery,” another investor at a state - owned fund told the FOF Research Center.
Against this background, in the past two years, many primary - market investors have made career transitions.
Difficulties in raising funds, making investments, and exiting projects... This is a true portrayal of many investment institutions in the primary market. The statement “it's difficult in all aspects of fundraising, investment, management, and exit” is not an exaggeration. Therefore, investment institutions have carried out rounds of layoffs and salary cuts. Investors in the eye of the storm have made different choices - some have left, some have stayed, and some have changed with the trend.
Many investors have taken up “side jobs”: part - time selling insurance, working as FA, doing consulting, running self - media accounts as bloggers, or switching to invested companies... Many have also transferred to post - investment positions - “We have been very idle in investment in the past two years. Instead of just sitting around doing nothing, it's better to do something practical and accumulate experience in post - investment management and exit. Investment institutions have also started to attach importance to post - investment management in the past two years. Many of my primary - market investor friends are now focusing on post - investment work,” said Qian Ming (a pseudonym), an early - stage fund investor in Shanghai.
“Post - investment management is actually a technical job. We need to find ways to help invested companies survive and develop better, help them find business opportunities and solve problems. From the perspective of personal career development, I think getting in touch with excellent startups is also a way to accumulate resources and experience and expand my network,” Qian Ming said.
Qian Ming introduced that the current focus of post - investment management is “going global”: “The reason is simple. For many startups, if they don't go global, they will be out of the game. Against the background of the in - depth adjustment of the global economic pattern and the continuous increase of trade barriers, the long - term development of enterprises must involve global layout. For example, some fund managers have gone to the Middle East to set up industrial parks to provide post - investment services for invested companies going to the Middle East.”
Coincidentally, in addition to focusing on going global in post - investment management, investors still in the game have also increased their attention to “going global” on the fundraising side. On February 19, the General Office of the State Council issued a notice forwarding the “Action Plan for Stabilizing Foreign Investment in 2025” jointly formulated by the Ministry of Commerce and the National Development and Reform Commission, clearly encouraging foreign investment to carry out private equity investment in China. “Foreign LPs are coming back. Previously, many US - dollar funds ‘closed down’. Due to multiple factors such as poor investment performance and the reduction of capital contributions by foreign LPs affected by the external environment, the amount of funds raised decreased significantly. Coupled with the poor exit channels, many US - dollar funds were frustrated. As far as I know, some foreign LPs have abolished their domestic teams. The latest policy has greatly encouraged and supported foreign investment to carry out private equity investment in China, and has removed the restrictions on the use of domestic loans by foreign - invested holding companies, allowing them to use domestic loans for private equity investment. It is foreseeable that a large number of foreign LPs will ‘return’ to the market,” said an executive director of a dual - currency fund management institution to the FOF Research Center.
It can be seen that “going global” may become a new opportunity for GPs and enterprises in the current primary market.
If you ask where the foreign LPs most concerned by Chinese GPs are and where the most popular destinations for Chinese enterprises to go global are, the answer is mostly the same - the Middle East.
In the past two years, there has been a “two - way rush” between Middle Eastern capital and the Chinese market: hundreds of GPs have gone to the Middle East to raise funds, including many leading institutions. At the peak, the air tickets to the Middle East skyrocketed, and hotels were fully booked. On the other hand, Middle Eastern capital has also come to China to set up offices and increase their layout in China. Currently, Middle Eastern sovereign wealth funds such as the Abu Dhabi Investment Authority, the Kuwait Investment Authority, the Saudi Public Investment Fund, the Qatar Investment Authority, and Mubadala have all set up offices in China.
At the same time, the Middle East has become a popular destination for Chinese technology companies to go global. With the in - depth implementation of policies such as the Belt and Road Initiative, the highly penetrated Internet and strong consumption power in the Middle East have attracted the attention of many Chinese enterprises. Along with the economic diversification transformation of the Gulf countries, Chinese enterprises hope to bring their successful business models and solutions in the domestic market to the Middle East to achieve a win - win situation of “Chinese solutions + local production capacity”.
Against this background, the First China - Arab Investment Summit will be held on April 9, 2025, in Abu Dhabi, the United Arab Emirates! This summit is hosted by the Global FOF Association and organized by the FOF Research Center (www.china - fof.com, the same below). At the invitation of the Abu Dhabi Investment Meeting (AIM), the guests of the China - Arab Investment Summit will participate in the three - day (April 7 - 9) AIM Investment Summit.
The Abu Dhabi Investment Meeting is initiated by the AIM Global Foundation and co - hosted by the UAE Ministry of Industry and Advanced Technology, the UAE Ministry of Economy, the UAE Ministry of Investment, and the Abu Dhabi Department of Economic Development. It is directly supervised and authorized by UAE President Mohammed and Abu Dhabi Crown Prince Khaled. It shoulders the mission of promoting global economic growth and strengthening exchanges and cooperation in various fields. The first cabinet meeting of the UAE in 2024 officially included the Abu Dhabi Investment Meeting among the country's three major important events.
Since the successful hosting of the first Abu Dhabi Investment Meeting in 2011, it has been committed to providing valuable insights and opportunities for investors, entrepreneurs, and government officials in emerging markets and new investment fields. It has established long - term alliance partnerships with sovereign wealth funds, financial institutions, family offices, and ecological partners from more than 200 countries around the world. It has made long - term and in - depth investments in promoting foreign direct investment, setting up IPO funds, investing in growth - oriented enterprises, and cultivating startups. So far, it has attracted hundreds of billions of funds to support enterprises promoting economic growth around the world.
The AIM Summit has not only been a grand event in the investment community but also a witness to the friendship between China and Arab countries. After 13 consecutive glorious sessions, it has gathered political leaders from 179 countries, as well as global industry leaders, government officials, decision - makers, and entrepreneurs, providing a valuable platform for experience exchange and creating the best investment opportunities for global economic development.
Moreover, the AIM Summit provides a platform for enterprises to showcase their strength, projects, and brands, which helps to enhance their brand image and popularity. At the same time, through exchanges and cooperation with global investors, enterprises can gain more international recognition, laying a foundation for future international cooperation and business expansion. For startups, they can establish top - level global venture capital connections during the summit, seamlessly connect with global resources and funds, injecting strong growth momentum into the enterprise and accelerating the development pace.
The 14th Abu Dhabi Investment Meeting, to be held from April 7 to 9, will focus on eight major thematic sections - foreign direct investment, global trade, global manufacturing, future cities, digital economy, future finance, startups and unicorns, and entrepreneurs. Each field represents the cornerstone of global innovation and economic development. This summit will attract more than 25,000 outstanding figures from 180 countries around the world, 1,500 AI companies, and 500 startups. It is expected that more than 1,000 speakers will give speeches in more than 350 discussion sessions.
On April 9, the First China - Arab Investment Summit, hosted by the Global FOF Association, is a multilateral dialogue between China and international LPs from the Middle East and other regions. It will invite more than a hundred heavy - weight figures in the FOF and fund industries from China, the Middle East, and other regions to gather together to discuss global investment and business cooperation. Currently, at least three leading Middle Eastern sovereign wealth funds have confirmed their participation.
In terms of investment conditions, for Chinese GPs, the conditions of Middle Eastern LPs are undoubtedly “superior”. They have a relatively high investment ratio and are long - term capital in terms of investment period. Many institutions have set going to the Middle East as their annual fundraising strategy. The FOF Research Center learned that currently, many countries in the Middle East are also setting up “guidance funds” at the national level: GPs receiving investment are required to have “reverse investment” and “investment promotion”, that is, they need to introduce projects to build factories locally. This summit will also be committed to better assisting Chinese GPs and projects to “go global” and attracting foreign investment “in”.
For enterprises, due to the strong complementarity of economic structures and high compatibility of development strategies, there is extensive and in - depth cooperation space between Middle Eastern countries and China in many fields. For Middle Eastern countries, in addition to being optimistic about the potential of Chinese enterprises, they also hope to help their own countries change their single economic structure dependent on oil and gas and upgrade to new energy and smart cities through the layout of China's new energy, advanced manufacturing, and other industries. China's AI, autonomous driving, new energy vehicle, and other industries are developing rapidly, and there is broad cooperation space with the Middle East.
The First China - Arab Investment Summit will deeply focus on the development of the private equity investment industry between China and the Middle East, setting up several keynote speeches and special round - table forums to jointly discuss the opportunities and challenges faced by the investment industry, comprehensively interpret industry trends, analyze the investment layout of LPs, and promote exchanges in emerging industries, the going - global of high - quality Chinese projects, and the cooperation of GPs in attracting foreign investment.
Those who are interested in participating are welcome to scan the QR code below to contact the assistant of the FOF Research Center for consultation. Let's look forward to this investment event together!
