Feng Dagang's Dialogue with Li Wei of Songhe Capital: My Firsthand Experience of Three Decades of China's Venture Capital Industry | WAVES New Wave 2025

This is a new era for China's venture capital and investment industry. Currently, the Chinese venture capital market is not only at the turning point of the cycle bottoming out but also in the deepening period of structural transformation. In the new ecosystem dominated by policies and with high concentration of state - owned assets and capital, only by conforming to the trend and making flexible adjustments can we seize certain opportunities amidst uncertainties.

From June 11th to 12th, at the Liangzhu Culture and Art Center in Hangzhou, the 36Kr WAVES New Wave 2025 Conference, themed "New Era", gathered top investors in the venture capital field, founders of emerging enterprises, as well as scientists, creators, and scholars deeply involved in technology, innovation, and business. They jointly discussed cutting - edge issues such as AI technological innovation, the wave of globalization, and value re - evaluation, dissected their views on business ideals and the future world, and explored, together, the "New Era" of China's venture capital and investment.

On the morning of June 11th, a top - level dialogue was held at the investors' venue. The CEO of 36Kr had a conversation with Li Wei, the founding partner of Songhe Capital, around the theme of "Thirty Years of China's Venture Capital and Investment".

At the scene of the top - level dialogue, Li Wei, the founding partner of Songhe Capital, is on the right.

The following is the transcript of the dialogue, edited by 36Kr:

"A good era is one that allows young people to freely exercise their imagination."

Feng Dagang: Some time ago, we held an exhibition on the 30 - year history of China's venture capital and investment, perhaps the only one in the industry. At a very prominent position in the exhibition, there was a picture of the subscription announcement for the first convertible bond in the Chinese mainland's securities market in 1992. At that time, people didn't know what the capital market and bonds were. The designer behind it was Mr. Li Wei.

Today, we regard Mr. Li as a teacher and senior who has witnessed and even led and promoted the development of the venture capital industry for decades. We invite him here to review what has happened in these 30 years. Could you first tell us the story behind this photo?

Li Wei: Thank you, Dagang, for inviting me to talk about the past history. I'm already receiving my pension. Compared with many of you here, many entrepreneurs here were not even born 30 years ago. Indeed, I specifically designed the first convertible bond in China more than 30 years ago. I studied chemistry at Peking University in 1981. My first job after graduation was at the Science and Technology Development Department of Peking University, responsible for promoting the university's scientific and technological achievements to factories. In 1988, I went back to pursue a postgraduate degree and switched to studying economics. After graduating in 1991, in August of that year, I left Beijing, quit all my jobs there, and went to Shenzhen. In 1992, I transferred my Beijing household registration to a non - agricultural collective household registration in Bao'an County, Shenzhen. At that time, many people asked me why I would transfer my hard - to - get Beijing household registration to Shenzhen. I only had one thought in mind: the household registration system couldn't restrict free - thinking people, starting from me. And indeed, it didn't restrict me.

This conference is held in Liangzhu, Hangzhou, where there are many so - called "digital nomads". From another perspective, they are not digital nomads but pioneers of the digital economy, constantly exploring new frontiers in the digital field. Innovators are actually those who continuously explore new frontiers.

After I arrived in Shenzhen in 1991, the job I had agreed on didn't materialize, and I became a self - employed person. Later, feeling that I lacked the work experience of a large company and didn't understand how a large company operated, I went to China Bao'an Group to be in charge of securities affairs. At that time, Bao'an Group needed to raise funds and asked how to do it. The People's Bank of Shenzhen and the Shenzhen Office for Restructuring the Economic System were very innovative and said that Bao'an Group should come up with a plan. It was not feasible to issue securities (i.e., stocks as we know it today), so they suggested trying a convertible bond and a medium - to - long - term warrant. Based on these two suggestions, I designed a convertible bond. After being approved by the People's Bank, it was finally issued on the Shenzhen Stock Exchange. That's how it happened.

Why am I telling this story? It's not to show how capable I am, but to say that the fundamental principles are simple and universal. There were no reference materials when designing the convertible bond back then. However, the term "convertible bond" tells you that it can be converted. It can exist in the form of a bond and can also be converted into stocks under certain conditions in the future. It's just a matter of designing these conditions. Many of the principles in venture capital today are exactly the same.

So, young entrepreneurs should always keep the first - principle thinking in mind. As long as you firmly grasp the first - principle thinking, many things will be much easier to handle.

Feng Dagang: When innovation is not difficult and is a natural thing, when it's just an ordinary occurrence in that era, it's a good era.

Li Wei: Yes, as long as it can provide young people with space for free imagination and allow them to freely display their talents, I think it's a good era.

"Recovery lies not in the index but in confidence."

Feng Dagang: You were originally a financial professional and later switched to venture capital. When there was no venture capital industry in China, most of the early practitioners came from the financial industry. How did this transformation happen to you? Why did you enter this new industry? And after all these years, if we were to evaluate the 30 - year history of venture capital and investment, what would be your keywords?

Li Wei: I would use three words. The first is "ups and downs", the second is "a turn for the better", and the third is "bright prospects after setbacks".

I think everyone can feel the ups and downs. The first time I heard about venture capital or risk investment was in 1985 when I graduated from university and worked at the Science and Technology Development Department of Peking University. At that time, the Chinese government established the China Venture Capital Corporation, which was introduced from the United States. However, that venture capital attempt didn't succeed, and they later shifted to trust and other businesses. With the crazy financing in the 1990s, they eventually ran themselves into the ground and didn't achieve what they intended to do in promoting China's science and technology industry as they had conceptualized it from the United States. This was indeed related to the capital market. The first peak of venture capital in China should be in 1999 and 2000 when there were talks about launching a second - board market in China, and a large number of venture capital companies were established. The Internet was very prosperous at that time.

Feng Dagang: At that time, were the investment companies mainly state - owned?

Li Wei: There were both state - owned and private ones, but state - owned ones dominated. Everyone was looking forward to the second - board listing. At that time, there were quotas for issuing stocks, and the second - board listing didn't require quotas. High - tech companies thought there would be a wave of benefits. However, the second - board market was postponed for a long time. The Internet at that time was not the mobile Internet, and Chinese Internet companies couldn't be listed in China. So, foreign capital invested heavily in the Internet, while Chinese companies were hesitant to invest because they didn't know where the exit was.

In 2003 and 2004, some Chinese companies went public overseas. It's clear that China's domestic venture capital missed out on this wave of Internet companies. The reason is simple: your funds couldn't go overseas. Finally, in 2007, the so - called Growth Enterprise Market was launched. After the first wave of development and about five or six years of dormancy, a new peak came in 2007. Of course, such cycles continued one after another, which can be seen as a turn for the better. Whenever it seemed hopeless, suddenly there would be a glimmer of hope.

Why do I say there are bright prospects now? The economic development has reached a relatively low point or has started to gradually recover. In our industry, we are now discussing more about how to reserve talents, how to reserve funds, and how to be patient and bold investors. First, be bold and then be patient to welcome the next cycle of China's economic recovery. I think the recovery speed of technology and the development speed of technology - based startups will definitely be higher than the economic development speed because our economic development ultimately depends on technological development.

Feng Dagang: Are there any signs or indicators of the industry's recovery?

Li Wei: First, more people are starting to pay attention to this. Second, from my personal experience, our government is becoming more mature. Third, when we used to believe in globalization and could get chips cheaply from abroad, we didn't have the incentive to develop our own. But when the technology blockade reached a certain level, we naturally invested more efforts. With the attention from the state, the private sector, and the whole nation, our accumulation in this area has increased.

There is a statistic that China ranks first in the world in the production and export of low - end and mid - end chips. Most products in the world don't need the most advanced chips, and it's very difficult to replace China in this regard. So, I'm very confident about China's future technological development. After some pessimistic sentiment in the past two years, DeepSeek has given us confidence. We also see that even if there are temporary setbacks in hardware, software can still make up for it. Some scientific studies show that the average IQ level of East Asians is the highest in the world. Hardware development may require experience and accumulation, but in software development, with a combination of IQ and experience, our development speed will definitely be higher than that of ethnic groups with slightly lower IQ levels.

Feng Dagang: Is there a better observable indicator for the recovery? For example, some people say that when the Shanghai Composite Index reaches 4500, it means recovery.

Li Wei: I think recovery doesn't lie in simple indicators but in confidence. The confidence of investors. When investors are willing to invest and state - owned enterprises become bolder. The government should support technology and innovation, and state - owned enterprises should be further liberalized. I'd like to take this opportunity to appeal that the most correct thing is to let everyone act according to market rules. There will be both profits and losses. Those who make profits should be rewarded, and those who suffer losses without malicious intent or illegal behavior should be tolerated. As true bold investors, we should really tolerate. Only by truly liberalizing this can our economy develop continuously. I think the most important thing is that confidence should be restored because the market economy is largely a confidence - based economy. If people believe that the future will be good, they will consume and invest. If they lack confidence in the future, it won't work. And true confidence comes from whether you can let people give full play to their abilities naturally.

Feng Dagang: It comes from our encouragement of successful innovation and tolerance of failure.

Li Wei: Yes, encouraging success is very important. The power of a good example is infinite.

An important aspect of the confidence recovery in the Guangdong - Hong Kong - Macao Greater Bay Area is Hong Kong. Due to the actions of some radical people in the past few years, Hong Kong was indeed greatly affected. However, since last year, the securities market in Hong Kong has clearly recovered, which shows that at least confidence is coming back.

"Dollar funds are our teachers."

Feng Dagang: As a latecomer to this industry, I first came into contact with venture capital in 2005. At that time, I was a journalist. There was almost no venture capital industry in China, and there were no journalists reporting on the venture capital industry. That year, Michael Moritz, the founder of Sequoia Capital, came to China for the first time. I talked to him and learned that there was such a great business as venture capital in the world: using other people's money to invest in projects, getting a share if it succeeds, and not losing much if it fails. It was really eye - opening for me.

Li Wei: The venture capital industry is a roller - coaster industry. It's like interval training. Your adrenaline surges suddenly, and your heart feels like it's going to burst out, and then you can calm down. It's a high - stress industry. Those without strong psychological and physical endurance should not enter this industry.

Why is it a roller - coaster industry? Before investing in each project or enterprise, investors are very happy when they go to evaluate. Because each founder has unique qualities that you don't have, and you keep learning from them. But after actually investing your money, most of these founders will face various problems and challenges. And your money is tied up with them, and you can't get it back immediately. Your backers are constantly watching you, and you live in a state of anxiety. This is our normal state.

Feng Dagang: Indeed, it's a roller - coaster. Talking about the history of China's venture capital, starting from 2005, some major dollar - denominated funds began to enter China on a large scale, creating a prosperous 20 - year period. As an outstanding representative of domestic funds in China, what's your evaluation of the era dominated by dollar funds?

Li Wei: Dollar funds are our teachers, bringing us a lot of experience. They were the earliest bold investors in China, and their boldness is based on experience, professional knowledge, and the strong psychological endurance of their backers.

Now, Chinese backers are gradually acquiring these three qualities. Why? First, being bold without professionalism is just being reckless. If you are bold and professional, but your backers are impatient, it will become a short - term behavior. This was the dilemma that our state - owned capital faced in the past. Our state - owned capital has had a tough time. They hired professional people but couldn't offer them professional - level salaries. Government leaders wanted to be bold, but there were assessment requirements, putting them in a difficult position. It's like Lin Chong in "Water Margin" when he was fighting with Instructor Hong at Shi Jin's manor. After one round, he jumped out and said he couldn't fight because he was wearing shackles. So, to some extent, state - owned enterprises need to be liberalized. We must remove these shackles because a large amount of our capital is state - owned. Without liberalization, the venture capital industry will still be affected. It's clear that dollar funds are our mentors.

Second, I think dollar funds have made great contributions to China, especially in the development of China's technology. For things that we didn't fully understand and required long - term development, such as the Internet, dollar funds used many methods. They have made significant contributions.

Third, we must admit that foreign capital, including dollar - denominated funds, has reaped huge returns during China's high - speed economic growth and technological development. They have obtained such large returns in such a short period, which they couldn't achieve in other countries or markets. We must recognize this.

Fourth, currently, dollar - denominated funds are facing a slowdown in China's economy to some extent. Due to political reasons and some restrictions, they have to withdraw. I think as long as China maintains its composure, maintains a good business environment, and continues to develop unwaveringly, they will definitely come back. We can see from what has happened in Hong Kong in the past two years that they will return. We just need to create better business conditions, use better cooperation methods, and innovative means to attract them back. Their return and making profits in China will also help change the views of American politicians towards China.

Invest and manage according to market rules.

Feng Dagang: The next question is about patient capital. Just now, Mr. Li also mentioned it. I also want to discuss whether we should require patient capital or professional capital. Smart capital may not be patient. Is the goal to make money or to support startups?

Li Wei: I think patience and professionalism go hand in hand. Without professionalism, no one will be patient. If the money you invest loses value the next day, who will be patient? First, there must be professionalism, and second, patience. Third, since a large amount of the capital comes from the government, the government's assessment mechanism must meet the country's long - term strategic needs. This is the core. Whether it's our LPs, including private LPs, if you are professional and have a long - term perspective, people will earn a much higher average return than short - term speculation, and they will all become patient investors. The core is still professionalism.

More than 20 years ago, the early stage of venture capital in Taiwan, China, also provided us with a lot of help. Many Taiwanese investors returned to the Chinese mainland. They were trained in