Shanghai LPs are going all out

As the end of the year approaches again, it's time for a review, and the market presents a different picture.

At this time last year, most GPs were still deeply immersed in pessimism. However, this year, driven by policy dividends and technological breakthroughs, the primary market is gradually emerging from the shadow, and "busy" has become the annual keyword for many investors.

The "LP Panoramic Report 2025" recently released by FOFWEEKLY shows that in the first three quarters of 2025, the committed capital of institutional LPs was approximately 1.24 trillion yuan, a year-on-year increase of 9%. The number of newly registered funds was 3,434, a year-on-year increase of 15.18%.

The on-the-ground perception is the same.

This year, most institutions have significantly accelerated their investment pace, and the fundraising efficiency has also improved simultaneously. A partner of an early-stage investment institution in Beijing once revealed to us that due to the proactive promotion of a leading regional government-guided fund and its hope to make an early investment, their new round of fundraising, originally scheduled for next year, has been advanced to this year.

In fact, since the beginning of this year, the decision-making efficiency of state-owned LPs in many regions has been significantly improved, and the most eye-catching ones are Jiangsu, Zhejiang, Shanghai, and Beijing.

Frequent Investments by LPs

Since the beginning of this year, with the rising popularity of sectors such as AI, robotics, and low-altitude economy, the investment sentiment in the primary market has significantly recovered, and the willingness of LPs to invest has continued to increase, especially in first-tier regions such as Jiangsu, Zhejiang, Shanghai, and Beijing.

According to the "LP Panoramic Report 2025", in 2025, with the investment from national-level funds, Beijing and Shanghai became the regions with the highest investment scale. Zhejiang and Jiangsu were the provinces with the highest overall activity, and there were multiple active investment cities within the provinces. Overall, due to the change in the capital structure, the regions where local governments and local state-owned investment platforms have abundant funds and high investment requirements are the most active regions for LP investment.

Taking Shanghai as an example, since the beginning of this year, multiple trillion-yuan-level mother funds have been intensively launched, and the investment pace has been significantly accelerated. The three leading industry mother funds in Shanghai, the future industry fund, and the Shanghai state-owned capital mother fund have made frequent investments, and the decision-making efficiency has far exceeded the past.

It is reported that the three leading industry mother funds in Shanghai achieved "preparation, establishment, and investment decision-making in the same year" last year. In less than a year, they have completed the selection of two batches of a total of 26 market-oriented sub-funds, approved 47 projects for investment decision-making, with a total investment decision-making amount of 27.84 billion yuan, and driven more than 100 billion yuan of social capital to be injected into the three leading industries in Shanghai. The Shanghai Future Industry Fund, established at the beginning of the year, has also publicly selected multiple batches of sub-funds.

Since the joint restructuring of Shanghai State-owned Assets Operation Co., Ltd. and Shanghai Science and Technology Innovation Group in April 2024, they have been very active. According to a report in Jiefang Daily, in 2025, the fund management business under the management of Shanghai State-owned Assets Operation Co., Ltd. has shown rapid growth. It is estimated that the newly added investment decision-making amount of Shanghai State-owned Assets Operation Co., Ltd. in 2025 is expected to exceed 55 billion yuan, and the investment amount will exceed 45 billion yuan, which are more than three times and seven times that of 2024 respectively. As of now, the total scale of the company's fund management exceeds 270 billion yuan, and the number of invested enterprises exceeds 2,000.

Each district has also actively followed up and built a differentiated fund system. On October 11, Minhang District held a press conference for the "Rainforest-style Fund Matrix" with "10 billion funds and 100 billion scale". At the event, it was announced that the "Greater Lingang Science and Technology Innovation Originating Fund" with a scale of 10 billion yuan would be established, and a four - sector fund matrix would be formed. Through cooperation between central and local governments, cooperation between the city and the district, and attracting social capital participation, a rainforest-style cluster ecosystem of mother and sub-funds with "10 billion funds and 100 billion scale" will be created.

On October 10, Jing'an District unveiled the establishment of "Shanghai Jing'an Capital Investment and Operation Co., Ltd." with a registered capital of 12 billion yuan. It plans to form a 10 - billion - yuan investment matrix through the "government - guided fund + direct investment + marketization" model, promote "early - stage, small - scale, and high - tech" investments in key fields such as artificial intelligence and life sciences, and build a full - cycle industrial ecosystem.

Not only in Shanghai, but also state-owned LPs in Zhejiang, Jiangsu, Beijing and other places have comprehensively accelerated their investment pace.

On November 19, the Zhejiang Social Security Science and Technology Innovation Equity Investment Fund Partnership (Limited Partnership), jointly initiated by Zhejiang Province, the National Council for Social Security Fund, and the Agricultural Bank of China, was successfully registered with the Asset Management Association of China, marking the successful implementation of the cooperation between the National Council for Social Security Fund and local governments. It only took less than 20 days from the announcement of its establishment to the completion of registration.

In recent years, local governments and state-owned platforms have become the most active LP groups in the primary market. Driven by policy guidance and market evolution, state-owned LPs are evolving towards a more market-oriented and professional direction.

Reduction in the Reinvestment Requirement

Since the term "patient capital" was proposed in April 2024, it has gradually evolved from a popular industry term to a practical implementation. Long - term capital is crucial for the long - term development of China's venture capital market. It is not only the "stabilizer" for the venture capital market to weather economic cycles but also the key to solving the problem of "mismatch in investment cycles" in hard - tech investments.

Against this background, government - guided funds across the country have been promoting mechanism innovation, reshaping the ecosystem for long - term capital, extending the fund duration, and at the same time, continuously optimizing the reinvestment requirements.

According to incomplete statistics by FOFWEEKLY, in 2025, the average reinvestment ratio of newly established or revised government - guided funds has dropped to 1.15 times. Some regions have even clearly abolished the reinvestment requirement, making the operation of government - guided funds more in line with market rules.

In April this year, the Science and Technology Innovation Mother Fund established by Changsha Economic Development Group completed its registration. The overall reinvestment requirement for the mother fund is 0.4 times, which has attracted industry attention.

Some industry insiders pointed out that relaxing the reinvestment requirement does not mean giving up industrial guidance. Instead, local LPs have a better understanding of how to attract high - quality GPs through capital ties to achieve more sustainable industrial cultivation.

With the improvement in investment efficiency and increased patience, LPs' investment strategies have become more focused, and their choices are more professional and refined.

According to a survey of LPs by FOFWEEKLY, the vast majority of LPs prefer to invest in vertical GPs with industrial backgrounds. With the development of the equity market in recent years, the popularity of well - established and financial - type GPs has been gradually declining. In terms of preferred industry sectors, sectors such as artificial intelligence, intelligent manufacturing, semiconductors, and hard - tech, which are key areas in the national strategic layout, are the sectors where funds are most concentrated.

As we have observed, the newly established mother funds across the country this year have significantly concentrated their investment in frontier fields such as AI, robotics, aerospace, and low - altitude economy. Geographically, in addition to Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou, cities such as Hefei, Chengdu, and Zhengzhou have also shown high interest in the above - mentioned frontier fields.

Behind the improvement in investment efficiency is the busy state of LPs. Many LPs have revealed to us that the investment demand at the end of the year is still urgent, and they are actively looking for high - quality GPs.

On the busy schedules of LPs, many institutional teams are "fully engaged." In their own words, "They are either participating in events or on the way to due diligence."

Conclusion

It is obvious that since the beginning of the year, the investment enthusiasm in the primary market has been rising steadily, the investment enthusiasm of LPs has significantly increased, and the busyness of GPs has also reached a high level.

"It only takes a month at the fastest from initial contact to making an investment decision," sighed an investor. The implementation and practice of "patient capital" also mark that China's venture capital market is shifting from pursuing short - term returns to focusing on long - term value creation.

In 2025, driven by both policies and industries, the primary market is emerging from the trough and experiencing a long - awaited active period. The acceleration of LP investment and the relaxation of reinvestment requirements... A more mature and rational venture capital ecosystem is emerging.

This article is from the WeChat official account "FOFWEEKLY". Author: FOFWEEKLY. Republished by 36Kr with permission.