With a 46-fold return on investment, this Shenzhen-based "underwater VC" can no longer stay under the radar.
The A-share market has witnessed another phenomenal IPO.
On April 16th, Dapu Micro, a domestic SSD controller chip manufacturer, was officially listed on the stock market, becoming the first unprofitable enterprise on the Growth Enterprise Market. After the opening on the first day, Dapu Micro's stock price soared by 431%, and its market value reached 106.89 billion yuan.
As one of the very few domestic companies with the full-stack self-developed capabilities of "controller chip + firmware algorithm + module" for enterprise-level SSDs and achieving mass production and shipment, Dapu Micro was already a popular star in the primary market before its listing. According to the prospectus, Dapu Micro has completed nearly ten rounds of financing, with a cumulative financing amount of nearly two billion yuan. The list of shareholders is filled with well-known first-tier VC/PE institutions.
Among them, an institution named Zeyi Capital has become one of the biggest winners. This previously unknown dark-horse VC has continuously increased its investment in Dapu Micro in multiple rounds during its previous financings and is the institution with the most investment rounds. Based on the current stock price, Zeyi Capital's return on its first-round investment has exceeded 46 times.
Public information shows that Zeyi Capital was established in 2020 and is a very new institution. Moreover, it is extremely low-key, and there is basically no more information about it online.
However, not long before Dapu Micro's listing, I met Chi Ke, the founder of Zeyi Capital, in Shenzhen. This was also his first communication with the media. Chi Ke told me that currently, including him, Zeyi Capital only has five employees, and he is personally involved in the core aspects of "fundraising, investment, management, and exit."
This easily reminds people of a new model called "Solo VC" that has been emerging in Silicon Valley in recent years. Such VCs have no team and do not set up a complex organizational structure. The founder single-handedly handles project evaluation, due diligence, and post-investment management. Compared with traditional large-platform VCs, Solo VCs are full of fighting spirit and agile, often achieving unexpected results.
Is Zeyi Capital the Chinese version of "Solo VC"?
A Rare "S Transaction"
In Shenzhen, the headquarters of RMB funds, Shenzhen Capital Group is like a "Whampoa Military Academy." Many investors have left here and scattered like stars. Chi Ke joined Shenzhen Capital Group in 2014, which was the starting point of his investment career. But later, his path became rather "alternative."
As a certified public accountant, his position at Shenzhen Capital Group was in the risk control of the "middle office," a seemingly ordinary but actually very special position. As the "number one" among RMB funds, Shenzhen Capital Group has a large fund scale, and its investment managers are spread across the country. All projects are ultimately summarized to the risk control middle office at the headquarters. As a result, Chi Ke conducted due diligence on dozens of projects every year at Shenzhen Capital Group and provided risk reports. In total, Chi Ke was deeply involved in the investment research and judgment of more than a hundred projects.
Such a training opportunity is truly unique. Chi Ke told me with some emotion that he is very grateful for this experience at Shenzhen Capital Group. Calculated at an average investment of 50 million yuan per project, it's equivalent to him receiving special training in billions of yuan of investments every year. This opportunity is very precious for a young investor.
When Chi Ke was doing audits at an accounting firm, he would stay on a project for a month. However, the risk control in an investment institution must diagnose the financial authenticity of an enterprise, listing obstacles, and future growth potential within a limited time, which requires higher experience and judgment. More importantly, the role of risk control in an investment institution is not just to vote against an investment. Good risk control should also provide feasible risk mitigation solutions in addition to pointing out risks. For VCs, risks that can be solved should not be considered risks.
Because of his ability to give good advice, Chi Ke was quite popular among the investment teams at Shenzhen Capital Group. This is not easy, as in investment institutions, risk control and investment managers are often natural contradictions.
The high-intensity "actual combat training" at Shenzhen Capital Group quickly gave Chi Ke, who was once an investment novice, the "feeling" for investment. This keen perception of value finally erupted in 2020. By a very accidental chance, Chi Ke was able to single-handedly establish Zeyi Capital.
At that time, an institution in Shenzhen had a maturing fund containing 11 projects seeking a packaged transfer. When Chi Ke saw this fund, based on his years of risk control experience and rapid assessment of the projects, he immediately felt that this was a rare good opportunity. So, he made a decisive decision to establish Zeyi Capital and took over this portfolio in the shortest possible time.
At that time, the pandemic had just broken out, and the venture capital market was extremely pessimistic. The original investors of this fund had no confidence in the exit prospects of these 11 projects. Even some project founders later told Chi Ke that they themselves were also very uncertain about the future of their companies at that time. However, after carefully evaluating these 11 projects, Chi Ke believed that they were definitely worth more than the asking price.
How certain was Chi Ke? He told me like this: "When you find a very valuable gold mine, if you don't make this happen, I think it would be irresponsible for the rest of my life." Facts have proven that Chi Ke was right. Soon, the market recovered. Before the transaction was even completed, the acquired assets had already achieved a book profit. Currently, two projects in this fund have completed IPOs, and three projects have been transferred and exited. Just one project, Youjia Innovation, has earned back the entire fund.
This almost crazy "S fund" operation brought substantial book returns to Chi Ke and also marked the official birth of Zeyi Capital.
Why Build a "Solo VC"
Zeyi Capital not only was born in an extremely alternative way but also operates in a way that is the opposite of most of its peers after its establishment.
With the institutionalization of LPs, especially the increasing number of state-owned LPs, the venture capital industry is evolving towards team scale-up and complex decision-making processes.
However, Zeyi Capital still maintains a lean team of 5 people. Chi Ke himself personally leads the entire process of the fund's fundraising, investment, management, and exit. If it weren't for the current policy requirement that a management company must have at least 5 employees, Chi Ke would even hope that Zeyi Capital's team could be even more streamlined.
Regarding investment, Chi Ke has a unique and self-consistent philosophy. Chi Ke believes that investment is essentially an extremely subjective behavior, a projection of each person's worldview and values onto a project. "If you really have a good opinion and truly believe in your own logic, you shouldn't be easily influenced by others' opinions." Chi Ke emphasized that if an investor's judgment framework is easily shaken by the outside world, it will be difficult for him to capture truly non-consensus opportunities.
Therefore, Zeyi Capital actively chooses to be a "Solo VC." This extremely flat model enables Zeyi Capital to make the fastest decisions and have the strongest execution ability when facing good projects.
Also for this reason, Zeyi Capital can adhere to some principled practices that large platforms find it difficult to maintain today.
For example, in recent years, due to the increasing difficulty of exits, requiring founders to sign personal repurchase agreements has almost become an "unspoken rule" in the venture capital industry. However, since its establishment, Zeyi Capital has hardly signed personal repurchase agreements for all its projects. Chi Ke said: "Even if the founders want to sign, we won't agree. Venture capital is not insurance investment. Entrepreneurship is already very difficult, and there's no need to use personal property for compensation. We are willing to share risks with the founders."
Another example is that one of Zeyi Capital's projects suffered a devastating blow to its business during the pandemic, and the company was on the verge of survival. At that time, some large institutions, under the pressure of compliance and risk control, required the founder to repurchase shares or withdraw capital. However, Zeyi Capital made the exact opposite choice. Because it was optimistic about the company's long-term value, it not only did not apply pressure but also continued to invest money to support the company.
At this point, many people must be curious. Can Zeyi Capital raise funds in today's primary market with such practices?
The answer is, of course, yes. Since its establishment, Zeyi Capital has successfully raised 13 funds, with a total management scale of over 2 billion yuan. It would probably exceed many people's expectations that a "Solo VC" in China can reach such a scale.
Zeyi Capital's fundraising method is very "classical," only raising funds within Chi Ke's circle of friends. As it gradually achieved good investment results, some mother funds and state-owned LPs have also expressed their willingness to invest, on the condition that Zeyi Capital hires more people, builds a complete front, middle, and back office, and becomes more institutionalized. However, Chi Ke is not willing to do so. During our more than two hours of communication, Chi Ke repeatedly told me that in his opinion, the first principle of Zeyi Capital is to "invest in a pure way," without restricting the investment cycle, project stage, or even industry, and only investing in valuable projects. If it becomes impure due to fundraising pressure, Chi Ke believes it would be a great loss. This persistence has won the recognition of social investors, and the statistics show that the reinvestment rate of Zeyi Capital's past LPs exceeds 50%. Moreover, some state-owned entities also highly appreciate this and have invested in Zeyi Capital's funds multiple times.
Six Rounds of Investment in Eight Years
A Textbook Example of "Concentrated Heavy Investment and Multiple Rounds of Reinvestment"
Some people may say that "personal VCs" raising funds within their circle of friends are very common in Shenzhen. Aren't many GPs who specialize in single-project funds doing just that?
If you think so, you're underestimating the so-called "Solo VC." Single-project funds in the market usually try to grab shares of Pre-IPO projects, aiming for quick and easy profits, which is essentially arbitrage. The reason I call Zeyi Capital a "Solo VC" is that while its team is highly streamlined, it shows professionalism and sharpness in its investment logic that is not inferior to large institutions.
When you examine Zeyi Capital's investment portfolio, you'll find that its investment style is very bold and quite mature and sophisticated.
First, it adheres to long-term investment. Zeyi Capital can understand and dare to invest in very early-stage projects, and many of its projects were entered at the angel round or Pre-A round. This means that Zeyi Capital's investment cycle may be very long, often needing to accompany the enterprise through multiple cycles and definitely being the most steadfast supporter of entrepreneurs.
Second, it advocates altruism. Rather than chasing short-term interests, Zeyi Capital is more willing to make the pie bigger. Zeyi Capital is often jokingly called the easiest investor to negotiate with when it comes to issuing ESOPs by founders. This is because Chi Ke believes that although short-term interests are sacrificed in some cases, it motivates the project team and binds the interests of the team together, which often makes it easier to achieve success.
Third, it prefers heavy investment and long-term companionship. Zeyi Capital generally has a relatively high shareholding ratio in its investment projects because it continuously increases its investment in projects it is optimistic about and makes multiple rounds of investments. Zeyi Capital doesn't spread its investments thinly; it highly concentrates its investments, and the number of core projects is always controlled at around 5. Restraining the number of projects is more conducive to concentrating resources and increasing the certainty of projects.
Zeyi Capital's investment in Dapu Micro well reflects the above characteristics.
Chi Ke first got involved with Dapu Micro in 2018 when Dapu Micro was still in a very early stage and had no substantial revenue. Chi Ke believed that with the advent of the digital economy era, high-performance enterprise-level SSDs (solid-state drives) would become an indispensable core element of digital infrastructure. It was based on this judgment of the endgame that made Chi Ke firmly optimistic about Dapu Micro. At that time, Chi Ke was a partner at Qifu Guolong, and he promoted Qifu Guolong to make an early investment in Dapu Micro.
Although the financing scale of Dapu Micro doesn't seem small in hindsight, looking back at the process, Dapu Micro's financing path was actually not smooth. Many rounds of financing were even quite bumpy. The most critical one was the D round in 2023. At that time, affected by external environments such as Sino-US relations, many well-known foreign institutions that had already passed the review chose to withdraw. Dapu Micro faced the risk of a valuation downgrade or even a failed financing. At the critical moment, Zeyi Capital chose to lead the investment, which not only stabilized Dapu Micro's situation but also greatly enhanced the confidence of subsequent investors.
Before Dapu Micro's listing, Chi Ke himself, Qifu Guolong, and Zeyi Capital had invested in Dapu Micro a total of six rounds in eight years, among which Zeyi Capital alone invested four rounds.
It can be said that Zeyi Capital has truly become bold and patient capital. At the same time, Zeyi Capital has also received the rewards from the market. According to the prospectus, four funds under Zeyi Capital, namely Pinghu Zeyi, Pinghu Zewei, Zeyi No. 6, and Zeyi No. 8, hold a total of 5.53% of Dapu Micro's shares before its listing. Based on the current stock price, the market value of these shares can reach 5.31 billion yuan.
Willing to Be the "Capillaries" in the Venture Capital Circle
By adhering to long-term investment, advocating altruism, and providing heavy investment and long-term companionship, Zeyi Capital has preserved a rare purity in the primary market in a "non-mainstream" way.
When the institutionalization of mainstream VCs has gone too far and has sometimes become a hindrance, Zeyi Capital has proven that Solo VC may also be a viable solution. It has a more entrepreneurial mindset than investors from large platforms, is more empathetic with entrepreneurs, and is highly enterprising and more agile in action.
Of course, Zeyi Capital has also paid a "price," and the most obvious one is the scale. Chi Ke frankly said: "Zeyi's model has a very large natural shortcoming. You can't manage large amounts of money, and it's very difficult to increase the management scale." Therefore, to be a Solo VC, one must first restrain the desire to "become large," which may be the most difficult test of human nature.
Not being able to achieve a large scale also means that an institution cannot enter the "mainstream" vision and enjoy the halo of a well-known brand. Chi Ke is very open-minded about this. He said that Zeyi Capital will always be a "small and medium-sized enterprise" in the Chinese venture capital industry, just playing the role of very small "capillaries."
However, a good venture capital ecosystem cannot only have the "mainstream." Professional, patient, and warm "capillaries" like Zeyi Capital are also an indispensable underlying support for China's hard-tech venture capital ecosystem. "Becoming large" is not the only standard for success. In the noisy primary market, finding the right way and sticking to the right principles can also lead to a wonderful life of one's own.
This article is from the WeChat official account "China Venture Capital News", author: Zan Zhu. Republished by 36Kr with authorization.