VC Investor: Hurry up and take down the Guan Gong statue in the office.
The offices of venture capital institutions are full of unspoken rules.
Seats must be leather-upholstered, with a black-and-red color scheme. The floor-to-ceiling windows should face a body of water on one side, and the desk should be placed against a solid wall to be "reliable". The background wall is printed with the motto "Steady progress leads to far-reaching success", and feng shui ornaments are placed on the desk...
Even more extreme, some offices place compasses, and small institutions even enshrine statues of Guan Yu and incense burners. They seem to be "full of sincerity", but recently these institutions are busy removing all these feng shui decorations to carry out a feng shui-related self-inspection.
It sounds like a joke, but this is a real slice of the venture capital industry.
One entrepreneur said bluntly that he had been asked for his birth date and time by two institutions, which he ignored. He believed that such practice did not show belief in metaphysics, but that the investment logic of these institutions was already untenable.
Another investor told Rongzhong Finance that in the past, some LPs stopped making capital contributions at the last minute, because "the master said the project is not compatible with my fate".
According to Securities China, Shenzhen recently launched a compliance self-inspection for private equity funds, and listed a clear business boundary: whether private equity institutions carry out irrelevant businesses such as fortune-telling and family tree revision in their office premises.
From Hubei to Shenzhen, from Ningbo to Qingdao, at least 17 securities regulatory bureaus have successively issued self-inspection notices for private fund managers in their jurisdictions so far, with deadlines ranging from August 21 to October 15.
At the same time, the China Securities Regulatory Commission is soliciting public opinions on the "Measures for the Supervision and Administration of Private Investment Fund Raising", targeting long-standing problems such as share splitting, disguised breakage of qualified investor thresholds, and illegal promotion via the Internet.
On one side are compasses and fate calculation charts in the office, on the other side are the publicly released rectification documents. This detail is exactly the epitome of a serious cleanup that the entire industry is undergoing, leading to a more compliant future.
The Compass Next to the K-Line Chart
Without meeting the founder once or visiting the site, a million-level fund was transferred out.
This is not the beginning of a scam, but an investment story shared by Tang Shaoqi, founder of Lanshan Venture Capital, on his WeChat Moments. The project he invested in is called "Magic House", a startup that operates unmanned convenience stations. What facilitated this investment was not financial models or market research, but the founder's birth date and time — Tang Shaoqi called this process his own investment methodology: he collects the birth dates and times of founders first, then decides whether to invest or not.
Tang Shaoqi later reviewed the whole process to the media: he first got the founder's birth date and time, completed the fate calculation, and then decided whether to meet the founder. When it came to the "Magic House" project, he did not even have a face-to-face chat with the founder, but the money was transferred out.
This is not the only "performance art" in this circle.
People with entrepreneurial experience have more or less encountered similar situations: before meeting the founder, the investor will ask others to find out the founder's facial features, and directly abandon projects where the founder is considered to have "unfocused eyes".
For several years, "feng shui layout" such as setting up formations in the office, inviting amulets, and resolving Tai Sui has gradually become popular. Even some fund managers will specially arrange to meet founders in temples to discuss projects, with a very simple reason: after burning incense and worshipping Buddha, both sides are more relaxed, which makes it easier to close the transaction.
What is more surreal is that the fortune-telling business itself has become a target that the venture capital circle is willing to bet on.
A We Media company in Zhuhai that specializes in feng shui and numerology content and provides paid fortune-telling consulting obtained angel round financing in 2017, and completed a Pre-A round of nearly 10 million yuan the next year, with investors from several formal market-oriented funds.
A startup company that focuses on "artificial intelligence fate calculation" also emerged in Beijing, which developed birth date and time calculation into a mini-program product, and also obtained investment from institutions.
A group of people who manage money make a living by relying on data models and due diligence reports on the one hand, and invest real money in companies that tell "fate calculation" stories on the other — this is probably the most darkly humorous part of this industry.
And the "family tree revision" that was named this time is not difficult to understand in the context of the industry.
Some institutions hold private equity manager licenses, but in practice they are engaged in life services such as arranging clan affairs for high-net-worth customers and real estate agency. Their licenses are listed in the association's directory, but their actual businesses have long deviated far from the scope of private equity operations.
Once it is verified that there are irrelevant businesses such as fortune-telling, family tree revision, and real estate agency, the institutions will be identified as "unable to continue to carry out business".
These stories sound relaxed, but behind them is a non-relaxing fact. Now, the industry has finally ushered in the moment of cleanup.
One Million Threshold and Order Combining Tactics
"We are doing self-inspection work recently, and there are a lot of contents to deal with." said an IR of a private equity fund in Shenzhen.
According to Securities China, the Shenzhen Securities Regulatory Bureau issued a notice to launch the 2026 compliance self-inspection work for private investment funds in the Shenzhen jurisdiction. In accordance with the deployment, all private fund managers in the jurisdiction must complete the self-inspection before October 15, 2026, check non-compliant situations item by item against the "Self-Inspection Working Paper for Private Fund Managers" and submit the rectification plan.
"We attach great importance to this self-inspection." the aforementioned IR said.
According to the requirements of the notice, managers who fail to carry out self-inspection as required, submit false materials, deliberately conceal problems or make ineffective rectification will be notified to the Asset Management Association of China, and it will be suggested to suspend the filing of new products, and measures such as interviews and on-site inspections will be taken according to law depending on the situation.
It is worth mentioning that the "Self-Inspection Working Paper for Private Fund Managers" was issued along with the notice. In addition to five supporting detailed tables covering employees' large-scale investment, the company's financial information in the past three years, investment decision-making personnel, product nesting, and related party details, the core "self-inspection summary table" lists about 45 specific verification situations, which basically covers all kinds of non-compliant "edge ball" behaviors and chaos that have been focused on in recent years.
Among them, quasi-credit businesses, drawer agreements, and multi-layer nesting are the key verification directions.
Taking capital contribution as an example, under the current rules, individual investors need to pay in full at least 1 million yuan for a single private equity securities fund, the net asset of institutional investors shall not be less than 10 million yuan, and the number of investors of a single product shall not exceed 200 in principle.
However, insiders have said bluntly that the most common problem in the fundraising link is to split and sell products: several investors who cannot gather 1 million yuan together to share one share, which is a well-known survival method for many small and medium-sized institutions.
In terms of investment operation, the verification is directly targeted at "quasi-credit" and disguised guaranteed principal and return behaviors, including:
Whether the balance of loans and guarantees provided by the fund to the investment target exceeds 20% of the fund's net asset, and whether the term exceeds 1 year and rolls over continuously;
Whether the investment agreement sets obviously unreasonable conditions, and the repurchase price is calculated based on principal plus fixed income;
Whether the valuation adjustment agreement requires repurchase at fixed income or payment of cash compensation regardless of operating performance;
Whether the convertible bond agreement does not set conversion conditions and is disguised as a loan;
Whether the fund distributes returns to investors according to fixed yield instead of actual investment returns, etc.
Judging from the penalties issued in the first half of the year, the core non-compliant problems of private equity in the investment operation link mainly include misappropriation of fund property, transfer of manager authority, and failure to invest and operate in accordance with the contract, etc.
For example, on August 24, 2022, Zhejiang Zheshang Huiyue Private Equity misappropriated 2 million yuan of "Deqing Yueya" in the name of providing a loan to Hua Mouyu, the then investment manager of "Deqing Huisheng", to pay the principal and income of investors of "Deqing Huisheng"; in 2020, Zhongnuan Huarui agreed with a third party that the third party would be responsible for part of the work related to the fund, and agreed that Zhongnuan Huarui would pay 35% of the fund management fee to the third party, so Zhongnuan Huarui had the behavior of transferring management rights; the "Kaishi Technology Integrated Private Equity Securities Investment Fund" under Hainan Kaishi Private Equity violated the investment restriction in the fund contract that "the total value of fund assets shall not exceed 200% of the net value of fund assets", and failed to invest and operate in accordance with the contract.
A Shenzhen private equity person commented: Continuous penalties are conducive to accelerating the clearance of shell private equities, pseudo-private equities, and low-quality private equities from the market, and will also form a warning to other institutions, forcing the overall compliance level of the industry to rise.
A National Compliance Test
In June this year, the General Office of the State Council issued the "Guiding Opinions on Strengthening Supervision, Preventing Risks and Promoting High-Quality Development of Private Investment Funds", which is referred to as "Document No. 54" in the industry.
The current round of self-inspection covering more than a dozen provinces and cities across the country is the specific action of the local securities regulatory bureaus to implement this document.
Up to now, the securities regulatory bureaus of at least 17 regions including Shanghai, Shenzhen, Sichuan, Guangdong, Zhejiang, Fujian, Qingdao, Xiamen, Jiangxi, Jilin, Gansu, Hebei, Hunan, Hainan, Jiangsu, Ningbo, and Hubei have all issued notices for private equity self-inspection in their jurisdictions.
Under the unified deployment, the implementation details in different regions are not exactly the same.
The core contents of self-inspection in many places are generally the same — compliance of shareholders' capital contribution, irrelevant or conflicting businesses, related party situations, promotion, investor suitability, and compliance of investment operations are almost the "standard configuration" of notices in various regions. The supporting summary table of employees' large-scale investment, the financial information table of the past three years, and the table of product nesting with more than two layers are also mostly similar.
The differences lie in the details: the Shenzhen Securities Regulatory Bureau additionally requires private equity institutions to fill in a "related party detailed table" to make the capital transactions between the institution and related parties public; the Sichuan Securities Regulatory Bureau requires institutions to additionally submit a "self-inspection work commitment letter".
Looking at the timeline, it is easier to understand the significance of this big test.
The 2016 round of rectification cleared out 67% of the shell licenses, solving the problems of "whether it exists" and "whether it is real"; ten years later, the current regulation can be accurate to the granularity of "forbidden word list" and "20-year document retention period", aiming to solve the problems of "whether it is good" and "whether it is stable".
Shifting from quantity to quality is itself a sign that the industry is maturing — an industry that is truly worthy of entrusting wealth should be able to withstand this level of scrutiny.
It is precisely because of this that the phrase "whether to carry out irrelevant businesses such as fortune-telling and family tree revision" written in the self-inspection notice is particularly meaningful.
It seems to be a trivial issue, but in fact it draws a clear boundary: private fund managers must first be professional asset managers, not shells that can hold all kinds of businesses. When the compasses and fate calculation charts on the desk are removed and replaced by related party detailed tables, suitability assessment records and compliance working papers, the remaining institutions in this industry will be a group of institutions that truly rely on professional capabilities and credibility to speak — which is exactly the confidence that the private equity industry with a scale of 23 trillion yuan needs to move towards the next decade.
This article is from WeChat official account "Rongzhong Finance" (ID: thecapital), author: Abu, published with authorization from 36Kr.