First Release | Youshan Investment's 2 Billion USD New Fund Reaches First Milestone

The start of the year brings fundraising season.

According to industry sources, YouShan Investment has completed the first round of its new 2 billion yuan fund, with the fund established in Wuhan. Limited Partners include state-owned assets and industrial capital at provincial, municipal, and district levels. This marks the landing of Wuhan’s first major fund of the Year of the Horse.

In the industry’s impression, YouShan Investment has always been professional and pragmatic. This demeanor stems from its female founder and leader, Chen Shiyou, who is the soul of YouShan Investment. Her career is a microcosm of China’s venture capital industry. Coming from Wall Street investment banks, she refined a unique investment methodology during nearly 20 years at China International Capital Corporation. She managed China’s first 4.8 billion yuan equity investment fund at a domestic securities firm, backing over thirty successful IPOs. She also led the establishment of China’s first 40 billion yuan national strategic emerging industries venture fund, supporting many excellent Chinese VC funds.

Five years ago, Chen Shiyou and like-minded partners founded YouShan Investment, emerging with a fresh face in the venture capital scene.

Spring waters warm as fundraising begins. This round of fundraising is highly indicative of a market turnaround, signaling a long-awaited recovery in the venture capital industry. As Chen Shiyou predicts, “This year will be both a big year for investments and for IPOs.” Thus, an upward cycle is beginning.

Wuhan’s Largest Fundraising of the Year

Historical experience shows that the level of venture activity is an important indicator of a city’s technological level. Over the years, guiding funds across China have flourished. Hubei and Wuhan are no exceptions: 20 billion yuan from the Hubei provincial government, 30 billion yuan from Wuhan funds, 20 billion yuan from Jiangxia District government’s parent fund… These efforts are well-remembered.

Among these, a particularly impressive scene remains: in the second half of 2023, to strengthen local industry development, the Hubei provincial government’s guiding fund globally recruited the best master fund manager. After a rigorous selection process, Deep Creation Venture Capital and China International Capital Capital were chosen as co-trustees. The provincial guiding fund’s decision to hire external managers, reaching out to top VC/PE firms across China, exemplifies market-oriented operation at the forefront.

Meanwhile, Wuhan funds are recruiting “partners” worldwide, exploring market-oriented operations with foresight and innovation. They have guided and supported leading institutions to establish funds in Wuhan, forming a multi-hundred-billion-yuan fund cluster. These achievements, amid the current cold market for fundraising, have undoubtedly boosted confidence among VC/PE firms, establishing a benchmark in the national government-guided fund arena and demonstrating Wuhan’s vibrant venture capital market.

At that time, YouShan Investment faced a critical turning point: its first fund’s investment period was about to end. What next? Coincidentally, the Hubei provincial guiding fund extended an invitation to YouShan Investment to visit Wuhan.

Interestingly, the deep connection between the two may be unknown to outsiders. The entrusted management organization of the Hubei provincial guiding fund, Deep Creation Venture Capital, is the largest LP of YouShan Investment’s first fund, with a long-standing, tacit partnership. Moreover, YouShan’s founding partner and chairman, Chen Shiyou, is a native of Wuhan, both undergraduate and graduate degrees from Wuhan University. “People told us to go back and contribute, so we did,” Chen Shiyou recalls.

In summer 2024, YouShan Investment took nearly twenty portfolio companies to Wuhan for an inspection. The trip was deeply moving: first, the local business environment is excellent, with high efficiency from state-owned enterprises and government departments. Second, Wuhan’s strategic location connects nine provinces. Third, Wuhan’s many universities provide abundant R&D talent for the tech industry.

More importantly, Wuhan’s industry is deeply rooted, with leading companies in new productive forces that can bring numerous upstream and downstream opportunities to portfolio companies. Chen Shiyou values this greatly: “Many of our portfolio companies have needs for landing and industry chain collaboration.” Feedback from participating entrepreneurs was positive, inspiring YouShan to consider establishing a second-phase fund in Wuhan.

Industry sources reveal that YouShan’s new 2 billion yuan fund has completed its first closing, landing in Jiangxia District, Wuhan. The LP lineup includes support from the Hubei provincial government, Wuhan city, Jiangxia District, and others such as the Hubei provincial guiding fund, Wuhan Fund, Jiangxia Science and Technology Investment, Yangtze River Industry Investment Fund, Wuhan Metropolitan Circle Fund, and JiXin Times.

Exclusive Analysis of LP Composition

Let’s start with a memorable scene.

Beyond pioneering cross-regional boundaries and globally recruiting top management institutions, the Hubei provincial guiding fund demonstrates impressive efficiency and flexibility in decision-making. From initial contact to final approval, the process is clear and responsive, reflecting international-standard professionalism. This “trust and service” governance approach not only boosts confidence in market-oriented institutions like YouShan but also highlights Hubei’s excellent business environment—pro-business, friendly, and thriving—an exemplary model of government and market cooperation.

Another key LP is Wuhan Fund and Wuhan Metropolitan Circle Fund, jointly investing 280 million yuan, making them the largest LPs in YouShan’s new fund. Behind them stands Wuhan Innovation Investment Group (“Wuchuangtou”), a major state-owned venture capital entity tasked with promoting capital and industry synergy in Wuhan. Wuchuangtou manages Wuhan funds and actively initiates and manages direct investment funds, becoming a main force in Wuhan’s state-owned fund system.

Additionally, Xiangchuang Spark Entrepreneurship Fund, managed by Xiangchuang Venture Capital, is a key player in attracting YouShan to Jiangxia. Xiangchuang Venture Capital is the fund manager for Jiangxia District’s government investment fund and a subsidiary of Jiangxia Science and Technology Investment Group.

Furthermore, the Yangtze River Industry Investment Fund, established by the Yangtze River Industry Group, is a 40 billion yuan investment platform; JiXin Times is the investment entity behind Hubei’s integrated circuit industry fund, affiliated with Wuhan Financial Holding Group.

“Proactive and efficient.” Reflecting on this fundraising experience, YouShan’s team was deeply impressed. Wuhan’s fund market is highly market-oriented. After receiving the formal application materials in late October, the team quickly conducted research and decision-making, completing all procedures within two months. When encountering difficulties, they responded swiftly and effectively, demonstrating Wuhan’s resilience and strong support for leading institutions. This marked the beginning of YouShan’s deep engagement in Wuhan. Moving forward, the team’s plans in Wuhan will extend beyond a single fund to explore broader cooperation opportunities.

In fact, the new fund also includes social LPs such as Midea Family Fund, which was an LP in YouShan’s first fund. Their past cooperation was smooth: YouShan delivered impressive returns for Midea and helped expand its industry perspective. Based on this foundation, Midea firmly committed to joining as an LP in the second fund. The continued participation of previous LPs speaks volumes.

Thus, the “local state-owned capital + industrial support + old LP reinvestment” structure has solidified YouShan’s LP composition. If the participation of old LPs signifies recognition of past achievements, then the involvement of local state assets and industry players reflects expectations for YouShan’s ongoing industry deepening. The fund has several investment projects underway, with active investment work in progress.

Five Years of Refinement

Embarking on the Next Chapter of Venture Capital

In recent years, industry peers have generally viewed YouShan Investment as low-profile and pragmatic, rarely seeking the limelight.

This unique temperament begins with its leader, Chen Shiyou. As one of the few female leaders in China’s venture capital industry, she has a rich background: nearly 20 years at China International Capital Corporation, where she founded and led the PE, VC, and fund-of-funds platforms, witnessing the bloom of China’s venture capital era.

“After more than 20 years, venture capital remains my passion,” Chen Shiyou admits. She believes that investing helps entrepreneurs realize their ambitions and offers investors excellent returns. This sense of achievement drives her forward. Five years ago, she and like-minded partners founded YouShan Investment.

Internally, YouShan emphasizes research-driven investment: extensive industry research to identify emerging opportunities before they become mainstream. At this stage, companies are often small, valuations reasonable, but products validated by the market with explosive potential.

Reviewing YouShan’s investment landscape reveals a near “strict” criterion: “Aim to invest in the top three in the industry.” This trait is evident in nearly every portfolio company. The reason is simple: targeting industry leaders in niche sectors often results in higher hit rates.

However, competition also intensifies exponentially. In this context, the management and empowerment capabilities of an investment firm become crucial. With years of industry experience, YouShan’s team has accumulated rich resources across supply chains, academia, and R&D, enabling them to provide practical solutions when companies need help most. This deep empowerment often manifests early in the investment process, becoming a key advantage in securing leading projects.

Unknowingly, YouShan has made precise placements across multiple sectors, backing many star projects such as Jingpin Special Decoration, Huanyan Robotics, Blue Arrow Aerospace, Tianbing Technology, Langxun Technology, Songyan Power, Xinjing Special Glass, and Kaizhi Daokong. Over 70% of their portfolio companies are now recognized as national “Little Giants” in specialized and innovative fields, gradually forming a comprehensive tech industry map.

Currently, China’s venture capital industry is undergoing profound changes. During exchanges, Chen Shiyou frequently mentions the importance of a fault-tolerance mechanism. Especially now, with state-owned enterprises and central SOEs dominating the primary market, increasing litigation and disputes are emerging. She advocates for “appropriate fault tolerance for state-owned assets investing in new productive forces, especially in today’s environment encouraging early-stage, small, and hard-tech investments. When high-tech companies face listing challenges, more tolerance and patience are needed—time can buy space.”

Looking ahead, Chen Shiyou expresses hope: “I want YouShan not just to be an excellent investment firm but also a nurturing ground for young investors, supporting generations of Chinese entrepreneurs to realize their technological dreams.” In the long history of China’s venture capital, some individuals will leave a distinctive mark.