01/01/2024
In September 2023, while summarizing our 9th year at Linear Capital, we wrote the following sentence: "The goal is in the distance, the road is still difficult, but there is light in our hearts". It can also summarize 2023 for us.
"Recovery is not yet successful, we still need to work hard." That's my brief word for 2023. In 2022, we made a budget for 2023 and planned to invest $100 million in new projects. However, we ended up in investing around $35 million in approximately 16 new projects. But we believe this contraction is practical and necessary. The main reasons are: 1) We have raised our investment standards; 2) The number of early-stage projects that meet our standards has significantly decreased in the market; 3) The prices of early-stage projects have fallen, and the effectiveness of fund utilization has improved; 4) Follow-on funding has also decreased, and the exit channels are not smooth, making the entire primary market investment chain more tense.
But the challenges of reality do not change our confidence in China's long-term recovery. This is a moment that tests our long-term beliefs the most. I have already elaborated on many long-term perspectives in my year-end summary last year, so I won't repeat them here. As long as we believe in: 1) The competitiveness of the Chinese people (= intelligence * motivation *diligence); 2) The pragmatism of the Chinese government (ultimately the ability to seek truth from facts); 3) Our collective belief that China can become better. The twists and turns of the process do not affect our confidence in China's long-term prospects.
Therefore, overall, we refuse to "Lie Flat" in 2023 and have done many things, such as 16 new investment projects and 26 follow-on invested projects. Regarding exits, in 2023, on the one hand, Linear is exploring suitable exit strategies for portfolio companies, and on the other hand, we are resolutely and strictly implementing exit disciplines to achieve staged and diversified exits. So far, two projects have completely exited, and more than ten projects and asset packages are in the process of exiting or partially exiting. We believe that a large and meaningful exit in technology investment takes a long time and patience, and the premise of a good exit is definitely a good investment. In addition to maintaining high standards in investment requirements, we also hope to prove the value of good investments in both an upward and downward environment through strict ex*****on of exit disciplines and proactive exit strategy management.
We summarize some important events of this year in chronological order (due to the article length and confidentiality of individual invested companies, we only list some new investment projects and follow-on projects here):
January-February: Juehua Medical, based on neuroscience, announced angel round fund raising from Linear Capital. In addition, the micro-surgical robot platform Dessight Biomedical completed Pre-A round financing, with Linear Capital as the lead investor. On the other hand, our post-investment service continues. One of the important events was the first time "Linear Open House". We organized portfolio companies to visit Agile Robots' office, encouraging the experienced entrepreneurs to share their experiences to the newcomers.
At the beginning of the year, the most often discussed topic was the new wave of AI brought by chatGPT. As a company that has always focused on technology investment, we have invested in companies such as Mindverse, Boolv, fasion.ai, and Vistring during 2020-2022. We believe that this AI development wave will bring about paradigm changes, and we encourage all invested companies to leverage AI to empower their products and productivity.
At the same time, the Linear Capital investment team actively shared our views on AGI and related investment projects through media interviews and events.
In March, synthetic biology company SynMeta Bio secured millions of dollars in financing, with Linear Capital leading the angel round. This is an important attempt for us in the field of new materials. 3D real-time interactive virtual activity platform Bitsrealm Technology also announced their millions of dollars in financing, with Linear Capital also leading the angel round.
This month, Linear had an important personnel news: "Songyan Huang was promoted to partner at Linear Capital." In terms of post-investment activities, we held the brand event "Meditators Alliance." The theme of 2023 was energy storage, where we invited industry experts and entrepreneurs to discuss topics such as different technical routes and digitization in energy storage scenarios. Additionally, Linear Capital's startup knowledge sharing platform, Linear Academy, jointly organized an offline workshop with Amazon Web Services team, connecting Beijing and Shanghai, and sharing Amazon's recruitment experience with founders and teams of invested companies.
In April, microfluidic production chip company Haoli Technology completed a series A financing of tens of millions of dollars, with Linear Capital leading the round. As the pandemic was fading, we went to Europe - one of the core areas of technological innovation. Over the past few years, we have invested in many technology founders with backgrounds from renowned European universities and research institutes(such as Agile Robots, ReaVis, Orthogonal Tech, Dessight Biomedical, Ruhr Tech, ACXEL, and ReSun Technology with founders from the German Aerospace Center, the University of Cambridge, and the Max Planck Institute, among others). Our past investment experience has made us more confident that these technology entrepreneurs who have emerged from top European universities and research institutes are capable of growing into outstanding technology entrepreneurs and bringing the value of cutting-edge technology to more people. During the trip, we talked about technology and entrepreneurship with local students and entrepreneurs in the United Kingdom, Switzerland, France, and Italy. We also revisited Agile Robots' headquarters in Munich, Germany, after five years. Upon returning to Shanghai, we invited friends of Linear Capital and portfolio companies to have a private discussion about the European market at our office. Later, we published our reflections and thoughts on this trip on Linear Capital's official page.
In May, after three years of online annual meetings, we finally held the Linear Capital Annual Meeting in Shanghai, Rebound 2023, inviting Linear Capital's LP, founders of invested companies, and collaborators over 200 people in person. In terms of project investment, projects of AIGC continued to be sought after. We are optimistic about the prospects and actively engage with projects, but at the same time, we remain cautious about the market's enthusiasm. This month, we announced leading the A+ round of investment in AI image generation technology service provider Tiamat, and we also held the AIGC Tech Event in Hangzhou. In terms of personnel, we announced that Henry Li, former Senior Product Manager Director at LinkedIn (Silicon Valley Headquarters), will serve as a venture partner. Henry's joining will help us actively attract projects and talents in Silicon Valley.
In June and July, Linear Capital's invested company PowerLaw.ai jointly released the PowerLawGLM legal vertical model in collaboration with BigModel.ai. Our invested company Dessight Biomedical, a micro-surgical robot platform, completed a tens of millions Pre-A+ round of financing, with Linear Capital continuing to support as an existing shareholder. Not long after, Dessight Biomedical brought more good news as they announced the completion of the first clinical application of an ophthalmic surgical robot in Asia. During this period, we also announced the exclusive investment in the angel round of EYIMU Technology, a startup focusing on providing digital solutions for farms, and continue to have a positive outlook on the prospects of technology-enabled industrial upgrading.
Meanwhile, the World Artificial Intelligence Conference was held in Shanghai. Many of Linear Capital's invested companies, including Horizon Robotics, Tezign, and SupreMind, participated in activities such as live talk, hosting forums, roundtable discussions, and product launches. In terms of post-investment activities, Linear Capital and invested company Guan Data jointly organized the "ToB Technology Enterprise Operations Management Discussion" which was a achievement showcase and summary of the participation of invested companies in Huawei BLM workshops organized by Linear Academy two years ago.
In August, in terms of projects, follow-on rounds of financing for invested projects were actively carried out. Orthogonal Tech, an intelligent product design tool developer, completed a million Pre-A round of financing with Linear Capital as the lead investor. Previously, our invested project Datablau completed a B1 round of financing with Linear Capital continuing to support as an existing shareholder. At the same time, we also announced that Gritworld Technology, an early-stage investment project, completed a B2 round of financing led by BYD.
In September, discussions and investments in the AIGC direction gradually calmed down. Linear Capital continued to focus on innovative projects in the application layer. We co-organized the "AI+ Vertical Industry Application Implement" event in Shanghai with Microsoft Accelerator, where Microsoft Data & AI solution experts and three founders of Linear Capital's invested companies shared their perspectives on the current application of generative AI technology. September also marked the 9th anniversary of Linear Capital. At the end of the month, we announced that senior technology entrepreneur and former CTO of Dada, Jun Yang, would serve as a venture partner. Jun Yang will assist Linear Capital in discovering entrepreneurial projects, participating in project evaluations, and helping invested companies grow. He has previously been a guest of Linear Academy, sharing his experiences and stories with founders of Linear Capital's invested companies.
In October, Linear Capital held an offline event in Hangzhou titled "From Intelligent Robots to General Intelligent Robots", where we invited Professor Jianwei Zhang, Academician of the German National Academy of Engineering and the Hamburg Academy of Sciences and Humanities, as well as scholars from laboratories at Stanford University, Columbia University, and the Swiss Federal Institute of Technology, to discuss on the current status, challenges, and future development of general intelligent robots with 10 Linear Capital invested companies in the robotics field.
I elaborated on Linear Capital's long-term focus and investment strategy in the direction of general intelligent robots: "Starting about five years ago, we shifted from focusing on data intelligence to the combination of software and hardware, especially from the perspective of integrating cutting-edge technology and artificial intelligence, thinking and trying how to significantly improve efficiency in some core key steps in the industry and construction sectors through machine completion." With the guidance of the concept and the laws of technological evolution and being ahead of the market by 2-3 years, Linear Capital has already invested in some early-stage robotics companies. We will continue to practice its investment concepts and commitments in this field. In addition, we invited Professor Jianwei Zhang and research scholars from university laboratories to share ideas with invested companies at this event, Linear Capital looks forward to continuing to have more in-depth talks and cooperation with industry and university laboratories in the future.
In November, amid a generally cooling market, we continued to maintain optimism and caution, while also raising the requirements for team work and invested companies. Despite approaching the end of the year, our investment progress continues. This month, we led the investment in Kewoke Technology, a manufacturer of alkaline hydrogen production and research composite membranes, in their Pre-A round of financing. We also exclusively invested in Tanda, a non-cement-based, carbon-utilizing inorganic adhesive material development company, in their Pre-A round. Additionally, the project Wonsor, which we led in the angel round, received nearly 100 million RMB in financing, and its domestically produced sensor products have entered leading customers such as BYD. In post-investment service, we initiated the recruitment of Global Young PhD Fellow, inviting global technology entrepreneurs. We will continue to invest to build a platform for learning and communication for young talents domestically and internationally who are interested in or are in the early stages of technology entrepreneurship and want to understand the growth path of China's best technology startups.
In December, news of projects continues. In addition to announcing our lead investment in Yinghua Chenrui, a high-performance modification and application innovation company in biomaterials, with tens of millions of RMB in angel round financing. We are also preparing to announce the financing of other new projects, so stay tuned.
At the same time, we have heard about the progress of several invested projects: Linear's early-stage project Powerlaw.ai announced the completion of nearly 80 million RMB in Pre-B round, with Linear Capital continuing to follow-on invest as an existing shareholder. ReaVis, Linear led angel round project, received investments in two rounds from Hongshan Capital and Xiaomi Ventures. Ling Fan, the founder of Tezign, which Linear led angel round, was selected as a 2023 China New Growth Pioneer by Harvard Business Review. Harbinger Intelligence, Linear led angel round, deployed ultrasound robots in a county hospital in Guoluo, Qinghai Province, using remote medical technology to solve medical challenges. This is what we hope to see in technology investment: technology for good, bringing a better life for more people.
For 2024, we have these plans:
- Continue to excel in investing. It may be the best investment vintage for the next ten years now. The best prices, the highest quality entrepreneurs, and the downturn cycle that exercises entrepreneurs the most. Hardship forges brilliance.
- We also plan to expand the team further, aiming to recruit 5-8 new investment members.
- Focus on the revolutionary impact of new technologies such as AI, robotics, new biotechnology, and new materials on the productivity of many industries, as well as related commercialization opportunities.
- Emphasize "Talk less, work more, make good decisions, and execute it well."
As we bid farewell to the old and welcome the new, we wish everyone a Happy New Year here!
