From Dollar Funds to RMB Funds: A New Paradigm for Tech Investing?

“Whether your reputation gains 0.01 or loses 0.01 each day — ten or twenty years later, it either compounds exponentially or it collapses.” — Su Lin, on how private markets judge people

After 2022, dollar LPs turned collectively cautious on China, and a hundred-billion-dollar fund whose investment committee spanned five time zones spent the overwhelming majority of its energy on exits. In mid-2023, Su Lin stepped out of his position as a cog in that machine and founded, with friends, an RMB fund with a total size in the hundreds of millions — under a billion yuan. Raising in the coldest moment in the market, and investing in the hardest technology. Why did the textbook-correct process of late-stage dollar investing fail to arrive at correct results? What’s the difference between backing scientists and backing internet founders? Why is an A-share listing like a breach suddenly opening in the Great Wall? Why will Chinese bosses not sell their companies under any circumstances? And after Manus, how much further can the red-chip structure go?

In this episode, Raymond — a former investment banker now investing in listed tech — talks with Su Lin, who went from a New York investment bank to a dollar buyout fund, to the world’s largest late-stage growth fund, and on to being an RMB GP. Same generation, same sell-side training. One chose dollars and public markets, the other chose RMB and hard technology, and the two paths meet at close quarters at every stage of fundraising, investing, portfolio management and exit.

What follows is the full conversation, edited and condensed.

1. “I very much like being kept by a company” — from a cog in a hundred-billion-dollar machine to RMB GP

Raymond: I’ve known Su Lin less than a year and my impression is extremely good — okay, I can no longer manage the audience’s expectations. He’s been through a full cycle of dollar investing and now runs his own RMB fund. That crossover is rare. Tell us about the path.

Su Lin: Raymond and I both had investment banking as our first job, and the sell-side habit is fused into daily life — making your counterparty feel good about you. I did two years of banking in New York out of undergrad, then came back to China and joined a dollar buyout fund, based in Shanghai, but my first deal was a pure-dollar leveraged buyout in Singapore. After that I answered the call of the era and founded a company for about a year — the mutual friend through whom I know Raymond was my partner at the time. Then back to the main line of work: two years of growth investing at a dollar fund, then joining what was then the world’s largest late-stage growth fund, from the founding of its China office through to mid-2023, when I formally left. The current fund invests early stage, growth stage and pre-IPO. It’s RMB for now; we may consider dual currency in future.

Raymond: Let me translate that CV: good kid, studied hard, went into banking, stepped out of line for a year to found a company, retreated back into being a good kid — a small cog inside a hundred-billion-dollar fund — and then left that platform to become a GP of an RMB fund. That last step is a big one. You used to fly to New York and London in business class and stay in the best hotels; your life was configured by a hundred-billion-dollar platform. Was there a comedown?

Su Lin: For people not in this business, when they hear you do dollar investing, the first thing they think of is lifestyle. But people actually doing it go numb fast — Raymond, you stuck it out eight years in banking, so obviously you were desensitized within six months. The intensity at a large platform is extreme: the investment committee spans five time zones, running from Asia and Europe through to New York and Silicon Valley, and you’re permanently in a high-intensity state. So what I thought about more was what kind of investing I actually wanted to do.

The real reason is that the era opened a window. After 2022, with Russia-Ukraine plus the US-China conflict, dollar LPs rebalanced on China, and global investment committees deliberated repeatedly over new investments in China. Chinese technology innovation has come in waves since 2015, and for an investor not yet 40 who very much wants to deploy, you can’t let the fact that your LPs are rebalancing mean you spend the overwhelming majority of your energy on exits. Endowments and state pension funds were all hesitating — the Middle East and Singapore, by contrast, have stayed quite positive on China these past few years. We left precisely because we wanted to stay on the front line, continuously deploying.

Raymond: Some background: after the sequence of events in 2021 — Didi, Ant, the education-sector overhaul — Chinese VC’s performance was, frankly, not great. Among funds established between 2015 and 2018, very few got DPI above one. Chinese VC as an asset class had run out of room to fool anyone, Chinese or American. As for me being desensitized within six months — no. I loved the big platforms of the dollar world, with ample budgets; I very much like the feeling of being kept by a company. Later I joined a private Chinese company and then founded my own, budgets kept shrinking, and I economize daily. My Marco Polo Platinum card has been expired for ten years. I’d very much like to be Platinum again; I just don’t have the money to be that person anymore.

2. “The correct process didn’t lead to the correct result” — filigree in dollars, supply-chain jigsaws in RMB

Raymond: Mechanically, what differences were hardest to adjust to?

Su Lin: First, decision-making. Decisions at a large global fund are highly structural: a handful of founding partners you can count on one hand sit at the top, and it cascades down to regions and deal teams. You’ve essentially finished your conversations with the founder, and there are still four or five layers of decision chain above you to keep working — inside a large institution you periodically feel like an internal financial advisor. Now there are a handful of us, single digits, and a healthy debate among partners is enough to reach a decision.

Second, focus. Late-stage dollar investing is genuinely textbook: the investment committee really will flip to the model page and challenge your assumptions — is that growth rate the founder’s number with a 20% haircut, or did you build it up layer by layer from industry growth, market share in five years and average selling price? You can pay for McKinsey, Bain or BCG, but your own work genuinely gets read. The most painful thing for a newly joined investment associate is earnings adjustment, earnings normalization — restoring the numbers management gives you into numbers that reflect real operations. That discussion alone takes weeks. RMB investing isn’t ticking off five to ten checklist items one by one; it seizes on the two things you care about most: the structural window the next few years of policy create, and whether the team fits. RMB capital encourages earlier-stage tech innovation, and plenty of already-listed companies still have no substantive revenue or profit, so the standards of judgement are completely different.

Raymond: That machine got built because people believed a correct process would produce a correct result.

Su Lin: Right. Late-stage dollar investing, whether buyout or growth fund, wants the correct process to lead to the correct result.

Raymond: But apparently the past few years haven’t worked that way. However good a model you built on used cars back then — and how many earnings adjustments does that market require daily — it ultimately can’t lead to a correct result. So late-stage dollars are like filigree work, while on the RMB side you have no numbers anyway, no earnings so no adjustment needed, and it’s more about calling the broad direction and picking the sector?

Su Lin: Our stage has shifted forward overall, using what a lot of podcasts have been calling the barbell strategy. As a GP you have to think about total cash returns; you can’t only look at paper multiples — DPI is simply, out of the 100 in cash the LP gave you, how much cash you return. So on one end we invest in frontier upstream supply-chain materials, components and systems innovation, where many projects have just gone from technology to product and haven’t commercialized. On the other end we deliberately invest in very good late-stage projects — unlisted chain-leader companies, the anchor firms in a supply chain, pre-IPO, valued in the several billions to tens of billions of yuan. The chain leader can tell the early-stage companies what the midstream and downstream customers actually want. LPs like it too: the return multiple on a pre-IPO project can be calculated, and frontier technology gives you upside. But what we value most is the two ends helping each other.

Raymond: When you invest pre-IPO, how do you think about DPI?

Su Lin: With these companies, the greater weight actually sits on their value to the early-stage chain leaders we’ve backed. Whether the company itself is worth investing in is the same as what I learned in dollars, and the same as public-market investing — don’t tell me about the dream, I’m looking at your curve over the past three to five years: revenue growth, revenue quality, changes in margin. IPO delivering DPI relatively quickly is an outcome; strategic value matters more.

Raymond: You used to invest in soft things — fintech, cross-border e-commerce, large platforms, the Pinduoduo and ByteDance types I discussed in my last two episodes. Now you invest in hard things, where the knowledge threshold on materials, patents and technical architecture is far higher. How did you adapt to that crossover?

Su Lin: Early in a career everyone faces the generalist-versus-specialist choice, and I’d say I chose the former half actively, half passively. Late-stage dollar checks start at one or two hundred million dollars, some deals at five hundred million to a billion, so you have to invest in industries with a big enough ceiling — consumer platforms, e-commerce with enormous GMV. Before the CHIPS Act and the China-ADR trust crisis, the path to a US listing was clear, and China’s very best second- and third-generation VCs also emerged before the 2021 peak, capturing the mobile-internet dividend. That period trains your ability to learn a sector fast. But hard technology requires you to understand the upstream and downstream of a supply chain extremely well: the companies we invest in can’t possibly be at the very top of the chain, they’re always upper-middle or lower-middle. Whether we can invest depends heavily on downstream end customers — the Apple-chain leaders, for instance — and their positioning over the next three to five years, taking information from the supply chain to judge direction. Liquid cooling, for example, is used across the Nvidia chain, data centers, embodied intelligence, autos and consumer electronics. Where dollars focused on whether the market was big enough and the trend right, now you have to spend far more energy marinating in the supply chain.

Raymond: My version is going with the flow. In my first year the bulk of my work was the Big Four banks — after the financial crisis every financial institution was recapitalizing, and there was a huge amount of work around the AIA listing. Later I did a lot of Sequoia-portfolio high-growth deals, plus a great deal of real estate.

Su Lin: You’ve straddled the two most specialized areas there are. I did banking in New York, and colleagues there who picked FIG did FIG for life; pick real estate and you only do real estate, from banking through to the buy side.

Raymond: The Hong Kong team was small, so juniors could take more senior responsibility. The real turning point was working on the JD.com deal in 2012. JD’s competitor at the time was Vancl — the pitch had to spell out the differences from Vancl, their listing timetables conflicted, and we also had to write a non-conflict. It looks funny now, but that’s how it was. From JD onward I moved steadily toward tech, covering all of Chinese TMT. First, there were enough deals to keep me fed; second, it was fun — my personality isn’t well suited to dealing with real-estate and coal-mine bosses. I’m somewhat precious; I can only wait on internet bosses. When I entered the industry, the sector with the most TMT deals was actually Taiwanese semiconductors, and going on business trips to Hsinchu Science Park was like visiting a graveyard, nobody around. Completely different now. Today we’ve made analogous choices: I do public-market tech and you do private-market tech, except you’re RMB and I’m dollars.

3. “If you want to invest at the freezing point, you can only raise at the freezing point” — family-office money and meetings in Hefei

Raymond: On fundraising, let me first lay down a layer of cultural difference. Many of my listeners work in the dollar system — by which I mean all offshore capital; doing banking in Hong Kong is fundamentally the dollar system too. The RMB system is an entirely different ecosystem: the capital comes from local state assets, local government financing vehicles and state-owned enterprises. The most famous is Hefei, which cultivated chain leaders like BOE and added who knows how much to Hefei’s GDP. One meeting from my banking days left a strong impression: a large A-share listed company wanted to acquire a US semiconductor chip company, and I took him to California to negotiate as the US investment bank. At the same time he needed to raise a consortium domestically, so I had to go and hold meetings with several municipal state-asset institutions — which meant writing two enormous, completely different memos. I found it hard to sustain Chinese throughout; I’d genuinely get stuck halfway. My daily reporting was all written in English, and I had to write extremely long documents in Word — and crucially, there was no ChatGPT then. How do your RMB LPs today differ from the dollar LPs at your former platform?

Su Lin: Let me caveat that at the dollar institution I had a cog’s-eye view: presenting deals to LPs as part of the deal team, taking them to meet portfolio CEOs. When that pan-Asian growth fund was first established I also sat, as a team member, through LPs’ diligence interviews of a new GP. Late-stage dollar LPs are American endowments, pensions and universities, plus Singaporean and Middle Eastern sovereign funds. In conversation you find the other side speaks exactly the same language as you — banking, the Big Four, everyone has had identical training. The AGM, the annual partners’ meeting, is a standard format: cover the fund’s status, cover DPI, cover exits. Proceduralized, with nothing to surprise you.

Ours is now completely different. Briefly: our fund’s total size is in the hundreds of millions, under a billion yuan; the first fund is RMB only, we’re a bit over two years in, and we deploy at a fairly high frequency. For a first fund, raising from mainstream RMB LPs — local governments, insurers — is basically impossible; they have hard thresholds like assets under management. So what we chose was money skewed toward family offices and market-oriented capital, and we deliberately sought LPs who value the training we’ve had: look at fundamentals, relatively proceduralized diligence. It’s a two-way selection.

Raymond: I run a fund myself, so I understand vintage a little. I also wanted to come out and raise at the market’s lowest point, and then found raising extremely difficult — at the freezing point nobody wants to give you money. I later realized you should raise at the top. Was raising your first fund in the coldest part of the market, in 2023, hard?

Su Lin: You’re absolutely right, everyone wants to raise when it’s hottest. But our driver was needing to invest at the freezing point — we had no money in hand, and if you want to invest at the freezing point, then you can only raise at the freezing point. Back then the 2024 public-market rally hadn’t arrived, the DeepSeek moment of February 2025 hadn’t happened, and the market was very cold. But we’d lived through both the best and coldest states of the dollar market, so we’re sensitive to picking vintages. Running a fund is also entrepreneurship, and coming out for the first time, we went to the closest family and friends, to people who had known our team long enough to trust us. We did no real go-to-market, we set expectations extremely low, and it was more about starting as soon as possible. All the big funds started from something very small, and we hope to be worthy of that trust.

4. “Killing a good one by mistake doesn’t matter” — a scientist’s jigsaw, and a reputation gaining or losing 0.01 a day

Raymond: What about portfolio management? Dollar-fund portfolio management sounds like a process of making the accounting look better.

Su Lin: Late-stage dollar portfolio work skews toward process and reporting: large volumes of material to LPs each quarter, and valuation is a sensitive subject. From 2021 to 2023, when the market was bad, valuations at large institutions were only set after third-party auditors had spoken each quarter with management and with the investment team; some smaller institutions simplified it, leaving positions at cost or at the latest round’s price indefinitely. Day to day it’s taking new financial data to update the model and reporting variances against the investment thesis to the investment committee.

Raymond: A tangent: private credit has been hot in the US lately. I think a private credit arm under Carlyle or KKR bought some SaaS companies and the valuations shifted enormously; and there was an article about two PE giants investing in the same SaaS company where the valuations the two sides put on it differed by 50%. Ultimately it’s the question of how you value a portfolio company. You’ve covered two kinds of portfolio work: buyout is “I’ve already taken this child in, he’s entirely mine, I can beat him or scold him as I please” — break the company up, cut staff, change the CEO, all fine. Growth stage, though: Chinese founders have an extremely strong need for control, always have new ideas, always need to go do food delivery as well; you just provide the money.

Su Lin: You have to ask him for numbers, and you also have to maintain the relationship well before he’s willing to give you the data on time. On the RMB side we take minority stakes, sitting in the passenger seat or the back seat. For a good deal you want into, what gets you there isn’t money — the founder lets you in because he wants you to help the company. These past two years I’ve genuinely been doing very concrete things for companies: introducing potential customers, sitting alongside them negotiating partnership contracts. The technical founders we back are, on valuation and revenue, small ants, and across the table is a downstream state-owned enterprise or listed giant. The giant is willing to support you, and what it wants is the intellectual property and returns from joint development — while this scientist’s greatest value is precisely the technology. Do you take the partnership? Will binding yourself to one particular giant lock in the ceiling on your company’s value as of today? Commercial negotiation, internal decision processes, government affairs — scientists aren’t good at these. We have somewhat more experience and somewhat more friends, and everyone who can be our LP is the family office of an industry leader, with plenty of experience to share.

Raymond: In my imagination that scientist might be a fifty- or sixty-year-old academician who, never mind managing government relations, doesn’t even want to manage his relationships with students — he genuinely doesn’t want to supervise that PhD. Ask him to do very BD-like things, possibly involving drinking, and he won’t. So first, in choosing a founder you have to judge whether he’s commercial enough; second, why would an academician choose you as that BD person? This is almost not an investment relationship, it’s a recruitment relationship, an alliance — he’s assembling his jigsaw too.

Su Lin: Scientist founders could be a whole separate episode. We have one deal where the controlling person is a scientist at near-academician level, and he’s very clear about what he’s good at; he positions himself as chief scientist, chairman at most, and we worked with his mentor to help him find a CEO. The other type is the young scientist whose direct mentor is an academician, who is around 30, doesn’t want the route of academic titles and paper publishing, and comes out proactively to commercialize research results as CEO himself. What we like most is looking at which person your jigsaw is missing — missing government affairs, missing an RMB backer who understands the industry and the policy — we bring them in and see whether there’s chemistry. Deals with a complete jigsaw have plenty of institutions chasing them, and if the valuation is reasonable we’ll invest too. But the technical founders we back generally need pieces filled in — which means deeper binding, more influence and more handholds. Also, investors aren’t that expert in the specific technology, but we have one advantage: we’ve seen enough failures. Equity structure, option design, which people to find at which stage — we have endless horror stories to tell a first-time founder.

Raymond: Have you looked at SenseTime?

Su Lin: SenseTime was a portfolio company of my previous fund.

Raymond: What you just described is exactly the relationship between Tang Xiao’ou and Xu Li: with only Professor Tang, you have to find a Xu Li; with a Xu Li you don’t necessarily need a Professor Tang, but with a Professor Tang you definitely need a Xu Li.

Su Lin: Right, exactly.

Raymond: I have indeed walked a few too many dark roads. A story: I ran into a former Morgan Stanley friend in Hong Kong the other day, and we both brought up a certain property company and started badmouthing its boss together — the three of us had all covered that client at different points. That company did every single thing it was possible to do wrong, ending with issuing an enormous dollar bond and then not repaying it. Very ugly. But all of it had provenance: in the earlier years we followed this boss around, watched him do things one through eight, and thought, how can this person be so frightening. At the start it’s “Chairman Zhang, Chairman Li, we’re ringing the bell in New York tomorrow,” and you can’t see the real character. Then specific events occur, a point off, another point off. We’re a few years older and have seen more ghosts, and at the time we already felt this person must never be touched in this lifetime. What happened later all had provenance.

Su Lin: This is the biggest difference between early and late stage. Late stage has historical data, growth looks good, you have a natural bias in favor of the founder, and small matters like character get down-weighted — show me the numbers. In early-stage deals, differences between people cause 99% of a project’s success or failure. Fortunately China has a surplus of talent in science, engineering, hard technology and supply chains, so we have the luxury of filtering. This is an industry where reputation and credibility compound: whether you gain 0.01 or lose 0.01 each day, ten or twenty years later it either grows exponentially or it collapses. When looking at a deal, how people who’ve previously worked with the founder assess him is a hard metric; being outstanding at the actual job is only the most basic box to tick.

Raymond: I later concluded that this is, first, hard, and second, something I don’t want to do. Making a character judgement about someone in a short window is almost impossible. I’m good at working relationships but don’t enjoy working relationships, and having formed a poor judgement of someone and still having to chase after them is very tiresome.

Su Lin: It’s hard, I agree. There was a book that got a lot of attention last year, What I Learned About Investing from Darwin — the author did private markets at Warburg Pincus in India and the US and now does public markets — and one big thing I took from it is that subtraction alone can substantially raise your hit rate. Don’t agonize over “I have to render a good-or-bad verdict on this person.” Spend the energy on what kind of person you don’t want to back: get hearsay from his former colleagues, teachers and students, and we don’t look at deals where we can’t get feedback. Some points our team dislikes intensely may be irrelevant to another GP, and that’s fine — you don’t need to agonize over whether you’ll kill a good one by mistake. Killing a good one by mistake doesn’t matter; the act of elimination itself raises your hit rate.

Raymond: Exactly, except I don’t even want to do the elimination. Elimination means looking at 100 to pick 3 — and in my life I simply don’t want to interact with those 97 people, which is why I went into public markets. In public markets, my friend is Pony Ma, maybe plus Wang Ning, and I don’t need any other friends. Isn’t that what value investors say: Yao Ming standing in a room, you see him instantly. With a Yao Ming available, why burn time on the other 97? After all these years in banking I’ve seen every kind of monster, and I have some understanding of the floor of human nature — being forced to tie myself to them would make me very uncomfortable. Pony Ma I could absolutely tolerate; even Jack Ma I could tolerate.

Su Lin: I understand. On this point, I understand.

5. “Once you’re through, you’re through” — a breach in the Great Wall, Chinese bosses who won’t do M&A, and secondaries funds

Raymond: On exits. Last cycle, the wave of Chinese companies listing in the US and Hong Kong from 2015 to 2018 — in 2015 many companies unwound their structures wanting to return to the A-share market, failed to unwind, then the RMB market crashed and everyone went back offshore — with Didi’s 2021 listing as the last high point of offshore exits. After that, the exit paths of the Chinese companies backed by dollar funds like your former employer visibly jammed: a US IPO faces US resistance and possibly resistance from the China Securities Regulatory Commission too; Hong Kong was thought to be merely short of liquidity, and now red chips are being restricted as well. As for A-shares, Zhuang Minghao used a metaphor on my episode with him: an A-share listing is like a breach suddenly opening in the Great Wall — the Xiongnu poke along the wall, and wherever it gives way they get through. But once you’re through, you’re through; if you don’t get through, that breach may never appear again. The uncertainty is enormous. Pre-IPO companies are one thing, but for those companies your academicians have just started, the exit path is longer. How do you see it?

Su Lin: An observation first: constraints actually make the work simpler — Chinese people are best at maximizing scores on a constrained exam. Today’s environment forces every VC to think through the exit on day one of investing, where previously only PE would discuss exits fully at the deal-approval meeting. The qualified-IPO clause in the legal documents specifies the exchange, so on day one you have to ask a first-time founder where he plans to list, and whether the company is registered in Shenzhen or Shanghai, or Hong Kong, Dubai or Singapore.

Raymond: Can founders answer questions like that?

Su Lin: Today’s founders have AI tools. You say “red chip,” he doesn’t know it, and half a minute later he’s looked it up.

Raymond: Completely un-lookupable. This is industry lore; AI does not have this data source, okay.

Su Lin: Whether they’re in their early twenties or in their forties and fifties out of a traditional industry, they read WeChat accounts and have baseline knowledge of capital markets, and it becomes a two-way selection. We’re a pure RMB fund, so our first preference is for portfolio companies to list on A-shares. In Hong Kong there’s now a lot of A-plus-H, and even red-chip companies who’d rather unwind the structure and list directly. A dual-currency fund ten years ago would certainly have preferred dollars — bigger pool, and that era’s entrepreneurial heroes were all ringing bells on Nasdaq and the NYSE. The last two or three years have completely reversed it. And the sector determines the channel: if you’re founding a chip company today, by default you only consider A-shares or Hong Kong. The young scientists we back had their direction determined long ago by ten to thirty years of academic and work experience, so they don’t actually agonize about it.

Raymond: Unlike internet startups, which pivot at the drop of a hat.

Su Lin: Right, a company does something different in each of its A, B, C and D rounds. Which is why dollar internet investing has another common clause, or gentleman’s agreement: what I picked was Raymond the person, so if this venture fails, I get priority subscription in your next one, or you roll the money I lost into it. In RMB that’s harder.

Raymond: This whole large block of technology assets — M&A sounds like it should be a big possibility. Are there many M&A opportunities in RMB?

Su Lin: In trend terms, policy encourages it and industry needs it, so more and more; but today it isn’t 80/20, it’s that 90% of deals are under a hundred million to a billion yuan. To do a cash or stock-plus-cash acquisition above a billion, what level does the acquirer’s market cap have to be? The scale of the overwhelming majority of Chinese listed companies can’t support that — and I’ve already assumed by default that the exit relies on a listed company doing the buying. When we were in banking everyone most wanted to get into TMT, M&A, financial sponsors, because the US market serving private equity specifically is extremely segmented: countless middle-market funds whose websites say outright, “we focus on companies with EBITDA of $100 to $500 million.” Financial talent is more oversupplied there than anywhere in the world. China’s market for selling to a financial sponsor hasn’t developed yet, but the trend is shifting: Liu Xiaodan, who came out of the brokerage world to run an M&A fund at Chenyi Investment, which Daniel Zhang, Alibaba’s former CEO, has also joined. Regulators and practitioners both want exits to go from single-path IPO dependence to something diversified, and the state is also encouraging investing early and small, and forming large secondaries funds.

Raymond: Is a secondaries fund an exit route for taking things off people’s hands?

Su Lin: A secondaries fund takes over LP interests. When a portfolio company can neither be sold to PE nor listed, the VC has to hold the asset for many years, the fund reaches the end of its term, and DPI has to be considered — at which point a secondaries fund takes the old LPs’ interests at a discount, helping them exit in cash and helping the fund achieve part of its DPI. The root cause is still that Chinese exits depend too heavily on IPOs. Our own approach is diversified: pre-IPO deals go the listing route, while for early-stage deals we sell part of the old shares in a later round to recover principal, protecting capital safety at the DPI level first. The ones we’re very bullish on we can accompany to a listing; otherwise, if you invested at a single-digit-hundreds-of-millions valuation, you can consider exiting when the company reaches 10 or 15 billion yuan. We may miss it going from 10 billion to 100 billion — that’s fine.

Raymond: Let me add a point I don’t entirely agree with: besides the small scale of listed companies, China also has a cultural problem. Japan has no first-generation founders left at all; every other day it’s “I’m 89 and retiring, the family business absolutely must be sold, who’ll take it on, name your price.” China is the opposite. Take Richard Liu of the new generation: I can still go do food delivery. Nobody stops, and everyone is watching what’s in someone else’s bowl — you do e-commerce, I can do e-commerce; you do large models, I can do large models. Where the intellectual property is very new and small and the price isn’t high, someone might buy it; but the moment it’s a bit expensive, they build it themselves. Demographics plus culture compound, and the result is that it won’t do M&A. Chinese entrepreneurs may have to age further before this problem can possibly be solved.

Su Lin: So what do you imagine happens after they get old? Are you hoping founders born in the 1990s and 2000s don’t think this way, or that second-generation heirs and professional managers, once they take over, have less deep emotional binding to the business?

Raymond: Let me think about how to avoid naming the company with high emotional intelligence. Imagine a very large listed tech company, the boss in his forties or fifties, a super-alpha male who always feels he can still build many new things. When he ages and steps back, professional managers appear: shut down or sell peripheral businesses, focus on the core — he always has one business with a moat in this enormous Chinese market that can hold for ten or twenty years. Eventually it becomes a stable target well suited to a buyout. The American example is Dell: does Dell have any growth upside? No. But it survived at a smaller scale in a more sustainable way. Tech companies often just disappear, but some infrastructure-type things persist, and those have buyout potential.

Su Lin: There’s a chance. Though honestly, we’re the same generation — do you want to retire? I don’t want to retire yet, so why would they? The bosses you’re describing are all founders of mobile-internet platforms, born in the late 1970s, with a very long runway of years left to strive, and their businesses can expand infinitely. Younger ones like Dreame are even more extreme — several hundred business units, all kinds of new products, a state of infinite war. But within smart manufacturing and supply chains, I actually hope for more consolidation in future. We’ve invested in one company where, in the highest-precision category, only it and one Japanese company in the world can do it — but the entire global category is only 10 billion yuan. China has countless companies like this: decent margins, neither needing nor able to expand infinitely. These are excellent M&A targets — sell to PE, get consolidated upstream or downstream, or diversify products so the downstream opens up their ceiling and they list themselves.

Raymond: In manufacturing and consumer I believe it: DJI buying Insta360 isn’t outlandish, and Anker buying Insta360 isn’t outlandish either — Procter & Gamble-style product-brand logic.

Su Lin: Restaurants all end up as large groups too; Anta is already doing exactly this today.

Raymond: Consumer and manufacturing have no shortage of examples. Only technology is hard — technology’s problem is that in the next round it may not be you. The market structure is different.

6. “An hour over tea and it’s signed” — red-chip panic and the Manus mystery

Raymond: Another very prominent exit issue lately: the red-chip structure. Explain it first?

Su Lin: Simplified: Raymond and I found a company in China, with team, business and supply chain all in China, but we want to take money from a dollar fund — so we set up an offshore financing entity in the Cayman Islands or BVI, and control the domestic operating entity by contract. That’s the red chip and the VIE, one containing the other. The dollar fund’s own legal entity is also in Cayman or BVI, everyone does equity transactions at the offshore level, and finally the offshore company gets listed in Hong Kong or the US. What has happened recently is that regulators no longer encourage companies with red-chip structures to list in Hong Kong. My own practitioner’s sense is that the main trigger was Manus: everyone has founded companies this way for the past twenty or thirty years, but Manus’s absolute figure may have startled regulators — a very short founding history, young founders, and AI, the hottest topic in US-China confrontation. On something where regulators want a voice, the transaction simply happened. There are two concerns: first, that China’s finest assets are lost entirely without their knowledge, and the founding team can then go straight to work at foreign high-tech companies they see as more threatening to China; second, tax.

Raymond: Expand on tax. In an RMB structure, I invest in an angel deal at a 10 million valuation, and three months later it’s 20 million — a capital increase involves no tax, since there’s no realized gain. But selling old shares means going to the tax bureau and paying tax first.

Su Lin: And the tax bureau matters more than the market regulator: you do the tax confirmation and complete payment before you can do the registration change. There’s a knock-on effect too — in the same company, Raymond and Su Lin registered an old-share transfer at a 100 million valuation a month ago, and then Alex and Brian’s transaction a month later comes in at 500 million; the tax bureau will come back and ask, was that 100 million of yours too low? The whole arc of a company’s development is visible at the point of tax and registration changes.

Raymond: Doing dollar investing we never paid this tax. Now I’m wondering whether we underpaid.

Su Lin: Of course not. Dollar transactions happen at the Cayman or BVI level, and old-share transfers often don’t directly transfer the equity in the investor’s hands — you put another layer of structure above it. Raymond first sets up entity A, and entity A is the shareholder of the target company; when you want to exit, you transact the ownership of entity A directly, selling 30% or 100%, which is equivalent to completing an old-share transfer, and you don’t even need to notify the target company. It can be the two of us talking it through over an hour of tea, signing an agreement, each side’s lawyers confirming title, and it’s done. Under an RMB structure there’s the magnificent Qichacha, the public corporate-registry lookup; the equity chain is ultimately traceable and publicly transparent, every transfer has a record, and appreciation in the underlying asset means tax. Two completely different worlds.

Raymond: I hadn’t realized the implications ran that far. Manus is certainly an important precedent, because it can’t be allowed to become a bad precedent. It’s actually enormously encouraging for China’s tech industry — something built by an ordinary young person winning recognition from a very important international company in such a short window is a shot in the arm. What regulators least want to damage right now is confidence, and confidence is the most valuable thing — past economic experience has proven that. But they also don’t want every company from here on to go and set up in Singapore. Honestly, looking at Manus again today, it may not be such an important company that it had to be acquired — the ball is now in the regulators’ court on how they signal. One more point: the first VIE was set up by Sina in 2000, so there’s 25 or 26 years of history; every Chinese internet company that took dollar VC money over the past twenty or thirty years, ByteDance included, sits inside this structure, and the implications for the existing stock are enormous. How do you read the direction from here — will it go as far as red chips having to be completely unwound?

Su Lin: I happened to run into a US-firm lawyer practicing in Hong Kong yesterday, and they’re now acutely short of IPO lawyers — there are several hundred companies queuing in Hong Kong, and the red-chip development only happened two or three weeks ago, so the overwhelming majority of companies that took dollars and reached this stage are discussing at board and shareholder level whether to unwind. All they can do is proceed and watch. The two regulatory concerns I mentioned — strategic assets lost without their knowledge, and tax — won’t diminish in importance in the foreseeable future, so unwinding red chips may be something many companies have no choice but to do. But I hope there’s a more moderate approach: a Hong Kong listing already requires CSRC permission, so there’s already an extra layer of review; could you not unwind the red chip, and instead add a further procedure when a transaction like an acquisition occurs? I’m not a structuring expert; I just hope both investment institutions and founders can keep their entrepreneurial enthusiasm.

Raymond: Every lawyer I’ve spoken to has a different view, and there’s a lot of rumor going around. Regulation hasn’t changed materially so far, and IPOs in process can only keep moving forward. The more realistic compromise I can think of is to draw the line by industry: look at the 15th Five-Year Plan for which industries the state cares most about and the US guards most heavily, and require more there; loosen it for the more consumer-oriented ones.

Su Lin: The consumer-oriented ones — those are all the companies you invest in, aren’t they. On hard technology we don’t agonize: RMB fund, it’s simply a question of the A-share listing timetable.

Raymond: Once the Manus case concludes I want to have you back, ideally with a lawyer who isn’t on the deal, so the three of us have no conflicting interests and can gossip freely. I recorded a Manus episode earlier where the guest, Frank, wasn’t a Manus investor, so he dared to comment; every actual investor I asked found it too sensitive and wouldn’t speak.

7. “Absolute number one means nobody can choke you” — will you run a dollar fund again?

Raymond: Last question. Your first half was dollar funds, and you’ve now got RMB going. Before the red-chip issue arose, the Hong Kong channel was getting smoother, and some Chinese VCs have recently raised fairly large dollar funds, which amounts to global investors re-examining Chinese technology. Will you run a dollar fund again?

Su Lin: Not at all opposed; there should be an opportunity in 2026, and we can start with some dollar transactions on individual deals. First, more and more portfolio companies need to go global — they’re already excellent domestically, but the bigger market is worldwide. Second, some excellent companies operate domestically and offshore simultaneously from day one, with localized teams for the offshore business, where the number-one founder may be an ethnic Chinese serving as chairman; to cope with US-China market restrictions, or to satisfy EU ESG requirements, they set up a dedicated entity for the European and American markets. We’ve seen quite a lot of that over the past two years. My own dollar experience is the longer part of my career anyway, so it follows naturally.

And we don’t want to be perceived as a fund that only invests in import substitution. China’s biggest structural opportunity is, frankly, the accumulation of several generations — our parents’ generation, their parents’ generation — which has finally allowed China to produce the world’s most advanced companies in this many industries. What we want to invest in are global companies, not chokepoint-substitution companies that are only excellent within China. They have a chance to become, like CATL, the absolute number one globally in a niche — absolute number one means nobody can choke you, stand alone, on its own, sustainable without needing anyone else. Very ironically, Trump took office saying he’d decouple, and in 2025 China’s trade surplus hit another all-time record.

Raymond: I’ve never thought of you as an import-substitution fund. My framework is: China is the only country in the world that literally has every kind of company across an entire industrial chain. The core is that the market is big enough to let companies in specific niches take root; chain leaders and ecosystem companies are all in China, and personnel mobility, upstream-downstream procurement relationships plus market scale let a lot of companies in odd corners survive. “Survive” doesn’t sound like a good word, but it’s extremely important — some Japanese chemicals firms, some German auto-parts firms, didn’t have a big enough home market and had to export aggressively, and when the market changed those companies gradually disappeared. China happens to have both an enormous market and enormous supply, too many engineers, and Chinese people compete ferociously. If I ever get rich, I’ll hand my money to you to manage — thank you for helping me find the future of Chinese technology.

Su Lin: And I hope Raymond keeps finding me the Yao Mings in public markets, finding entrepreneurs like Pony Ma and Jack Ma.

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