Fundraising, Investment, Post-investment Management, Exit, Bye
At half past six in the morning, the smoke from the first incense stick at Lingyin Temple has not yet fully dissipated.
Several investors just inserted their incense sticks into the incense burner, then turned around and walked to the merit box. The monks in the temple could hardly imagine that this group of “devotees” who have come recently do not pray for romantic fate or admission to higher education, and their wishes are exceptionally unified: the “comprehensive assessment and consultation” will be smoothly passed.
These are partners from several institutions that are queuing for record-filing. What they are praying for is a document that is still stuck in the association’s system and has not been approved for a long time.
Since June this year, practitioners in Hangzhou and Shanghai have been spreading rumors privately that the “record-filing fortune slips” at Jingshan Temple and Lingyin Temple have become increasingly effective. Jokes aside, there is real anxiety behind them: some people, still feeling uneasy after praying, turn to check the Chinese almanac to see if the day they submitted the materials is “suitable for going out and signing contracts”; others wrap the incense ash in small bags and tuck them into the drawers of the compliance team, saying it will “bless the system”. An investor joked at a dinner party that the private equity industry’s jargon has been upgraded from “raising, investing, managing and exiting” to “raising, investing, managing, exiting and worshipping”, a one-stop service that none of the five links can be missing.
Behind the jokes is the real feeling of many people: this year’s record-filing is indeed more difficult than in previous years.
The approval curve is steeper than the K-line
Numbers are more intuitive than metaphysics.
Official data shows that in August, there were only 5 newly registered private equity and venture capital fund managers that completed product record-filing; 16 in July and 12 in June. Back in August 2022, this number was 74.
Looking at the longer term, this curve has been trending downward in recent years.
In 2022, 1,280 managers were registered throughout the year, with 5,395 newly filed venture capital funds, exceeding a scale of 200 billion yuan.
In May 2023, the new version of the “Administrative Measures for the Registration and Filing of Private Equity Investment Funds” came into effect, clearly requiring managers to continuously meet the threshold of paid-in capital of no less than 10 million yuan, and putting forward higher requirements for the professional background and working years of shareholders, actual controllers and senior executives.
As soon as the measures were introduced, the approval rate dropped immediately — only 316 private equity fund managers were newly registered throughout the year, a year-on-year decrease of nearly 60%; 7,417 new funds were filed, a year-on-year decrease of about 15%.
The industry calls this period the era of “strict entry”, with multiple rounds of feedback becoming the standard configuration. Any unaligned item, such as the inability to verify the capital contribution capacity, senior executive resume, or office address, may be sent back for supplementary materials. Some practitioners tease that this process is more troublesome than applying for a US visa.
The real turning point was Document No. 54 issued in June this year.
The most critical sentence in the document is: newly established private equity fund institutions must first pass the “comprehensive assessment and consultation” of the provincial financial regulatory department and the securities regulatory bureau before they can go through industrial and commercial registration and subsequent record-filing. Moreover, this review is “strictly prohibited from being delegated” to lower-level local governments.
In other words, in the past, the process was “get the business license first, then register with the association”, but now it is “pass the provincial level review first, then talk about other procedures”.
An investor who is queuing for review sighed privately: “The primary market has heated up this year, many friends around me are eager to try, resigned and want to set up their own fund to do big things, but they are stuck at the license step. The qualification that was approved smoothly last year has been questioned repeatedly this year.” He said bluntly that being required to constantly supplement materials is the norm, and the waiting often lasts for more than half a year. “The team is under great mental pressure, the company is operating at a loss, the agreed LP cannot fulfill the capital contribution, and the valuation of the target project we favored has risen, we can only be anxious with no way out.”
Some practitioners hold different views. A private equity lawyer said bluntly in his interpretation article that most of the various “collapse theories” circulating on WeChat Moments these days are creating unnecessary anxiety. “The industry has already been jittery enough in recent years, there is no need to scare everyone anymore.”
VCs Need to “Break Through” the Consultation Barrier
Let’s first look back at the past situation.
In the past decade, there was a time gap between “registering the company first and then registering with the association”, which the industry called the “naked operation period”.
Many people deliberately took advantage of this loophole: they set up shell companies with names containing “private equity fund” or “venture capital fund”, with no intention of carrying out actual business, but purely hoarded them as “shell resources” for resale.
Even worse, some people used the private equity name to run capital pools, claiming to make equity investments, but in fact they made disguised loans and guaranteed both principal and returns, and some even directly became channels for illegal fundraising.
Regulatory data shows that from 2023 to the first quarter of 2026, a total of 1,805 managers have been taken administrative regulatory measures, 97 have been given administrative penalties, and 86 clues have been transferred to the public security organs; the Asset Management Association of China has deregistered 5,444 non-compliant managers during the same period.
Shell institutions, lost-contact institutions, and institutions with no actual operations once accounted for more than 30% of the total stock. That means for every three institutions hanging the private equity sign, one is actually a “fake shell company”.
In January this year, the China Securities Regulatory Commission issued the “heaviest fine in history” in the private equity sector: Ruifengda and 8 related private equity institutions were fined and confiscated a total of more than 41 million yuan, and its actual controller Sun Wei was banned from the market for life. This private equity firm, which once managed a scale of 2 to 5 billion yuan, raised funds frantically through false publicity, falsified net value curves, and private agreements that guaranteed principal and returns. The funds were layered into junk stocks on the New Third Board, and the actual controller cashed out and ran away. By the time investors realized what had happened, the office had already been emptied.
A law firm explained this logic very clearly: in the past, many institutions took advantage of the arbitrage path of “first complete industrial and commercial registration with the words ‘private equity fund’ in the name, then complete AMAC record-filing”, or registered shell companies in different places to avoid substantive review.
Document No. 54 completely cuts off this path from the source.
Entities whose names contain the words “private equity fund” or “venture capital fund” are not allowed to be registered at all without the consent of the securities regulatory agency and the provincial financial regulatory department, and the pre-interception by the market regulatory authority has officially been put into operation.
The comprehensive assessment and consultation system did not emerge out of nowhere. Shenzhen, Zhejiang and other regions have previously piloted similar practices at the local level. Document No. 54 upgrades the local experience to a unified national standard, which is jointly controlled by the provincial (including the five separately planned cities of Shenzhen, Dalian, Qingdao, Ningbo and Xiamen) financial regulatory departments and the dispatched agencies of the China Securities Regulatory Commission.
At an industry roundtable, a practitioner made an analogy: GPs can no longer only act as financial investors, but also have to play the roles of industrial investment promoters, local relationship coordinators, and capital operation experts, taking multiple roles at the same time.
The subtext behind this is that the demands of LPs have changed — especially after local government funds have become the main force of capital contribution, the demands of investment promotion and return, and industrial synergy, which are “wanting everything at the same time”, are becoming more and more common, so the standard for the gold content of licenses naturally rises accordingly.
Looking at the consultation system in this context, the logic is actually not difficult to understand.
Rather than cleaning up the mess after a fund blows up, it is better to screen out the obviously unqualified institutions before the company even hangs its nameplate.
For applicants at the county and district level, this change is indeed more uncomfortable.
Things that could be done in the past by finding local connections and going through the process now have to be reported to the provincial level for review, and the path of “asking for special treatment” has basically been blocked.
Some people also complained on the forum that although this barrier has blocked institutions with real problems, it will inevitably accidentally injure a number of normal applicants with complete materials who are just “unlucky to catch up with the new policy window”. It is like the college entrance examination has suddenly changed from “admission as long as the score meets the standard” to “after the score meets the standard, it also depends on the tutor’s mood”.
Shells Are Getting Fewer, Genuine Licenses Are Getting More Valuable
If the “consultation” controls the entrance, another main line of Document No. 54 is to accelerate the cleanup of existing institutions: those with abnormal operations, long-term lost contact, or less than 5 full-time staff shall be deregistered within a time limit; those with “private equity fund” in their names but not filed shall be guided to complete the record-filing first, and those who do not cooperate shall be directly marked as abnormal and have their business licenses revoked.
Subsequent supporting rules are still in the pipeline.
The regulatory measures for managers, fundraising measures, and mandatory custody measures have all been included in the 2026 legislative plan of the China Securities Regulatory Commission, collectively referred to by the industry as the “N” in the private equity “1+N+X” system.
At a recent industry conference, a partner who has been managing hard technology tracks for many years shared his feelings: equity investment has now entered a stock elimination stage, DPI is a hard indicator, and without positive DPI, institutions may not even have the qualification to “sit at the negotiating table”.
Data from the Asset Management Association of China shows that there were 25,000 filed institutions at the peak of the industry, and now there are about 19,000 remaining, a decrease of more than 5,000 in five years. His judgment is that market funds are highly concentrated on the main line of “investing in early-stage, small-sized and hard-technology projects”, and the degree of involution in the track is unprecedented, but this also means that institutions that can truly survive the cycle and realize DPI are more easily recognized by LPs.
A veteran in the private equity industry also mentioned in his interpretation that in the second half of the private equity fund industry, what is being competed for is no longer licenses, channels and scale, but professionalism, fiduciary responsibility and long-term value creation.
This statement translates to real costs for specific institutions, but from another perspective: with fewer people who are just making up the numbers, the remaining licenses are naturally more valuable, and the track record itself has become the hardest “passport”.
So rather than saying this is a “cold winter”, it is better to say that the industry is experiencing a long-overdue repricing.
For those who are willing to spend time making their materials solid and sorting out their team’s resumes, the current “consultation period” is more like a threshold rather than a wall.
As for that incense stick at Lingyin Temple, what people pray for is not so much luck as a psychological comfort: anyway, the materials that need to be supplemented still have to be supplemented, after worshipping the Buddha, they go back to revise the PPT.
This article is from the WeChat official account “Rongzhong Finance” (ID: thecapital) and published with authorization from 36Kr
