China Materialia started in 2010 as an Open Innovation (OI) advisory company. Over the years, we have worked with many multinational companies to build open innovation network in China, including research institutions, start-up companies, incubators and accelerators. CM also worked with local governments to select high-potential high-tech start-up companies for business plan advisory. Over the years, CM has advised over 200 high-tech start-ups, of which more than 100 are returnee companies, and more than one third raised venture capital financing post CM advisory. Thorough quality work, CM established reputation as China’s premium business plan advisory firm for start-up companies. Through the open innovation advisory and start-up business plan advisory, CM built a broad network of innovative companies, including multinational corporations, Chinese start-ups, foreign start-ups, venture capital funds, incubators and accelerators, universities, high-tech parks, and research institutes. CM is leveraging its extensive OI experience and broad ecosystem into winning model for Venture Capital. We capture the synergies inherent in combining world-class technologies with China’s lower development costs and the vast Chinese market.
Our Funds China Materialia LLP Fund I of 150 million RMB was raised in 2011, backed by the Shanghai Venture Capital Guidance Fund, Shanghai Yangpu District and seven private enterprises. China Materialia raised China Materialia Venture Capital Fund II of 400 million RMB in 2016 with backings of government and corporate strategic investors, including GE, Samsung, BASF, SABIC and BAT. China Materialia Venture Capital Fund II is focused on advanced materials, advanced manufacturing and digital industrial. We are an active investor in our companies. We help our portfolio companies by contributing our knowledge and expertise, by introducing them to corporate strategic partners, by assisting business development and by sharing our extensive network. Our foremost goal is to assist entrepreneurs in the making of great companies.
The China Opportunity
Abundant innovation, talent, market opportunities and generous government incentives are creating excellent market conditions for venture capital in China today, much like in the 1970s in Silicon Valley when US venture capital industry took off: • Rapidly growing and already substantial R&D investments sets China as an emerging innovation powerhouse. • Recent wave of experienced “returnees” with global experience bring advanced technologies and global mindset to their entrepreneurial endeavors. • Generous government supports to high-tech companies enhance leverage for equity investments. • Opportunity to leapfrog the West creates opportunities for adopting world-class technologies in many industries. • Maturing exit markets in China: IPO channels are open and M&A market is developing in China. Most importantly, the Chinese market is dynamic and opportunities exist in China that do not exist in a mature market. Chinese economy is underdoing transformation – many traditional markets are disrupted and many new markets are created. As a result of the lower market entry barrier, lower operation cost, generous government grants and faster development pace, Chinese start-ups have shallower J-curves than the West, offering investors better returns.
While venture capital’s notable successes have concentrated in software and biotechnologies, there is a third category of technology area which we call “hard technologies” because usually those technologies lead to physical products you can touch. Non-software, non-biotechnology “hard technologies” are based on physical science and engineering include materials science, electrical engineering, mechanical engineering system engineering and so on. Physical science and engineering comprise a very significant portion of R&D spending, including university research, yet, it comprises less than a quarter of venture capital financing world-wide. “Hard Technologies” are hard to invest in because they span many technologies and many industries, are incredibly complex, require many years of product development, require manufacturing in general and address primarily enterprise markets. China Materialia is pioneering an investment model for hard technologies that both bridges the East and the West and bridges start-ups and multinational companies. By taking advantage of market opportunities and resources available in China today, and by encouraging start-up companies to partner with multinational companies for manufacturing, supply chain and distribution, we hope to build a venture capital success model in “hard technologies” – this is critically important as many of world’s pressing problems are dependent on hard technologies for solutions.
Shanghai Strategic Emerging Industries FoundationTo promote the development of innovation and entrepreneurship ecosystem, China Materialia founded the not-for-profit Shanghai Strategic Emerging Industries Foundation (SEIF) in 2014. The SEIF Foundation’s mission is to become 1) a thought-leader for strategic emerging industries in China, 2) a bridge for China & the world and 3) a platform for open innovation and open entrepreneurship. The SEIF Foundation organizes annual “Innovation China” conference that brings together academics, corporates, start-ups and VC thought-leaders to network, to discuss hot topics and pressing issues in China’s innovation and entrepreneurship landscape, to showcase China’s brightest start-up companies. The SEIF Foundation also organizes quarterly industry events. Visit the SEIF Foundation website to learn more. You can view selected presentations at the Innovation China conferences in the Media secion of this website