The venture capital ecosystem is undergoing a transformation as insurance capital enters the scene, backed by supportive policies and a long-term investment approach.

Recent developments highlight this trend. Shaanxi province and other regions have introduced policies encouraging insurance funds to participate in venture capital funds. Sunshine Hengyi, the seventh insurance-backed private equity fund this year, has signed its fund contract, moving from preparation to near-launch in under six months.

The rise of insurance capital in venture investment stems from the urgent need for long-term funding in technological innovation. In June 2024, the State Council issued measures to promote high-quality development in venture capital, explicitly supporting insurance capital's market-driven investment in venture funds. This policy marks insurance capital's emergence as essential "patient capital" in the venture ecosystem, sparking nationwide adoption.

Under this policy impetus, insurers are eagerly exploring various models—such as secondary funds (S funds), co-investments, and indirect limited partnerships (LPs)—to invest in hard tech and strategic emerging industries. This shift reflects a "government-guided, market-driven" approach to industrial upgrading.

Compared to their cautious stance in 2010, insurers have become pivotal in fostering new productive forces. Their evolution signifies not just an asset management revolution but also deeper integration into global tech competition strategies.

**Central and Local Policies Drive Diversified Growth** On November 27, Shaanxi unveiled measures to deepen capital market reforms, including mechanisms to attract insurance capital into local venture funds. Similar policies have emerged nationwide. Guangdong, Sichuan, and Tianjin have all rolled out initiatives to channel insurance capital into venture investments, aligning with the State Council's June 2024 directive to encourage long-term capital flows into venture capital.

As China's second-largest financial sector, insurance capital brings substantial heft to venture markets. Balancing prudence with the high-risk nature of tech innovation, insurers are adopting distinctive strategies.

**China Life’s S Fund Strategy: Bridging the Gap** China Life Asset Management, a leader in insurance asset management, has prioritized S funds—secondary market vehicles that invest in existing private equity funds. By bypassing early-stage volatility and high fees, S funds accelerate returns, appealing to insurers seeking stable cash flows. Notable examples include China Life’s RMB 11.8 billion investment in Shanghai’s semiconductor fund and a RMB 5 billion commitment to Beijing’s hard-tech-focused mother fund.

**Collaborative Investment Models: Scale and Synergy** In May 2025, PICC Capital, Generali China, and Zhongcheng Capital jointly established a RMB 130 billion fund, pooling resources for large-scale, long-term projects. Such collaborations leverage diverse expertise and mitigate risks.

**Indirect Investments: Leveraging Expertise** Many insurers now invest as LPs in government-backed funds, indirectly backing tech firms. For instance, insurers have funded national funds like the China Internet Investment Fund, gaining exposure to robotics and AI startups without direct early-stage risks.

**From Caution to Cornerstone: A 15-Year Evolution** Insurance capital’s venture journey began in 2010 with cautious regulatory openings. By 2014, rules explicitly allowed venture fund investments, albeit with strict criteria. Over time, policies relaxed, enabling insurers to explore diverse roles—from passive LPs to active managers. Key milestones include the 2016 State Council push for diversified venture capital and 2023’s risk factor adjustments for strategic industries.

**Macro Impact: Fueling National Innovation** Insurance capital’s venture foray addresses structural gaps in China’s bank-dominated financial system, providing vital funding for innovation. Globally, it mirrors the long-term capital models of tech powerhouses like the U.S. However, challenges remain, including risk management and alignment of long-term venture horizons with insurers’ performance metrics.

The expansion of insurance capital into venture investment is reshaping China’s financial landscape, underpinning technological advancement and national competitiveness. From individual funds to broad strategies, it is laying the financial groundwork for next-generation productivity.