What is Zhuhai doing to support aspiring unicorns?

Zhuhai has recently updated its supportive measures aimed at unicorn companies.

Its most recent progressive policies are intended to take the unicorns to the forefronts of their industries.

A three-tiered management system

The Zhuhai government will draw elites from third-party think tanks and venture capitalists into an evaluation committee which will decide the eligibility of companies for a renewable incubation system. The list, to be updated annually, is divided into three levels according to companies' state of development, with each level to receive corresponding service.  

The top level is companies that are already unicorns. A unicorn is a pre-IPO company with at least a $1 billion market value that has attracted private-equity investment and venture capital (excluding listed companies on the New Third Board -- China's National Equities Exchange and Quotations (NEEQ)).

The middle level is enterprises considered to have potential to become unicorns and that are valued at more than $100 million with over $50 million in private-equity investment.

First level companies are at the seed stage. They have to be fast growers with mastery of cutting-edge core technologies or exceptional technological achievements. Startups established by top-tired talents or first-level high-caliber talents in the city in this group will be prioritized.

Zhuhai anticipates arrival of five to eight unicorn companies within five years, along with at least 50 middle-stage enterprises with the potential to become unicorns, and more than 200 hopefuls still at the preliminary or seed stage.

Carving out a niche for innovative practice

The Hengqin New Area will provide a facility for unicorn headquarters from out of town.

In addition, companies will be guided to locate in places that match their development directions and have advantageous available resources. For example, Hengqin will focus on new-generation information technology, big health, financial technology, cross-border e-commerce, and cultural and creative industries. Projects of those types will be advised to settle in Hengqin.

Xiangzhou District concentrates on smart equipment, integrated circuits, networked cars, new retail, cultural and creative industries.

Jinwan District will be an ideal place for development of high-end medical equipment, biomedicine, new energy vehicles, aerospace and other industries.

Doumen will continue its momentum with advanced new-generation electronic information, intelligent manufacturing, new energy, new materials, and modern logistics technologies.

The Zhuhai National Hi-Tech Industrial Development Zone in Tangjiawan is encouraged to develop integrated circuits, artificial intelligence, biomedicine, high-end medical equipment, new-generation information technology, new materials, and computer vision among other industries.

The Gaolan Port Economic Zone Area is competitive in advanced equipment manufacturing, new materials, and new-generation information technology industries.

The Fushan Industrial Park prioritizes the next generation of electronic information, intelligent electrical, and advanced equipment manufacturing.

Strengthened, more efficient financial support

Multi-level venture capital support will be secured through the establishment of a Frontier Industry Unicorn Investment Fund with a first installment of 10 billion yuan ($1.6 billion). The fund will rely on the Zhuhai Fund and the combined efforts of third-party venture capital institutions and giant enterprises.

A policy-oriented angel fund will be established after a comprehensive study. It will be non-profit and have a scale of 500 million yuan in the initial stage. It will focus on strengthening equity financing support for unicorn enterprises listed in the city program. Fund applicants can be granted up to 20 million yuan in venture capital, according to an official.

Those fast-growing enterprises that grasp leading technology and use innovative business models but are not eligible for the program can be provided with up to 5 million yuan in venture capital plus assistance in achieving eligibility.

The enterprises listed in the government system will be rewarded as follows according to their contribution to economic development for three consecutive years from the year they first participate in the program.

Unicorn enterprises may be rewarded 30 percent of their contribution to economic development since the previous year, up to 20 million yuan.

Candidates at the second level, with potential to become unicorns, may be rewarded 40 percent of their contribution to the economic development since the previous year, up to 10 million yuan.

Companies at the first or seed level will receive 50 percent of their contribution to the economic development since the previous year, up to 5 million yuan.

The award hierarchy is compatible with the urban financial system.

Technological Innovation Beach in Tangjiawan [Photo courtesy gdvb.com]

Building a talent bank

Founders of level three unicorns and level two potential unicorns will be identified as first-grade or second-grade talents as stipulated in the Zhuhai Talent Program.

Companies listed in the system are encouraged to introduce innovative teams and high-level talents in a cooperative way to conduct scientific and technological innovation projects. Innovation and entrepreneurship teams evaluated at international top, international advanced and domestic leading levels will be funded with up to 100 million yuan.

There is also a benefit for unselected innovation and entrepreneurship teams. As long as they post good growth potential, they can be included in the official system and receive grants of up to 5 million yuan.

Furthermore, list members and the city's leading enterprises will be incentivized with up to 5 million yuan if they cultivate a promising level one seed stage company, a second level unicorn potential enterprise or a level three unicorn enterprise.

Bolstering industrial core technologies

Enterprises in this sector that are newly included in the government program will be given one-off R&D rewards of 2 million yuan. They will be free to choose their own research themes. Projects deemed worthy of government support will be funded with up to 5 million yuan each; the amount must not exceed 30 percent of the project's total R&D budget.

A further proposal is to establish a reward targeting the common key technologies needed to be solved by companies listed in the city program and new-type R&D institutions. If the projects attract the world’s top innovation teams and R&D personnel for joint development, they will be supported with up to 20 million yuan each. If officially-accredited innovation and entrepreneurship teams alone are attracted, the subsidy will be up to 50 percent of the project's implementation value.