Core Viewpoint - Establishing a fault-tolerant mechanism for state-owned venture capital (SOE VC) is a positive start, but the ultimate goal is to guide SOE VC towards a clearer positioning [1][5]. Summary by Sections Establishment of Seed Funds - On June 21, the Hubei provincial government officially established a seed fund, allowing for a maximum 100% loss on individual investment projects. This is part of a broader trend of "loosening" regulations for state-owned venture capital [2]. Tolerance for Losses - The term "tolerance for loss" has become a key phrase in the local SOE VC sector since 2025, aimed at correcting previous demands for stable returns from all projects. This approach encourages venture capital funds to take risks and invest early and small [3]. Understanding Investment Risks - The preference for risk aversion and stable returns among state-owned venture capital funds reflects a misunderstanding of the equity investment market. There is a need for respect for the basic rules of equity investment rather than just a commitment to fault tolerance [3]. Role of Limited Partners (LPs) - As LPs, government funds should focus solely on delegated investment to General Partners (GPs). The LP-GP model is well-established internationally, and the core pursuit should be reasonable financial returns [4]. Clarifying Responsibilities - It is essential to clarify the responsibilities of government funding and respect the asset management capabilities of PE/VC institutions. Government funding should return to its asset management nature without imposing additional requirements [4]. Final Thoughts on SOE VC - While establishing a fault-tolerant mechanism is a good start, the ultimate goal is to guide SOE VC towards a clearer positioning. Market mechanisms should prioritize the selection of superior investments, allowing excellent investment institutions to stand out [5].

Group 1 - The establishment of the seed fund by the Hubei provincial government allows for a maximum 100% loss on individual investment projects, reflecting a trend of loosening restrictions on state-owned capital venture investments [2][3] - Other regions, such as Sichuan and Shenzhen, have also introduced similar policies, permitting high loss tolerances for government-guided funds, with some allowing up to 100% loss on individual projects [2][3] - The term "loss tolerance" has become a key concept in the state-owned capital venture investment sector since 2025, aimed at correcting previous demands for stable returns across all projects [3][4] Group 2 - The preference for risk aversion and stable returns among state-owned venture capital funds indicates a misunderstanding of the equity investment market, highlighting the need for respect for the basic principles of equity investment [3][4] - The relationship between Limited Partners (LPs) and General Partners (GPs) in venture capital should be one of delegation, where LPs respect the investment decision-making authority of GPs without imposing additional requirements [4][5] - Establishing a fault-tolerant mechanism for state-owned venture capital is a positive step, but the ultimate goal is to clarify the positioning of state-owned capital in the market [5]