- The city remained China’s largest private equity and venture capital market by fundraising and investment activity in 2025
- Semiconductors, AI and advanced manufacturing led a broad recovery as mergers and acquisitions emerged as a key exit route
Private equity and venture capital managers in Shanghai oversaw 2.44 trillion yuan ($360 billion) of assets at the end of 2025, accounting for 16.5% of China’s total.
This news comes as the city’s investment market rebounded sharply from the previous year’s slowdown and retained its position as the country’s largest PE hub, according to an industry report.
Shanghai had 1,681 private equity and venture capital managers overseeing 9,319 funds as of the end of 2025, while maintaining the nation’s highest investment and fundraising volumes, the 2025 Shanghai Private Equity and Venture Capital Industry Development Report said.
The report was released at the 2026 Seminar on Private Equity Regulation Trends and Industry Hotspots on June 30 and was jointly compiled by the Shanghai Equity Investment Association together with GPRO Investment, Detong Capital, Genharmony and Bank of Shanghai.
Deep-tech investment rebounds
The report said investment activity recovered strongly in 2025, with both deal value and transaction volumes reaching record highs after a slump in 2024, when investment value had fallen about 50% year over year during the first three quarters.
Semiconductors attracted more than 110 billion yuan in financing during the year, while Shanghai also ranked first nationwide in fundraising for biopharmaceuticals, new energy and the low-altitude economy.
Investments remained heavily concentrated in hard technology sectors, with electronics and information technology, healthcare and advanced manufacturing emerging as the three largest investment themes.
AI investments spanned the full technology stack, including computing infrastructure, foundation models, embodied AI and edge applications.
Emerging sectors such as commercial space, controlled nuclear fusion, quantum technology and future energy also attracted early concentrations of capital.
State capital takes the lead
Fundraising activity significantly outperformed the national average, with state-backed capital remaining the dominant funding source, complemented by insurance and industrial investors.
According to the report, Shanghai’s three strategic industries have leveraged diversified capital mechanisms to channel nearly 200 billion yuan of private capital into hard-tech projects, supporting companies from early-stage research through large-scale commercialization.
The report said the city’s capital ecosystem increasingly supports the full innovation cycle, from original technological breakthroughs to industrial deployment.
Exit channel diversity
Exit activity also improved across IPOs, mergers and acquisitions, and secondary fund transactions, with M&A recording the fastest growth and emerging as one of the industry’s primary exit channels.
Shanghai also retained the country’s leading position in secondary fund, or S fund, transactions, helping improve liquidity across the private equity market.
Looking ahead, the report said the industry has entered a new phase driven by long-term “patient capital” and future industries.
It also highlighted China’s new private equity regulatory framework, introduced on June 5 under the so-called “Document No. 54,” which establishes end-to-end oversight covering market entry, operations and exits.
The report said the framework is expected to shift the industry from reactive compliance toward proactive governance, while outbound listings and dedicated M&A funds are likely to become increasingly important exit channels.
