China's capital markets are recovering, but opportunities are emerging at different speeds across sectors and investment stages. Some high-profile sectors continue to attract capital, while others remain in adjustment. As IPO activity picks up, investors are also asking whether listings can translate into cash returns.
On September 28, Michael Zhang (Sheng), President of TTGG Ventures, joined the “China: Signalling Selective Opportunity” panel at SuperReturn Asia 2026 in Singapore. Drawing on TTGG Ventures' investment experience, he shared his views on investment cycles, sector opportunities and exit prospects in China's private markets.
01 A recovering market calls for a longer view
The number and size of IPOs in mainland China and Hong Kong have increased compared with the past year or two. For investments approaching exit, stronger market activity has created opportunities to realize returns and make distributions to investors.
VC investing, however, need to look beyond current market conditions. “We are looking six to eight years ahead. That matters more to us,” Michael said. The near-term economy may shape market sentiment, but it cannot replace an assessment of a company's long-term competitiveness. He suggested that elevated valuations in some popular sectors, together with potential selling pressure when lock-up periods expire, also make timing important for both investing and exiting.
02 Finding value beyond AI during industry adjustments
AI remains an important investment theme, and TTGG Ventures continues to follow opportunities in AI infrastructure. Michael noted that other industries are undergoing changes that merit a long-term view.
He pointed to Sigenergy (06656.HK), in which TTGG Ventures first invested in early 2024. At the time, concerns about overcapacity were widespread in the energy storage sector. The industry adjustment gave investors an opportunity to reassess companies' product capabilities and long-term value. In Zhang's view, an outstanding company should create more value for society than the profit it earns.
The same perspective applies today. Alternative energy and healthcare face their own cyclical pressures, Michael said, but pressure on a sector does not eliminate the growth potential of its strongest companies. The key is to identify those capable of building a lasting competitive advantage.
03 Identifying opportunities—and realizing returns
Exits were another central theme of the discussion. Michael noted that TTGG Ventures has invested in more than 230 companies over its 26-year history, 55 of which have completed IPOs. Listed portfolio companies have made a major contribution to the funds' DPI, illustrating how a small number of exceptional investments often drive a fund’s ultimate returns.
While share transfers can provide additional exit routes, Michael sees IPOs as the most important path to returns for venture funds in China. However, an IPO is only one step toward a successful exit. Company fundamentals, market valuations and liquidity after lock-up periods all affect whether an investment's value can ultimately be realized.
For existing investments, Michael stressed the need for a pragmatic assessment of exit prices and transaction opportunities. Investors should move to realize proceeds when an exit is available. When a company falls short of expectations, they must also respect the price determined by the market, rather than extend the holding period indefinitely in the hope of achieving an unrealistic valuation.
As the discussion drew to a close, Michael returned to his outlook for China: investors need not focus too heavily on today's valuations, as markets move in cycles. With sound judgment, opportunities will always be there.
