Venture capital is optimistic about the investment prospects of new agriculture, focusing on mature enterprises to control risks.

　　If organic food demand grows by 1% annually, then in the next 5 years, taking the Shanghai market as an example, it could grow to 5%. In other words, the Shanghai market alone would increase its market share by hundreds of billions of yuan per year." As a member of the modern agriculture industry, Zhang Tonggui, chairman of Shanghai Duoli Farm, is so optimistic about the development of modern agriculture. According to his vision, if the national market can be captured, this "cake" will be very tempting.
　　Besides Shanghai Duoli Farm, which integrates nature and modernity, when we see Guolian Aquatic Products' shrimp seedlings and Beijing's Century Chestnut Garden's organic and green products, we find that modern agriculture is no longer the synonym for "dirty, messy, and chaotic" in legends, but is presenting a promising future under the guidance of modern technology.
　　More importantly, they have begun to be sought after by venture capitalists.
　　Venture capital follows policy
　　In recent years, venture capital investment in agriculture has shown a gradually increasing trend, even experiencing explosive growth in 2010.
　　Data from Zhong Group shows that in 2006, private equity institutions invested only $0.56 billion in agricultural projects, while in 2007, this figure jumped to $3.96 billion. By 2010, the investment amount reached $14.89 billion, exceeding the total of the previous four years.
　　Why did venture capital institutions suddenly increase their investment in agriculture? In response, Feng Po, an analyst at Zhong Group, told a reporter from "Investor Daily" that agricultural investment began in 2006, and by 2010, agricultural investment had become increasingly intense. The investment in modern agriculture will be even greater in the future. Currently, it is a good time to invest in modern agriculture. On the one hand, there is policy support, and on the other hand, market demand is gradually emerging.
　　In 2011, the opening year of the "Twelfth Five-Year Plan," policy support was quite obvious. It is understood that during the "Twelfth Five-Year Plan" period, Beijing will delineate five urban modern agricultural industrial circles: urban, suburban, plain, mountainous, and cooperative areas outside Beijing. It will efficiently allocate agricultural resource elements based on the characteristics of different regions, highlighting the characteristics of agricultural areas in the suburbs of large cities. Zhao Genwu, director of the Municipal Agriculture Bureau, recently stated that through the construction of agricultural industrial circles, Beijing's vegetable self-sufficiency rate will be increased to 35%, the output value and efficiency of facility agriculture will be increased by more than 30%, the area of landscape farmland will reach more than 1 million mu, and the ecological service value of the agricultural system will be increased by 10%.
　　Beijing is just a weather vane among Chinese cities. From the "Twelfth Five-Year Plan" of Guangxi, the plan is for the per capita income of Guangxi farmers to reach 8,000 yuan in the next five years. In addition, many other cities have begun to increase investment in modern agriculture, hoping to take advantage of the "Twelfth Five-Year Plan" to boost their development.
　　Unlike traditional agriculture, "modern agriculture" is defined as socialized agriculture that widely applies modern science and technology, modern industrial production materials, and scientific management methods. In the history of agricultural development classified by the nature and level of agricultural productivity, it belongs to the latest stage of agriculture.
　　Competing for new agricultural projects
　　Many venture capitalists are focusing on agricultural investment. Venture capitalists and private equity firms that have already entered the Chinese agricultural sector include Sequoia Capital, Qingyun Venture Capital, Zhiji Venture Capital, CDH Investments, Nine Dragons Investment, Zhongke Zhaoshang Fund, Advantage Capital, and Dacheng Capital, among many other "gold diggers".
　　Among the listed agricultural companies, Shengnong Development should be the most prominent. In December 2006, Shengnong Development received an investment of more than 20 million yuan from Dacheng Capital. Dacheng then made additional investments until Shengnong Development went public in 2009, making Dacheng a huge profit.
　　As agricultural investment gradually received attention, on October 24, 2007, Guolian Aquatic Products received a joint investment of $1.577 million from Zhiji Venture Capital's Zhi Long Fund Phase I, Yimei Investment, and Tongchuang Weiyue's Nanhai Growth Venture Capital Fund. In 2010, Guolian Aquatic Products successfully listed on the Growth Enterprise Market, and Zhiji Venture Capital, a foreign investor, also successfully "landed".
　　Chen Youzhong, its managing partner, once said in an interview with a reporter from "Investor Daily": "From the perspective of marine aquaculture, Guolian Aquatic Products has three very important treasures: shrimp seedlings, feed, and pest and disease control drugs and facilities. These three points are all technically demanding aspects that ordinary shrimp farmers find difficult to master." More precisely, Guolian Aquatic Products' mastery of these technologies is a reflection of modern agriculture.
　　In June 2010, Beijing Century Chestnut Garden Ecological received an investment of 30 million yuan from Tiantu Venture Capital. Following this, in November 2010, Shanghai Duoli Farm received an investment of 70 million yuan from Qingyun Venture Capital and other institutions. This farm, which claims to have "washed" its land for three years, reportedly spent more than 60 million yuan on the construction of its water circulation system alone.
　　In this way, a series of new agricultural projects were acquired by venture capitalists. In the view of Cao Yue, president of Hezhong Capital, as an investment bank, Hezhong's important task is to guide more venture capital into low-carbon agriculture. He predicts that neither medical nor clean technology will be as large-scale as this upcoming new agricultural investment boom.
　　Choosing mature enterprises
　　Although modern agriculture is a key industry supported by the state, the risks involved cannot be ignored. After all, agricultural enterprises are greatly affected by weather and natural disasters. More importantly, for agricultural enterprises, the time cycle from investment to profit is long, which is a great test for venture capitalists investing in early-stage agricultural enterprises.
　　While domestic agricultural investment is being carried out intensively, the pace of overseas agricultural investment is also keeping up. In the past two years, against the backdrop of soaring global food prices, many developing countries have paid more attention to their own agriculture and have been more willing to consider external capital entering their agricultural sector. Because some countries and regions where Chinese companies have entered have relatively backward economic and social development, and some areas have unstable political situations, imperfect laws, and frequently changing policies, these are all political risks faced by agricultural enterprises.
　　In this regard, Feng Po, an analyst at Zhong Group, explained to the reporter that venture capital institutions invest in agricultural enterprises mainly focusing on business models and food safety. Because modern agricultural enterprises are modernized and large-scale enterprises, they require a large amount of capital.
　　Because of this, there are not many venture capitalists investing in early-stage agricultural enterprises. Most of them invest before listing or invest in mature agricultural enterprises. However, the size of the funding gap depends on the position of the agricultural enterprise in the industrial chain. If it is at the upstream of the industrial chain, the amount of capital required is smaller; if it is at the downstream of the industrial chain, the amount of capital required is larger.
　　Yang Xiaobin, managing director of Beijing Agricultural Industry Investment Fund, told a reporter from "Investor Daily" that the most basic requirement for the agricultural enterprises they invest in is that they are already profitable, as the fund needs to exit through the listing of the enterprise or other channels in the future.
　　From this point of view, investing in mature agricultural enterprises is indeed more controllable in terms of risk. At least for such enterprises, they have already gone through a period of burning money and have a certain foundation, so the success rate of using venture capital to grow and strengthen is higher.
　　A veteran venture capitalist revealed that while agriculture may seem simple, it actually has high barriers to entry due to significant upfront investment and low, or even nonexistent, initial returns. However, for industries like modern agriculture that are vital to the national economy and people's livelihood, businesses should invest boldly once they've identified a promising opportunity. This is because, once established, agricultural businesses have relatively low operating costs, and adding labels like 'green,' 'organic,' or 'environmentally friendly' can significantly increase profits, often many times over those of traditional agriculture.
　　It's no wonder that Liu Chuanzhi, who made his fortune in IT, also revealed last year his hope to 'invest in large-scale agriculture'.