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On April 2, it was reported that Zhejiang Venture Capital Group’s $13.1 million USD investment in Chongqing Zhangxue Machinery Industry, also known as ZXMOTO, has so far surpassed expectations. This investment marked ZXMOTO’s historic achievement as the first Chinese motorcycle team to win a title at the World Superbike Championship.
The group has traditionally focused on early-stage, small-business, and high-tech ventures. The initial spark to invest in ZXMOTO was a viral video of 19-year-old founder Zhang Xue, who was seen chasing a TV crew on his motorcycle and repairing an engine while blindfolded. However, the decision to invest was based on more than just emotional appeal. It involved meticulous due diligence and a thorough review process by the investment committee.
Founded in April 2024, ZXMOTO achieved a significant milestone by winning both races in the World Supersport category at the Portuguese round of the Superbike World Championship last month. This victory was historic as the first by a Chinese motorcycle manufacturer at such a high level, ending the decades-long dominance of European giants like Ducati, Yamaha, and Kawasaki.
The decision to fund ZXMOTO was a consensus among the investment committee, with no coercion involved. The project was presented clearly, highlighting its strengths and addressing potential risks. The group emphasizes decisions driven by conviction, supported by a mature and comprehensive management system.
In July 2024, ZXMOTO raised 20 million CNY (roughly $2.9 million USD) through a fund managed by Focus Capital, securing a 9.2% ownership stake. In January, Zhejiang VC invested an additional 90 million CNY (approximately $13.1 million USD) in a Series A round through its funds.
Cash flow was a major challenge during ZXMOTO’s early days, with the company struggling to process payroll on time. Zhang Xue had to borrow money from friends, suppliers, and even his landlord to gather 7 million CNY ($1 million USD). Despite this, Zhang remained cautious about external investment, negotiating valuation terms with Zhejiang VC before agreeing on a valuation exceeding 1 billion CNY (about $145.2 million USD).
Some risks remain, such as the company still operating at a loss, the founder holding significant control, and an unclear exit strategy, according to another government-backed venture capital firm. Recent policy improvements in risk management, return expectations, and long-term performance evaluations have given state-backed VC firms more operational flexibility, said Cheng. He added that understanding a project thoroughly is the best way to reduce investment pressure.
Continuous monitoring, support, and reassessment are critical even after the initial investment, Cheng said. Investing is a long-term commitment, only ending when the company successfully exits.
ZXMOTO’s deep technical expertise, strong industry insights, and innovative R&D approach have been key to its success, Cheng noted. The company’s championship win is expected to attract top talent, boosting confidence in its future prospects.
The guiding philosophy of Zhejiang VC is to “support companies silently when they don’t need help, and to step in promptly when they do,” Cheng emphasized.
Established in 2000, Zhejiang VC was one of China’s first professional, market-oriented venture capital firms. Its investments span new materials, information technology, healthcare, and manufacturing. The firm’s shareholders include Zhejiang provincial state-owned capital entities and several other government-related organizations.
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