Shanxi province is rolling out an "investment-to-equity conversion" reform across the province, pioneering a new approach to overcoming key hurdles of tech industrialization, including early-stage startup difficulties, high financing costs, and gaps in pilot testing.

The reform shifts the focus of government science and technology funding from one-time grants to a cyclical equity investment model, emphasizing support for small high-tech companies in their early growth stages.

During the "investment" phase, financial support is provided directly to tech enterprises for industrialization projects, targeting critical stages such as concept validation, pilot testing, and secondary development. Funding for individual projects is capped at 5 million yuan ($724,000), with enterprises required to raise funds at a minimum 1:1 ratio.

Once the invested enterprises meet the conditions for equity conversion, the financial support is converted into equity, forming a sustainable mechanism of shared risks and benefits. Investment institutions will exercise shareholder rights under agreed-upon conversion conditions and equity ratios, with equity holdings capped at 20 percent to ensure they do not become the largest shareholder.

The "investment-to-equity conversion" reform will focus on technological innovations related to energy transition, industrial upgrading, and diversified development in the province. Priority support will be given to seed-stage, startup, or high-growth tech enterprises primarily operating within Shanxi.

Shanxi will continue to refine the implementation and operational processes of the "investment-to-equity conversion" strategy, striving to build an innovative ecosystem for tech industrialization and providing solid support for achieving high-level technological self-reliance and strength.