TMTPOST -- China's venture capital industry is once again reassessing its infatuation with scientist-entrepreneurs, as the enthusiasm that once drove investors into laboratories and academic institutions gives way to a wave of skepticism and self-reflection.

The latest round of soul-searching among RMB fund managers has revived criticisms of "technology fundamentalism" and cast a spotlight on the growing disconnect between capital and commercialization. Stories of investors "lining up to ask professors for their money back" and distancing themselves from hard-tech projects led by scientists have spread across Chinese tech media in recent months.

"Undeniably, there was a bubble," said Wei Yu, a senior hard-tech investor. "But the deeper issue lies in the mismatch between capital and the research system itself—especially in 2021, when the hard-tech sector became the last table standing."

According to data from IT Juzi, investor interest in scientist-led startups peaked in 2021—fueled by excess capital fleeing China's crumbling internet, consumer tech, and biopharma sectors. As other options froze, funds pivoted aggressively to deep tech, often without the institutional capability or patience required to back fundamental science.

Valuations soared as VCs scrambled to poach professors and co-invest in "deep tech" deals. Many claimed domain expertise after backing a handful of science-led projects, adopting hard-tech credentials more as marketing assets than operational strategies.

By 2023, deal sizes began shrinking and investment activity shifted to earlier-stage rounds. The exuberance had cooled, but a long tail of challenges remained.

The core question now being asked: are scientists to blame?

Not exactly, say investors. The real culprit may be institutional inertia. Despite national encouragement for technology transfer, China's research ecosystem still structurally deprioritizes commercialization.

"The model is fundamentally discipline-driven, not market-driven," said Wei Yu. "Even today, tech transfer is often treated as a secondary responsibility—far below publishing, patent filings, or institutional prestige."

The Chinese Academy of Sciences' 2015 "Three Orientations" placed the national economy at the bottom of its strategic priorities. Although that order was reshuffled in the 20th Party Congress report in 2020, with "economic battlefield" rising to second place, institutional change has lagged.

Entrepreneurial scientists often face internal resistance, especially when their ventures gain visibility. One now-infamous case saw an entire commercialization initiative abruptly shut down by research leadership, citing distraction from "core scientific work."

"The sword of institutional disapproval still hangs over every scientist considering a startup," Wei said. "Expecting them to go ‘all in' ignores the very real constraints they face."

Commercialization metrics are still absent or underweighted in most research performance evaluations. Universities focus on project funding, journal publications, and patent counts—but rarely track the effectiveness of patent monetization.

"There's no data suggesting scientists have higher success rates in entrepreneurship," said Wei. "This is a high-risk domain. If your fund lacks the capability to help scientists transition, you're not qualified to invest in them."

That transition is rarely smooth. Common criticisms of scientist-led startups—weak product focus, poor management, and limited business acumen—are often symptoms of systemic misalignment rather than personal failings.

Despite past setbacks, momentum for reform is building. Recent policies have offered stronger support for commercialization, including flexible employment rules that allow researchers to take multi-year leaves to launch startups.

China Agricultural University's announcement that Professor Li Ning—once imprisoned for misappropriation of research funds—has returned as chief scientist of a biotech firm sent a powerful signal: the walls between academia and enterprise are beginning to soften.

"The shift in tone is significant," said veteran investor Huang Miao. "Universities are now actively encouraging entrepreneurial leave and part-time roles in startups. And this time, enforcement is real."

Under new rules, scientists can take up to three years off to launch a business—with a possible three-year extension—provided they stay within the bounds of retirement eligibility. The message: don't abandon your research post, but do try entrepreneurship—responsibly.

China's financial system is also evolving to support this transition. At the 2025 Tsinghua PBCSF Global Finance Forum, Ma Weihua, Chair of the National Science and Technology Achievement Transformation Guidance Fund, called for structural reforms to bridge the "valley of death" between lab and market.

Despite recent gains—commercialization rates have risen from 25% in 2010 to 35%—China still lags developed nations, where rates exceed 70%.

Both proposals align with Beijing's broader goal of achieving tech self-reliance and developing a mature innovation ecosystem.

Still, capital alone won't solve the problem. Zhang Yu, a partner at a university-affiliated fund, warned that hard-tech investing requires more than a checkbook.

"Treating scientist-led startups like TMT plays is a fantasy," Zhang said. "You can't just be a financial investor. You must be an incubator, too."

China's experiment with scientist-entrepreneurs isn't ending—it's maturing. If the venture community wants to thrive in this era of deep tech, it will need to stop chasing hype and start building institutions that understand not just the science—but the scientists.