Abstract: In the context of global technological competition shifting from “single-point breakthroughs” to “ecosystem dominance”,unicorn enterprises have emerged as critical “incubators” of new productive forces and strategic “barometers” of national competitiveness. This study investigates the relationship between the investment activity of Chinese Government-Guided Funds (GGFs) and the cultivation of unicorn enterprises,utilizing comprehensive venture capital and private equity (VCPE) investment data,including GGF transactions,from 2009 to 2023. Drawing from 156226 investment events encompassing 588 unicorn enterprises,the research reveals significant overlaps between GGF investment sectors and unicorn industry distributions,highlighting the synergistic interplay between policy guidance and market selection. The findings demonstrate that increased GGF investment activity positively correlates with regional unicorn growth,moderated by regional differentiation indices and business environment quality. Three core drivers are identified to enhance GGF efficacy in cultivating unicorns: precision investment (X) to anchor technological strengths,ecological empowerment (Y) to optimize regional capabilities,and collaborative deepening (Z) to reconfigure innovation networks. The empirical results confirm that GGF investment frequency and capital size directly stimulate unicorn emergence,particularly in high-potential sectors such as semiconductors,biotechnology,and artificial intelligence. For instance,a one-unit increase in GGF investment frequency raises the number of GGF-cultivated unicorns by 0.017,while a 100 million yuan increase in investment amplifies this effect by 0.083. Regionally,GGF investments exhibit indirect spillover effects,with investment frequency and capital contributing to 0.012 and 0.061 unicorns per unit,respectively. Crucially,regional differentiation indices amplify these effects: a one-unit rise in differentiation enhances the marginal impact of GGF investment frequency by 1.8%. Meanwhile,superior business environments in top-tier regions double GGF efficiency compared to underdeveloped areas,underscoring the catalytic role of institutional ecosystems. Spatiotemporal analyses reveal evolving dynamics in GGF strategies. Early-stage GGF investments focused on technical breakthroughs in eastern coastal regions (e.g.,semiconductors in Jiangsu and Guangdong),while central and western provinces later adopted differentiated niches (e.g.,chip packaging in Henan and photovoltaics in Gansu). However,declining regional differentiation signals risks of redundant resource allocation,necessitating adaptive mechanisms to balance specialization and diversification. Case studies,such as Hefeis AI cluster (e.g.,USTC Silicon Valley) and Gansus large-scale green funds supporting the construction of a local photovoltaic industrial chain,illustrate how localized “innovation ecosystems” integrate policy,capital,and talent to accelerate unicorn incubation. To optimize GGF performance,this study proposes a “precision+ecology+collaboration” framework: First,precision investment: Prioritize sectoral differentiation based on regional advantages,avoiding homogeneous “checklist-driven” allocations. Eastern regions can target frontier technologies (e.g.,quantum computing and gene editing),supported by “national laboratory-fund” linkage mechanisms,while central/western areas leverage resource endowments (e.g.,renewable energy in Gansu and lithium reserves in Qinghai) to establish “single-champion cultivation funds.” Second,ecological empowerment: Strengthen institutional ecosystems via streamlined governance (e.g.,Shenzhens “instant approval” system reducing registration time from 15 days to 1 hour),industrial synergies (e.g.,Anhuis “USTC Silicon Valley” integrating academia,industry,and policy),and digital platforms (e.g.,Zhejiangs “Tech Brain” database enabling dynamic profiling of 170000+enterprises). Third,collaborative deepening: Foster cross-regional innovation networks through gradient collaboration (e.g.,R&D in the east,technology transformation pilots in central China,and industrial support in the west) and interprovincial coordination (e.g.,cross-regional joint due diligence committees) to mitigate redundant investments. Mechanistically,the study advocates for long-term value incentives,including extended evaluation cycles (5-10 years for strategic sectors like semiconductors),milestone-based funding (e.g.,phased capital release for biotech clinical trials),and “fault-tolerant” mechanisms (e.g.,dual-track assessments for project-level and portfolio-level risks). By aligning state strategic resolve with market-driven resource allocation,GGFs can transcend their role as fiscal instruments to become sustainable “innovation catalysts”. This research contributes to academic and policy discourse in three dimensions: First,the study enriches existing theoretical frameworks on unicorn cultivation by validating the proactive role of GGF in incubating regional unicorns,particularly the “leverage amplification” effects of regional differentiation and business environments. The study bridges a critical gap in existing scholarship,which has largely overlooked GGFs dual function as both direct financiers and indirect ecosystem catalysts.Second,leveraging the latest GGF investment data,the study comprehensively maps provincial-level disparities in GGF investment activity and sectoral allocation,thereby unveiling the socioeconomic value of “localized adaptation” strategies. The empirical evidence provides actionable insights for optimizing fund deployment,operational mechanisms,and risk-reward balancing,particularly in mitigating homogeneous investments and enhancing resource efficiency; This study also provides policy implications,findings empower policymakers to reconcile “national strategies” with “market principles”. On the one hand,GGFs should address market failures—such as early-stage financing gaps and prolonged exit cycles—through tailored policy tools (e.g.,extended investment horizons and milestone-based funding). On the other hand,market-driven mechanisms must be prioritized to invigorate innovation vitality while avoiding efficiency losses from administrative overreach. This dual imperative not only enhances fiscal efficacy but also serves as a cornerstone for Chinas “strategic overtaking” in global technological competition,enabling the nation to leapfrog entrenched industrial paradigms.