Nurturing Technopreneurship in China

Transcription

1 Nurturing Technopreneurship in China Chris Evdemon ( 易可睿 ) Partner, Innovation Works Development Fund (IWDF) Director, Finn Evdemon Capital Partners Pte. Ltd. Director, Business Angels Network South-East Asia (BANSEA) July

2 What does a technopreneur need? Infrastructure Culture Market Entrepreneurship Talent Pool & Language of Communication No Fear of Failure Turnkey Services Innovation Early Stage Investors Re-Circulation of Knowledge and Capital An early stage ecosystem! 2

3 Chinese Internet: largest market + low cost $250K Chinese lean start-ups 500M internet & 300M mobile internet users CEO / Product Manager User Experience Designer CTO + 7 more engineers Mobile Internet Internet Source: iresearch 3

4 Chinese Internet: a unique confluence E-Commerce E- Commerce Social Mobile Social Mobile Sequentially Simultaneously! Some characteristic facts: E-Commerce is a $100B market where the majority of transactions are still cash-ondelivery. It costs $1.50 to courier a standard item from Beijing to Shanghai with same day delivery. Low-end Android devices have already reached the $150 price point and decreasing. Total Android devices are estimated at 100m by the end of Sina s Weibo went from 0 to 250m users in less than 3 years. Tencent s Weixin app went from 0 to 100m users in less than 1 year. Internet is growing 5x faster than GDP. 4

5 Chinese Internet: an animal of its own Different Usage of Internet 100% 80% 60% 40% 20% 0% 89% 91% 79% 76% 70% 57% 83% 72% 71% 38% 34% 35% 55% 11% 34% 71% Various social phenomena: Curious users, hungry to explore (much less goal-oriented). Entertainment-centric. Information-overloaded. Users eager to have a voice for self-expression. Exposing corruption, enabling civilian paparazzi. A market reserved for locals: with cut-throat competition! 5

6 The internet is like a mirror, reflecting our society. If we do not like what we see in that mirror the problem is not to fix the mirror, we have to fix society. Vint Cerf

7 Entrepreneurship in China Today Chinese entrepreneurship is in transition. Still a new concept for local graduates. Peer and family pressure towards secure corporate jobs. Older generation is risk averse but grass-roots entrepreneurship from young people is improving. Returnees, with prior overseas experiences, are coming back to start their own companies. Few home-grown role models. Gradually, a new class of serial entrepreneurs is emerging: Grew up with the Internet. Hungry for success. Familiar with the local market. Able to iterate quickly. 7

8 Starting-up in China: the problems Nascent angel network. Angel investors are few and immature: minimal value-add and unreasonable expectations. No technical/ market understanding to evaluate early-stage opportunities. Tough to assemble a full team early-on. Difficult to assemble a complete and complementary team. Limited access to resources, network, and industry information. Information flow is not fluid in China. Home-grown CEOs need mentoring. Legal complexity the SINA structure. Entrepreneurs are often uni-dimensional. Limited innovation and imagination. Limited business, industry, and operational experience. Fear of failure. The Chinese culture is less tolerant of failure. Many engineers and managers are well-paid and risk-averse. Low burn-rate allows living dead projects to survive for years before admitting failure. 8

9 A nascent angel community $19B $28B Angel? VC $7B Zhou Hongyi ( 周鸿祎 ) Lei Jun ( 雷军 ) Xu Xiaoping ( 徐小平 ) 9

10 and a growing but later-stage focused VC market Total VC Funds Raised and No. of New Funds Already the 2nd largest VC market in the world but still only about 1/4th of the U.S. Chinese VC industry increasingly becoming more local, both in terms of currency as well as GPs / LPs. Very little attention to early stage and few GPs with the right skill-set / background. 10

11 IW as a case study: a unique platform to fill the gaps IW Incubation Incubation Formative / Seed stage IW Fund I/II Investment Investment Angel / Series A stages Operations Investment Full-Time Professionals 8,000 m 2 a unique collocation environment in Beijing Innovation Works (IW) built based on: A team with entrepreneurial mindset. Offering fair economics. Patience and passion to mentor. Product and technology expertise. Supporting professional services. 11

12 IW as a case study: the process 1. Invest in key themes. 2. Help lean startups scale up quickly. High Growth Low Capex High Value Localizable & Differentiable 3. Double-down on winners. 4. Apply learnings to find more winners. 100% 40% 25% 10% Seed Angel Series A Series B 12

13 Concentrate investments on specific themes Android Ecosystem Casual + Mobile Game Ecosystem Unfilled Need In SNS Monetizable O2O Service Covers 210M devices in 1.5 years 100M downloads in 1.5 years 35M users in 2 years Zynga-like platform 5M users in 1 year 7M users in 1 year 600M app downloads in 2 years HTML5 game platform >1M Tapas Phones + >10M apps ipad/iphone edutainment for toddlers Alexa global 1500 in 6 months Users 3x, Revenue 10x in 3 months Group-Buying No barrier to entry, competes on cost only, lacks merchant value. B2C E-Commerce High user acquisition costs. No longer lean startup. LBS Platform Not currently suitable for China. China LBS should focus on: food/fun + make/save money clones, 500 dying/month. Price & marketing war leading to likely bubble. Mostly in trouble; One having massive lay-offs. 13

14 Attract best-of-class Founders / CEOs Serial Entrepreneurs Experienced Executives Jack Xu CEO, Diandian Co-founder, Renren.com (multi-billion US$ IPO) Binsen Tang CEO, Xingcloud Founder, Elex Tech, 4 th largest social game developer in the world Ryan Xu CEO, Buding Founder & CTO, Tsinghua Tongfang Micro-electronics Lei Zhang CEO, Tapas Baidu Mobile director; 8 yrs. Huawei experience Chuan Luo CEO, AppChina CEO, MSN China CEO, Myspace China COO, China Mobile 139 Jeffrey Ma CEO, Nevel VP of R&D, Rising 10+ experience in security Junyu Wang COO, Wandoujia Senior designer, Google China Mily You President, Tapas PM Director, Tencent Mobile Ye Wang CEO, Doodle Mobile Special Assistant to CEO, Google China Zhenyang Zhan CEO, Xinyou COO, Kingsoft Games Limin Zhou CEO, Wandoujia Chief Architect, Baidu Fei Zhao Co-founder, Leiyoo Engineering Director, Renren Hongfei Tian CEO, LOOA Oracle USA Jing Jian CEO Co-founder, Lianzhong Games Fan Jiang Founder, Umeng Google China He Huang Co-founder, Leiyoo PM Director, Tencent Erik Huang COO, Zhihu Sr. Editor, Sohu Jun Xiong CEO, Tongbu CTO, NetDragon Innovation Works Confidential 14

15 Help start-ups scale quickly with services Build first product prototype Iterate & improve product The IW company-building process Market & promote product Prepare for next-round funding & growth Aiming to save >50% time spent by entrepreneurs on these areas. Recruiting Legal / GR Finance Tech / UX Mentoring PR/Marketing Internet headhunter Offshore set-up Payroll System reviews Mentoring sessions Grants & subsidies Resume database Share issuance Taxes Code reviews Executive coaching PR events Campus recruiting Term sheets Budget Design reviews Team building Product promotion EIR program Local licenses Rent Introductions X-company clubs Speaking slots 15

16 Recruiting, mentoring, and everyday DD Recruiting at Top Schools 500,000 Resume Database Speech: 8000 people Written exam: 1000 people 1:1 Mentoring and everyday DD Weekly Distinguished Guest Mentors Jerry Yang, Yahoo Interview: 100 people Huang Brothers, Guitar Hero Gary Wang, Tudou Welcome! Offer: 30 people Bill Buxton, Microsoft Steve Chen, Youtube Ray Ozzie, Microsoft 16

17 IW results in 2.5 years: 13 Series A & 2 Exits Ongoing (Seed + Pre-Series A) 28 Series A 14 Closed M&A, Series A delivering 20x step-up from seed Partnering with top VCs in China: 47 Ongoing Series A Closed 4 M&A 2 Two M&A Exits = 17X return in ~ 1 year 17

18 Amazing growth stories 40m Users in <2 Years 210m Devices covered in <2 years 90m Users in 1.5 Years 18

19 Contact me at: You can also find me at: