Chinese investors in silicon valley: what do we do investment?

article/Wang Yisu netease science and technology reporter Netease science and technology in American journalist ShangJing

on June 9, 2014, Zhang liang (Allan Zhang) and his startup Trust Look to outsiders to raise the Pre – A round of funding, two days later, the raised amount to $2.65 million, far more than the $2 million plan. On July 1, close to 3 million dollars to the account, “we had to declare no longer accept any new Wire Transfer request (already remitted except)”. For 3 weeks, zhang liang for Trustlook next development reserve enough money, and more than half of them from Chinese investors.

compared with a decade ago, more Chinese investors opened their wallets to silicon valley. Besides GGV capital, qiming, GSR ventures, morningside venture, such as sequoia capital established investment company, also appeared a lot of such as emerging Chinese fund and organization innovation works. And nearly two years, tencent, alibaba, baidu and other domestic Internet companies have also set up the investment department in silicon valley, through investment layout overseas markets.

the distinctive “Chinese class”

on September 19, the only “laowai” in innovation works partner, based in silicon valley, a partner at yi can be armed (Chris Evdemon) with two of their investment in silicon valley start-up team came to Beijing to help them find partners in Beijing, expanding the market in China.

this is the fifth anniversary of innovation works was founded, the do of incubator in China, was established in 2013 in silicon valley for overseas investment team, although the team only two people, including easy to farce, but just a year have invested in silicon valley, 18 entrepreneurial teams, investment in the United States from innovation works 5% of the total funds of money.

“in silicon valley, doing it investment cost is high, labor costs and the cost of each month is the domestic office three or four times, if you don’t make money, it is hard to survive.” Dutch yi can use farce “foreign accents” mandarin fluently said to netease science and technology, “we now have a company sold to yahoo, has obtained the good return.”

and innovation works, based in Beijing, zPark Venture is only to do investment in silicon valley. ZPark Venture Li qiang (Larry Li) in April, has just moved into the office is located in downtown Palo Alto. Less than two years of the establishment of fund has been borrowed from partner’s office before.

in the eyes of media, the zPark Venture’s a real star team: “at the top of the wave” author wu jun, director of Facebook’s Wei Xiaoliang and framework designers hai-ping zhao, Google’s first senior Chinese engineer Zhu Huican are its partners, such as other nearly 30 LP are high-level from large tech companies in silicon valley.

this combination has obvious advantages in the field of investment, the high level of LP know the direction for the future of big companies in silicon valley and industry trends, easier to grasp the investment hot spots; Industry resources can also be used for the enterprise cooperation, channel even more mergers and acquisitions, investment and financing to help.

“silicon valley of 50% VC is not profitable, double 80% agencies will not be able to return. But we can, and can reach the Top20 % “, li qiang, zPark Venture funds raised $4.4 million, the first phase of the current valuation has doubled. Raised $50 million in the second stage, the project from a purely early also slowly to the medium-term investment development.

unlike zPark class “executive”, set up a year of Dan hua capital has more local characteristics.

Dan hua capital is the main founder of the physics department at Stanford university, department of electronic engineering and applied physics professor zhang sheng, prize for physics in Europe, the American physical society barclays awards to world class award winner. Under such a halo, Dan hua capital more in the development of academic and Stanford university alumni resources.

“Stanford as we did in the first round of team selection”, said Dan hua GuAnJia capital partners, Stanford university, as one of the important factors of silicon valley innovation culture, in the recruitment of students when they pay attention to students’ ability of innovation, execution, etc. Long-term contact with students and alumni also provides conditions for the further understanding, select team.

“we don’t just follow suit to cast a hot area, and the more important the team’s execution, the founder of the quality. We hope can be found in the university who has focused on talented people in a particular field.” GuAnJia introduction, Dan project of China capital has about half of the Stanford alumni start-ups.

for startups, Dan hua capital can provide more resources. “We can not only reach to these students to apply for a job, before the recruitment ahead. We have a good relationship with the school teachers, talented students in a timely manner “. At the same time, a wide range of high quality alumni resources for business development team and future financing, mergers and acquisitions and other advantage.

in June 2014, Dan hua finished nearly $100 million of new round of capital raising, investment project from the beginning of angel investment is given priority to, to later period of investment.

compared with the former two “regulars”, some investors alliance of individual investors choose loose coupling mechanism.

Sun Jing is an angel investors in silicon valley. Trustlook she is one of the first investors, at the same time, participate in launched a local angel investor groups.

“many angel investors don’t like to put their money to fund custody, because they are in addition to profit, also hope that can direct contact to entrepreneurs, to participate in the venture. But after completely from any institution, mass and it’s hard to get a good project, also have little energy to manage all of the project at hand, “Sun Jing many investors friends have such problems.

Sun Jing initiative do such work: organization by several professional investor or fund entrepreneurs to see the project interview, then in view of the good project, a joint organization interested in other angel investors to invest. The initiator is responsible for providing information, prepare the material and the late management.

“within the group, so investors can share information between expanded all project resources; For entrepreneurs, can one-time reach more investors, quick get more financial support, “Sun Jing is introduced, compared with the traditional investment institutions 3-5 months of negotiation period, such mechanisms can fastest to complete the application within 2 weeks. Trustlook is the beneficiary of the new model since avoided team for financing too scattered energy, and at the same time, quickly enter the money also will help the team to read important development phase for A round of funding to provide more chips.

“at the beginning of the group (2014) this year began to do, there are hundreds of angel investors to participate in, most of the Chinese”.

with alibaba listed in the United States, Chinese Internet companies in overseas strategic investment is more conspicuous. It is reported, tencent, alibaba, baidu, have set up a special department of investment in silicon valley, is different from other investment company is the largest, is a BAT in overseas business of the company needs to make strategic investment, rather than financial investment.

compare innovation works, Park Venture, such as small and medium-sized funds, BAT always appears very “local tyrants” abroad. For example, some only a few small investment company, investment companies will share an office. And tencent in the silicon valley has a very large luxurious office, and the staff are all americans. Investors have declined to be named to the netease science and technology, said tencent’s investment abroad do very localized, excellent one reason for this is what they do. In overseas markets, the “localization” is the key to success. Tencent’s investment abroad from A D turn round, is not limited to the investment scale, mostly according to the requirements of strategic layout.

“, in contrast, alibaba’s investment strategy in the United States I’m not able to read, they buy project is very expensive.” The investors said.

hot behind

Chinese investment boom in silicon valley is not a whim, but the result of the generations of Chinese people at home and abroad for decades accumulation.

in the first place, in the past 20 years China’s rapid economic development, more and more domestic enterprises, institutions and individuals choose overseas investment to balance ratio of assets; Another silicon valley in the more entrepreneurial or engage in entrepreneurial Chinese, choose the way of venture capital value-added assets. All these bring sufficient funds for Chinese investment market. From $50-1 million caps, 10 years ago to the present level of the appearance of many tens of millions of dollars of investment.

second, 2010 years after the Chinese in silicon valley, and the previous “code” is quite different. More Chinese people begin to the company’s senior management, for the Chinese silicon valley start-up to bring unprecedented talent reserves, also bring more resources for Chinese investment perspective and the different decisions.

third, emerging on the Chinese team of the case of mergers and acquisitions, as well as the overall hot investment and financing market, provide more and better way of exit for Chinese investors, at the same time, more domestic enterprises to silicon valley business mergers and acquisitions, as well as Chinese investors have brought in good returns.

“Internet compared to other industries, the communication between China and the United States is very frequent, the development level of China’s Internet is rapidly improving, from ten years ago the C2C (copy to China) to China now to C (facing the average consumer Internet) products began to surpass the United States. Between silicon valley and zhongguancun, more and more is learning and complement each other, rather than in the past one-way mode migration.” Easy to farce.

easy to married a Chinese wife, although they immigrated to the United States after the baby was born, but easy to farce is very keen on bridge of understanding between China and the United States. “In fact, the United States is well-known investment institutions and investors, their present situation of the development of the Internet in China is not very understanding. In addition, I also put the innovation works investment enterprises in China is introduced to the United States to attend the communication industry, such as peas for the innovation works the first investment project participated in Google IO convention.”

indispensable “Chinese elements”

innovation works in silicon valley and its special advantages. Yi said, “the big Internet companies want to succeed in China is very difficult, startups are more have no chance, but China’s market is very big and attractive again.” Real-time video communication tools Sqwiggle enterprise, is the innovation works bring Beijing one of the two teams. Sqwiggle founder Tom feel, choose to accept investment rather than the investment institution innovation works, a very important factor is that innovation works can help them open the huge market in China. The innovation works in silicon valley investment 18 project, there have been two set up office in Beijing.

“we approached SkyCatch, their A round is over”, said li qiang, “but after talks with their CEO contact shareholders to accept our investment” again. Less than a year, zPark Venturer investment in SkyCatch had 10 times the return, and this is mainly thanks to their “Chinese elements”.

as a “world factory”, Chinese investors can produce for us companies to provide better resources; At the same time they also bring more Chinese market information, analysis and real partner or even recruitment channels in China; In addition, the Chinese background may also bring them round more attractive Chinese money.

in silicon valley, Chinese investors gradually become indispensable many entrepreneurs of investors.


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