The Models of Asian VCs
1) Why did you become a VC?
I had lots of ideas for different businesses, and wanted to pursue all of them, but I knew there was not enough time in the day to do it all. Venture capital allowed me that flexibility. I don't run any of the companies, but I get to work with them and create with them. Also, my father was a VC, and so was my grandfather.
2) Of the successful VCs I have met, there are 3 broad models:
- "Govt-turned-VC" model
- "The Apprentice" model
- "Ex-CEO/Winner" model
Which model do you belong to?
I am "son of VC model"
(Please suggest other models not included) Which do you feel is the most likely to succeed? The one who is the most determined to fight for the entrepreneur.
3) What is the nature of the apprenticeship?
People learn by doing.
4) What do you have to learn?
I don't know. I have been at this for over 20 years and I still don't have the answer for you.
5) How do you get to the point where you can actually get LP's to invest in you, and so on?
For individuals, it is generally by convincing them that you will be successful, you will help create great businesses, you will build great value, employ large numbers of people, and make them a lot of money.
For institutions, it is all about the track record. You have to have invested successfully before. You need to look like an institution before institutions will want to invest with you. They are fiduciaries and have responsibilities to their beneficiaries, not to mention potential liability.
How Asian VCs make money - the math of venture capital
6) Is it just speculating on the bubble or is there more to it than that?
VC makes money because large companies don't have all the answers. In fact, most large companies are risk averse, which allows small companies to jump in and try new things. I also believe that entrepreneurs and the teams they build have more energy and put more effort into their jobs than employees of big companies. So more value is created there.
7) Is Asian VC just like Silicon Valley VC and if not, are the differences a reflection of immaturity(some day China vc will be just like SV VC) or factors unique to China that will persist?
Originally, we thought they would be different, but it turns out that great entrepreneurs are great no matter where they come from. China's rise is important, as is the low cost of labor there. But I think the entrepreneurs are amazing everywhere.
For example, VC in the west usually funds tech, but in China VCs cover a broader range of sectors. I like that about China. Open to anything. Cool things are going to happen there.
8) How do you choose the right people to syndicate with?
I usually syndicate with people who work with great venture capital firms or people with great enthusiasm for the business and great knowledge of the industry the business is pursuing.
9) What are the 3 most common mistakes VC make?
- Not investing when they see passion.
- Group think.
- Not building as big a network as they possibly can.
10) What did you learn from your mistakes?
What LPs are looking for in Asian VCs?
I am a GP. As an LP, I would be looking for energy, a good personal local network, a link to the DFJ Network, and, if possible, a good track record.
11) Also who are the LP's and how do you persuade them to invest part of their assets in VC at all?
I believe now is the best time in my work lifetime to invest in a VC fund. Many of the greatest companies in the world have been created during depressions and recessions. Exxon, Chevron, GE, Lilly, Microsoft, Baidu, and Skype were all started during recessions or depressions. And for venture capitalists, the valuations, and cost of labor, real estate and materials are lower, so returns can be even higher.
How to go from where you are to where you want to be in the 21th century?
12) Is B-school necessary?
No. Steve Jobs, Bill Gates, Larry Ellison didn't go to business school. Some even dropped out of college.
For VC, I think business school is helpful. The broad base of knowledge and the network are both valuable.
Which B-School should you go to (HBS/Stanford/INSEAD?) to maximize your chances?
Your network is important if you want to be a VC. I would choose according to the network you want to build. Maybe it is ISB or a top Chinese Business School.
I'm specifically wondering why a VC firm would want to hire a recent grad, and how a recent grad can make his/her skills applicable to what a VC needs?
It usually takes about 6 months for a new analyst or associate to get up to speed on our business. After that, they are quite valuable. They generate new leads, and add to our network. They allow us to leverage
them to make great progress. They make for a more dynamic workplace. Lots of things.
13) Smart networking
Is starting early necessary? If so, how? Yes.
Should a VC be getting out to places like Chengdu, not just Shanghai?
How do you network with other VC's?
I go to and sometimes arrange meetings, conferences, etc. Both informal and formal gatherings are
14) Building your track record and reputation
What are the skills that really matter and how do you develop them?
No special skills, but specific emotions. You have to love (or get a kick out of) entrepreneurs.