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VC, Innovation, Entrepreneurship in China

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Olivier Glauser

on 15 October 2016

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Transcript of VC, Innovation, Entrepreneurship in China

Olivier Glauser
Venture Capital, Entrepreneurship, and Innovation in China
Venture Capital by the Numbers
USD and RMB Investments - Parallel Worlds
New Fund Raised = Peek into the Future
New funds raised =
Indication of future investments

Confidence of institutional investors in the region and sector
-11%
+253%
CHINA
OFF-SHORE
USD VC
Fund
Company
Holding
China
Operations
RMB VC
Fund
Chinese
Company
China Domestic IPO
Overseas IPO
2003
Total of 325 VC firms
70% Invested Capital Foreign
Overseas Fund:
Sector expertise
Global operations
Best returns
Domestic China Funds:
Small and understaffed
Local government sponsored
Poor returns
2010
1,000+ RMB Funds
<50% Capital invested in RMB
Returns outperform USD Funds
Local knowledge
Speed of execution
Entrepreneurship:
"the relentless pursuit of opportunities without regard to resources currently controlled"
China = 1.3 Billion Entrepreneurs?
Challenges
Hiring
Retention
Succession
Chinese Consumers
Eager to try out new things
Lots of them
A Product for Every Niche
fast product release
fast product iteration
listen from users
try new features
Lessons from Tencent product development:
BUT...
fast product release
+
many eager consumers
+
lots of entrepreneurs
=
copycats
&
intense competition
successful US Group Buying
Internet service
over 2,500 Chinese Group buying sites
Characteristics:
"the process of having original ideas that have value"
Next Generation Passive Display
Software based Mobile Telecom Switches
MEMS motion sensor chip
Next generation high powered batteries
In Search of Chinese Technologies
Chinese Ancient Technology Inventions
Irrigation systems

Movable type print

Iron plow

Paper money

Powder
Modern China: The Perfect Environment
Thousands of new businesses in China
Highly entrepreneurial culture
World center for electronics & manufacturing
Chinese Success Stories of Technology Innovation?
B2B
B2C
C2C
= Copy 2 China
Creativity
Sir Ken Robinson
Just Blattant Copying?
Technology vs. Innovation
Business Model Innovation
C2C + Adapting to China
Execution Risk
Market Risk
Technology Risk
Opportunity Cost of Technology Investment
Why take high-tech risks when can get
same return in 1/2 the time
in traditional industries
IPO as status symbol
Acquirers - copy and build vs. buy
Risks in new Ventures:
Copy of Expedia online travel?
pay on delivery
call centers vs. ecommerce
airport marketing
Another Handset Maker?
new handset designed in 3 months
sells intellectual property of design
delivers PCB in exchange for royalties
Online Video Games
Rampant piracy in console game
+
Internet cafe
Free to play, pay for virtual items
Incredibly successful and profitable model copied worldwide
Why so few Technology Startups in China?
Appendix
Venture Capital
People
Ideas
What is Venture Capital?
Long term
Active involvement
High-tech and life sciences
High Variance
an Asset Class
China Exits
M&A 90%
IPO 10%
US Exits
Venture Capital Exits
Challenges:
Reliance on Capital Markets
IPO for select few
what about the others?
Next Opportunity
China Outbound Investment
Sports Marketing & Rights
to connect China to the World
Ticketing
Sponsorship
Media
Thank You
Q & A
Wechat Mobile Application
Intense Product Segmentation
A Product for every niche...
CONCLUSIONS
Innovation in China:
business model vs. technology


Opportunities :
China international expansion

Solving China's challenges
Environment
Healthcare
Product Innovation?
Motivations:
money
new idea
change the world
be own boss
Full transcript