On Friday, March 19, Asia America Innovation Alliance (AAIA) joined hands with Chinese Coffee Club, a nonprofit based in New York dedicated to providing professional lectures and conferences for Chinese communities, to discuss industry trends in 2021. Also in this event, three VC guest speakers shared their unique perspectives on their investment thesis and provided insights into startup fundraising.
Jun Li - Founder/Managing Partner
Wisemont Capital was founded in 2015. Our team has extensive entrepreneur background and successful global M&A deal experience. As a member of the TEEC (Tsinghua Entrepreneur and Executive Club), we helped many Chinese startups thrive by promoting cross-border investment between North America and Asia. We primarily provide seed and early-stage investment. We are proud to say that about 50% of fund portfolios have Asian founders, and our partners and committee member invested in 4 out of top 10 semiconductor companies in China. Our investment focus is on artificial intelligence, which will accelerate automation to improve efficiency in all areas. Other primary investment focus include Transportation, FinTech, Education, Digital Health, Chipset, Cyber Security and Workflow Automation.
Jerry Wang - CEO
Haitou Global was founded in New York in 2014 as a research driven and technology-enabled global asset allocation platform that provides asset management, investment advisory, and investment banking services. Based on the investment thesis of Emerging Market, Emerging Technology, and ESG Investing, the fund invests in innovative companies in emerging technologies such as fin-tech, consumer-Tech, health-Tech, clean-tech in emerging markets, including China, United States, Southeast Asia, Africa, and Latin America.
We have three investment strategies:
1. Believe in technology innovation: change the traditional industry through technology innovation.
2. Model output: Help the Chinese team to copy the business model to the United States and the Emerging Markets. And help the American team to introduce advanced technology to China and the Emerging Markets.
3. Cooperate with entrepreneurs: Exporting mature technologies or models to new industries or markets.
We’ve incubated many successful companies such as Cashcepat and eMoola. We’ve also invested in late-stage pre-IPO projects like Didi Chuxing, Pinterest and Uber.
Yigang Yang - Founder/Managing Partner
WaterStar is a Venture Capital fund management firm providing equity investment to early-stage to mid-stage technology-based companies. We focus on serving the Chinese community overseas. Therefore, we only invest in North American companies, not in Asia. After an angel round, we usually invest in startups as a lead investor, becoming members of the Board and participating in the company’s strategic decisions.
We pay special attention to the intellectual property rights of enterprises. Our knowledge in this area can help enterprises protect their technology, protect their market. Enterprises can realize the value of IP through IP licensing. IP holding is the innovation ability and overall strength of enterprises. And we judge the value of a company from its patents. WaterStar uses the patent as a basis to determine whether the company is profitable for investors.
After the patent basis, we review it through six growth points and three trends: regional growth, industry growth, enterprise growth, market growth, product growth, technology growth, historical change trend, historical optimization trend, and historical consumption trend.
In your opinion, what are some of the industry/sector trends in 2021 and beyond?
Jun Li: We have seen the advancement of many exciting technologies in the past decades. Technologies such as artificial intelligence and machine learning, Big Data and deep learning, as well as cloud and edge computing have reshaped our lives. In the past couple of years, IoT played an important role in fathering and transmitting data to further fuel the growth of Big Data and AI. These technologies are applied to almost every industry you can think of. Just to name a few, Lemonade uses artificial intelligence technologies to reduce cost of insurance; Square Inc uses artificial intelligence to provide more affordable loans. So for companies that are solving similar needs using similar technologies, the key to success is improve customer stickiness by understanding the industry workflows. This is especially true for many B2B companies that are not IP driven. On the flip side, the emergence of new technologies also raises the concerns of information security and data breach. In my opinion, data security will continue to be a hot space for entrepreneurs. The structure of the world’s population will have a great impact on the future trends as well. Since the world population is decreasing, automation is inevitable. Speaking of automation, I think autonomous driving related technologies and electric vehicle will continue to grow and scale.
Jerry Wang: In my opinion, the future is looking very promising especially for the fin-tech industry. The pandemic has impacted the fin-tech industry in a positive way in that it fueled the growing demand for contactless payments and mobile payments. Nowadays, many of us work from home and this is reshaping our shopping and payment habits. Once the habits are developed, it’s hard to go back to the old ways of doing things. In terms of markets for mobile payments, China and Kenya have the largest adoption rate. The market is expanding rapidly in the United States as well, and this is reflected by the rising financial indexes as well as the amount of dollars poured into the industry. Digital banking is also on the rise with companies emerging from different markets, including Indonesia and the Emirates. For companies that are in this industry, regulatory risk remains to be one of the biggest risks faced.
Yigang Yang: Echoing what Jerry has said, the future is bright. In addition to the software industry, I’m also looking forward to the improvements in the smart manufacturing, medical devices, and hardware sectors. I think there are pressing challenges at the intersections of the supply chains, and many technologies are relying on the fundamental infrastructures and supply chains to grow and scale. For example, advancements in lithium batteries will signification improve the adoption rate of internet-connected devices and services such as EVs and drone delivery. April of last year, Amazon air drone delivery has gained approval from the FAA to allow un-manned deliveries within certain parameters. But the safety of lithium batteries used in drones remains as a public concern. Companies are racing to find solutions to reduce the risk of battery failure and make batteries perform better. In the healthcare industry, treatment med-tech companies tend to have higher valuations than diagnostic device companies because treatment devices require more proprietary technologies and clinical trials.
What are you looking for from a startup team?
Yigang Yang: I’ll share a few qualities we look for in a founding team. Firstly, we look for entrepreneurial experience in a founding team. We believe that serial entrepreneurs have more experience and have the ability to replicate the success of their past companies. Most importantly, they’ve learned to avoid the same mistakes they made before. The second thing we look for is great communicators. Having a great communicator as a key driving force of the company gives us the confidence to invest in subsequent rounds. Great communications also help founders work well with their employees, suppliers, and other investors. Lastly, investors like to work with founders who listen and learn, in other words, “coachable.” Great founders are ones that are open to taking advice from other investors and industry leaders, and are not afraid to make pivots.
Jerry Wang: For us, industry experience is one of the key attributes a founding team should have. We usually invest in founding teams that have at least 10 years of industry experience. Having international and cross-sectoral backgrounds is also important for us. Most of the founders in our portfolio earned their degrees abroad and have hands-on experience leading large corporates. For example, the project we are doing in India is with a Chinese-American team from Capital One with years of operating experience in China. We also evaluate the team’s ability to localize their products and services and how quickly they can replicate the success in a new market. Time to market is another critical consideration as we tend to gravitate towards companies that can get their business off of the ground in 3 months and start to generate revenue in 1 year. To sum up, we look for a sophisticated and complete team with both technical, commercialization, and operating skills.