As we all know, the ability to innovate in the field of high technology is the key to promote the market and economic development. With the rapid development of economic globalization and the rise of “counter-globalization”, how can entrepreneurs analyze the situation and seize business opportunities from it?
AAIA Youth is honored to invite David Chen, founding partner of EI Camino Capital, to hold an online seminar on September 22nd to share with us the trends and markets of hardware innovation, globalization and localization of industry chain, and challenges and opportunities in the post-epidemic era!
Guest Speaker Introduction
Dr. David Chen:
Dr. Chen is the founding partner of El Camino Capital (a cross-border venture capital fund based in Silicon Valley). Prior to joining El Camino, Dr. Chen was the founding President of InnoGrit Technology. He was also a Vice President at Marvell, a global semiconductor company, where he was General Manager of Marvell’s Solid-State drive business.
Q1: What is the difference between hardware investment and software investment? What are the investment themes of your fund?
A1: Compared to software, hardware requires more capital to develop; the development time and cycle of hardware is longer; the requirements for hardware are higher, and it is more difficult to fix bugs when they occur.
Q2: Can you explain more about globalization and localization of supply chain?
A2: Globalization of the supply chain requires factories around the world to participate in the production, from the small wafer to the final chip production, during which we have to move around many countries and regions to finalize the products
Q3: What is the development trend of the hardware industry? Can you give a few real-life examples?
A3: Although there is a big difference between hardware and software, the trend observed so far is that the line between software and hardware is slowly blurring, with Amazon and Google both selling hardware products, such as cell phones, smart speakers, laptops and so on.
The reason for software companies to get involved in hardware production are three folds. First, software companies are increasingly involved in hardware production because the hardware provides the entrance and exit of data, but data itself adds real values to the final products. Second, the popularity of artificial intelligence in recent years also brings opportunities for innovations in the hardware industry. Third, in the future, the energy development sectors will likely also demand the combination of both hardware and software.
Q4: What is the due diligence process of your fund? How do you handle post-investment portfolio management?
A4: EI Camion focuses more on companies in the growth stage, which are companies that have proven technical feasibility and are in the stage of focusing on finding customers. For due diligence in the growth stage, technology due diligence and the originality of the technology are the most important factors. The next important factor is market due diligence-to understand the market size, the competitiveness of the market. The last factors are the legal due diligence and financial due diligence. For many companies, the value of the technology itself needs to be tested by the market, while investors will pay more attention to the team’s technology, performance, industry reputation and teamwork ability, because only then will they have the opportunity to overcome difficulties when facing risks in market technology.
Post-investment management: Start-ups are not good at overseas promotion and globalization, and so the industry chain has been shifted, but the technology remains local. EI Camino Capital has helped start-ups connect with many customers through two rounds of investment. EI’s post-investment management will also help companies obtain more resources.
Q5: What do you think is the biggest challenge for start-ups in the post-epidemic world?
A5: I will give two examples. The first one is that breaking into a such globalized industry is a challenge for both large and small companies. The shortage of goods caused by the epidemic has caused countries to strengthen the localization of their supply chains. Then second one is that the post-epidemic era has resulted in higher communication costs. It may be more difficult for start-ups to find good partners locally than before the epidemic.
Q6: For start-ups, how to find the right investors in the semiconductor space?
A6: Main channels include referrals, institutional recommendations, friends’ recommendations. Referrals can increase investors’ trust in entrepreneurs and vice versa.
Q: What impact and opportunities will the periodicity of the chip industry have on start-ups?
A: In the overall economic environment, there are more opportunities for start-ups when the global economy is in its lows. Because when the economic is booming, the market competition is high, and so it costs more to start up a company. A start-up will also have more competitors, and its employees will not be as loyal as during an economic recession.