ZhenFund founder Xu Xiaoping wanted startups his team invests will disrupt China’s education market or disrupt big players like Baidu, he said on stage of TechCrunch Shanghai today.
His first goal has to do with his experience as co-founder of New Oriental school which disrupted China’s private education market years ago. New Oriental Education & Technology Group now is one of the largest private educational services in China that went public on the NYSE in 2006.
ZhenFund invested in a Zuoyeben, a service for elementary schools and students to organize courses, 5-6 years ago. It didn’t work out until it had the fourth CEO who also an executive of New Oriental and an expert in teaching.
The service has had 5 million daily active users. Mr. Xu hopes it can hope it can be of the rising startups that can challenge New Oriental school. They have seen some signs; for instance, it is found on the platform that some students in a school nobody never heard about performed better in English grammar than those in the best elementary school in Beijing. Thus users can leverage better educational resources then. Xu thinks it’s like how New Oriental school benefited students across the country. In the early days, students from across the country had to take flights or trains to take classes when New Oriental school only had presence in Beijing. Later New Oriental brought quality educational resources to a large number of cities in China.
Mr. Xu founded ZhenFund, an angel investment fund, in 2006. ZhenFund and Sequoia Capital China jointly founded an angel investment fund in 2012 to invest in up to one hundred Chinese startups from 2012 to 2014. The new fund, called ZhenFund 2.0, funded 26 starups in 2012 alone.
Well-known Chinese Internet companies ZhenFund has invested in include US-liseted LightIntheBox and Jiayuan. Other startups the fund has invested in include Yongche, an online/mobile car rental service, Da Yi Ma, a mobile health tracking tool and community for women, and Dijiuke, an online course marketplace.
Xu thinks China has entered a new ten-year golden age. ZhenFund found Chinese angels becoming more savvy and VC/PE cooling down in 2012. 309 Chinese angel investors in that year did at least two deals and committed over one million yuan in startup funding in 2012. Mobile Internet, e-commerce and consumer services were still the top areas. 60% of angels would exit by selling shares to VCs. ZhenFund found that investors, including Chinese Internet giants, still would like to acquire or invest in copycats. Anyhow big players such as Tencent, Baidu and Alibaba, became more willing to acquire small companies.
“We always feel hopeful every time we have decided to invest in a startup but sometimes regretful after we have wired them money”, Xu joked. After all those years in angel investment, he came up with four rules for entrepreneurs,
- You must know who your real enemies are.
- You have to have been on the real battle field.
- You have to have a reliable core team.
- You have to liberalize your thoughts.