[This article is contributed by our guest contributor Ying Peng, based in Silicon Valley]
On the evening of May 5th, Yongqiang Qian, the founder of New Oriental and Jp Gan, a well-known angel investor and Managing Director at Qiming Ventures, met with students in Stanford University, and discussed the topic “How to cooperate with the Chinese investors”.
30% of successful Chinese entrepreneurs are Stanford returnees
In the past ten years, overseas Chinese returnees have made great contributions to the booming development of China’s internet industry. Among the successful entrepreneurs, about 30% returnees graduated from Stanford. It’s no exaggeration to say that every few years amongst the audience someone would emerge a founder of an outstanding company.
Most top students choose prestigious professions like banking and less likely to do start-ups
As Qian had started his own enterprise before, he shared with Stanford’s masters, doctors and MBAs with his experiences. He said jokingly that Mr Gan was a successful example as he had always been able to score the most outstanding students, but he himself was on the opposite side. The top 5 students in a class rarely chose to set up an enterprise. After graduation from elite schools, most of them ended up working in investment banks or consulting industry.
Building a start-up is not easy
However, the path to start-up was fraught with difficulties. There might only be one who would succeed in 100 starters. The successful internet start-up founders nowadays have dazzling stories, but the fact was that more start-ups are unknown and unsung before they could grab headlines.
It’s hard to set up a successful enterprise, but there are still many opportunities waiting to be taken advantage of in China, where not many companies own their brand and value. He illustrated Jumei.com as an example. At first the team focused on advertising in web-games. However after the failure of that project, they identified their current opportunity in women’s cosmetics group-buying. They already had a united team, enough technology and experience so evenutally succeeded with Jumei.com.
Three ways of how to attract VC attention
Qian also described which start-up projects can attract him. He pointed out that there were two ways in general, one was to be introduced by his friends, and the other was able to appeal to his mind within 20 minutes.
Jp Gan described three ways of attracting middle-term investor’s attention:
- Firstly, the target market of the company should be infinite just like Facebook. The starters should figure out their target audience and marketing strategy clearly in their early stage.
- Secondly, the starters should have full control over their product and be able to make their products perfect, just like what Robin Li, the founder of Baidu, had done.
- Thirdly, team is of great importance. The special skills of the team members were better if they complement each other. For the three members of Ctrip.com, they respectively were good at technology, marketing and financing capacity.
A good angel investor can help a lot by providing constructive advice. Also they could make it easier for the start-ups to get financed.
The investor and entrepreneur dynamics
Mr. Gan was asked ‘if there were more investors than entrepreneurs in China?’He answered there is in the pre-IPO stage. However, in the early stage, when the start-ups were in need of the funds from angel investors, investors’ have more power to make the decisions.
Dealing with the government
Mr. Gan said that many VC’s don’t want to cooperate with Chinese returnees considering their lack of capacity to work with the government. However, according to his own experience, he deemed that it was not hard to keep a good relationship with the government if you were humble and modest.
Dealing with the giant Tech companies
Mr. Qian does not agree that giant tech companies like Tencent will obstruct the development of start-ups. To start up an enterprise, you should always take competition into consideration. But what is more important is whether you can be the best in what you do.