Today Matrix Partners China,  held a Q&A meet-up at Garage Cafe in Zhonguancun, a place for entrepreneur’s to work and meet. Matrix Partners China was started by Shao Yibo in 2007, who originally founded Eachnet, a Chinese clone of Ebay that was later acquired by the global online auction  giant.  Matrix Partners headquartered in America, is regarded among the tier 1 VC’s having invested in Apple, FedEX and Sandisk. Matrix Partners China has successfully in Kingsoft, and They are mainly focused in early stage high tech industries investments that go up to USD$10m.

Today’s panel was run by partners Shao Yibo and Zhang Ying.

Here’s a summary:

Entrepreneurs and team tips

  • A founding team of 2-3 people is best
  • A Product Manager who understands both technology and business is crucial in the early stage of a start-up
  • For entrepreneurs who are already married, it matters how supportive their family is
  • One of the most important qualities in an entrepreneur is persuasiveness, because without charisma it is difficult for people to join your team or sell your product
  • For fresh uni graduates it is better not to start a business straight away but instead join another start-up to gain experience

Investment tips

  • For angel investments founders should give up a maximum of 15-20% and for series A and B should only give up 20-25%
  • A start-up should get enough funding to sustain 12-18 months because raising funds is very time consuming (3-6 months)
  • Every time a start-up raises money it should ensure its valuation increases, so milestones should set up milestones e.g. product launch and money raised should get you to the next milestone

Finding the right VC tips

  • It is better to talk to many investors rather than just one, to find the most suitable one
  • Selecting a VC is like selecting a marriage partner because they sit on your board, you need to be able to communicate and understand each other well
  • Start-ups should ask a VC to provide the contact information of their portfolio companies to be able to understand what the VC is like to work with
  • For industries that can only have 1 winner, a VC will not invest in the others but for industries like online games or e-commerce they can invest in multiple companies
  • Do not give out your business plan to VC’s at public meet-ups or conferences, it is better to contact them in private

Some of these tips sound obvious but it is often the obvious things that people miss or disregard.

Jason is an Australian born Chinese living in Beijing, specializing in entrepreneurship, start-ups and the investment eco-system in China, especially in the tech and social area.

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