Steven Hu, a partner at Qiming Venture recently left the prestigious VC firm to take the reins of local mobile gaming company OurPalm. Mr. Hu said that lots of people – even those who knew him well – couldn’t understand what motivated him to make the jump, and in explaining his mindset, he gave us a fivefold reason, ascribing the departure to his passion for game, perfect timing, OurPalm’s capital advantage and great team as well as a non-stop dream to build up a Chinese entertainment empire.
As a matter of fact, Mr. Hu’s ‘sky dive’ isn’t an isolated case of veteran Chinese venture capitalists leaving their firms to either join one of his/her portfolio companies or to start a new cause. Known as those who always encourage the others to quit on steady income and leisure lifestyle to start a new business, venture capitalists are now rolling up their own sleeves to get some dirty jobs done, from talk the talk to walk the walk.
The past few months have seen CapitalToday’s Mr. Chang Bin left for e-commerce giant JD.com (one of his investments at the firm), a trilogy team departed with IDG China to found a new fund, a VP with DCM China team took a position at Qihoo and a partner at GobiVC left to launch his own venture capital.
After several years of meteoric growth, venture capital in the Middle Kingdom now reached a stage seeing affluent funding yet less worthwhile deals. For instance, a highly regarded local firm raised about US$ 300 million for its new fund two years back while only a small portion of it (about 15%) got used. Reasons? Besides increased cautious on the heels of the group buying frenzy that derailed a bevy of funds, a partner at that firm explained that numbers of high quality deals are declining as compared to one or two years ago. His explanation could be testified by the fact that a bunch of firms are less active than before over the course of past 12 months.
On the flip side, a lot of companies received venture capital from couple years ago now haven grown from start-up stage to ramp-up stage, to keep the momentum going they call for people with expertise to steer the ship, and that falls right under VC guys’ expertise. At the end of day, VC itself is a dirty job with hefty workload, dipping your toes into the sector means you’re supposed to center your life around startup world only to chase down a small bunch of stellar startups. Venture capitalists are expected to bring not only money but also managerial and technical expertise to their investments. And that is why I foresee a wave of such exodus when more and more Chinese venture capitalists moving forward to pursue a great cause of making world-class Chinese companies.