Knight Vision Capital founder and former Alibaba CEO David Wei delivered a speech at the 2021 Global Venture Capital Summit on June 10 in Xi’an. He discussed the current venture capital and startup ecosystem, as well as his take on the evolution of the tech and venture capital sectors in China over time.
# 1: The conditions for entrepreneurship are more favorable than ever
Wei said we are living in a golden age for Chinese entrepreneurship. In particular, he was bullish on startups in consumer goods, technology, and life sciences. He pointed out that 15 to 20 years ago, China’s venture capital industry was inextricably linked with the internet industry, with tech companies dominating the finance scene.
But that has changed, with Chinese venture capital focusing on startups in a multitude of areas. “We believe that in the next ten years, at least 100 companies will achieve a market value of RMB 100 billion in each of these areas,” Wei told the Xi’an audience.
Last year, seven consumer goods startups that Knight Vision Capital has invested in went public, four of which have a market value of RMB 100 billion. For reference, over the past three decades, 200 companies listed on Chinese capital markets have exceeded RMB100 billion in market value.
# 2: People matter. Invest in talent and management.
When starting a business, is it more important to define the strategy first and then build the team, or vice versa? Wei explained that for start-ups, building a strong team should be the priority, before determining a strategy. But for companies of a certain size, it’s more effective to set a goal and a vision, and then try to recruit talent who can move those goals forward.
Startups can also benefit from a diverse team with varied backgrounds and skills, Wei said. For example, Xi’an has many talents in IT and engineering, but if a startup is too technical, it will limit the business development of the company. “Ideally, teams should be made up of men and women, young and old, with backgrounds in both the arts and the sciences,” he said.
# 3: Domestic capital has exploded
Chinese entrepreneurs are also benefiting today from a more favorable financing environment thanks to the rise in domestic capital.
“When a company was founded 20 years ago in China, there were almost no local investment institutions. To get investments, you had to be able to speak a little English, because it was the language of investors at the time. But that’s no longer a problem. We can invest even if you don’t speak Mandarin well with a heavy Shaanxi dialect, ”Wei said.
Analyzing the current investment landscape in China, Wei said small and medium enterprises are often overlooked by large institutional investors and foreign capital. This is where the Chinese venture capital and private equity community has an advantage and can seize opportunities. Wei concluded by affirming his confidence in the Chinese startup ecosystem, highlighting Knight Vision Capital’s commitment to high-quality projects in consumer goods, technology and life sciences.
KrASIA Connection offers translated and adapted content published by 36Kr. This article was originally written by Jia Qiang for 36Kr Shaanxi.