10 Key Takeaways from 'Ask A VC': Gary Rieschel, Qiming Venture

Silicon Dragon's 4th 'Ask A VC Anything' featured Gary Rieschel, founding managing partner of Qiming Venture, one of the most established and dominant US-China VC firms. Rieschel is a thought leader in the venture business and manages to stay ahead of the trends with a long-term perspective.  
Here's 10 key takeaways from host Rebecca Fannin's conversation with Gary at Silicon Global Online Series: 
Ask A VC Anything.

1. Innovation will enter a hyperactive period that will last well into a decade as a result of the Covid-19 virus speeding up changes in lifestyles and norms

2. VC fund raising will become exceedingly difficult as limited partners that are already over-allocated in this asset class become more selective

3. VC investing in tech will be more selective as China faces its first downturn ever since Chinese venture took root nearly two decades ago 

4. China tech investing into the U.S. is dead, a victim of politics

5. Stricter financial disclosure requirements for Chinese companies listing in the US could come into play in the wake of alleged fraud at China's Luckin Coffee

6. Fair competition between the US and China over tech dominance is healthy, but both country's governments are too involved

7. New rules of the road will need to be developed for the use of AI, regarding such issues as patient data protection, which is more freely shared in China than in the US

8. Tech markets are moving away from a focus on the consumer internet to product solutions plus data

9. Sectors that will be hurt the most in this coronavirus crisis include commercial real estate and the shared economy such as co-working while those that will benefit include online education and pharmaceutical

10. US-China relations are at a low point politically but putting moats around tech with dual standards and decoupling of US and China markets won't work since technology likes to move, to flow 

Highlights of Gary's career

• Co-founded or sponsored 4 China VC firms and helped to jumpstart China venture investing
• 30 years experience as a venture investor working in Silicon Valley, Japan, Shanghai and now Seattle
• Co-founded Qiming Venture in 2006, which now manages $5.3 billion with nine US $ funds and four RMB funds
• Despite challenging times, recently raised a new $1.1 billion fund focused on healthcare and tech investing  
• Returned to the US in 2016 and launched the firm's 1st US fund investing in healthcare, and raised a second fund to total $300 million in capital

On-demand recording

An on-demand recording of Silicon Dragon Online with Gary Rieschel is available through the end of April 2020. Payment of $20 goes to Silicon Dragon account on PayPal, events@silicondragonventures.com. 

Ask A VC Anything: 10 Key Takeaways from the VC Who Named Zoom

Zoom founder Eric Yuan with
Jim Scheinman, Maven Ventures

For our third "Ask A VC Anything' episode, we put Jim Scheinman, the VC who named Zoom and invested extra early under the spotlight. Jim is currently investing from Maven Ventures and its $64 million, third fund focused on seed financing in game-changing consumer tech and self-driving startups. He's made a mark in venture investing with such deals as Zoom, which went public last year and is now the hottest startup around, and with self-driving tech startup Cruise, sold to GM for $1 billion. Jim has found his calling following this career path after trying his hand at being a lawyer, business executive and entrepreneur.  He's achieved five unicorn exits ($1 billion + exits/valuations) since forming Maven Ventures in 2013. Here are some insights from his investing style, as outlined during Silicon Dragon Online's weekly webinar, April 16. 

TEN TOP  DRIVERS

1. Strives to predict future consumer trends but not too far out. Examples include autonomous driving, tele-medicine, grab 'n go cashless outlets, and distance learning -- many of which are strongly emerging in this Covid-19 era. 
2. Invests in founders who are driven, trustworthy, passionate and have a vision worth fighting for 
3. Gets pitches from 3,000 companies per year primarily on Zoom and invests in only 6 annually
4. Invests at the earliest stage and works closely with the founding team on ramping up5. Keeps his fund size at a micro level (under $100 million) to hone in on investments at the earliest stage 
6. Invests in only one portfolio company in a market category at a time
7. Takes few board seats or observer roles, typically no more than 5 at one time contrasted with 10 or more by many VCs
8. Exits the board generally after the A round investment. Most of his portfolio companies get funded after the initial seed money
9. Focuses on the sectors he and his partner know best
10. Invests in founders who come from trusted sources within his extended network 

During our one-hour webinar, we also discussed how the coronavirus has changed our lifestyles at home and work in ways we couldn't have imagined a few months ago. It won't be 'back to normal' after the Covid-19 pandemic clears, and it could take one to two years before a vaccine or cure is developed. Meanwhile, new ideas are already being developed by entrepreneurial souls. Jim is ready to fund a select few of these innovations that are arising during this crisis period.

ON-DEMAND RECORDING

For more insights into what makes this VC tick, we have an on-demand recording of the webinar available for only $20. Click PayPal.me/silicondragon to purchase, and Silicon Dragon will send you the recording.Our thanks to Jim and Maven Ventures for matching this webinar's registration fees and making a charitable distribution to local healthcare workers on the frontlines of the Covid-19 battle.

NEXT EPISODE: APRIL 23

The next Silicon Dragon Online webinar is with Gary Rieschel, founding managing partner of Qiming Venture, a pioneer of early US-China cross-border investment and a specialist in funding healthcare and tech deals. 

Tune in April 23, 4-5pm PT. Sign up here to join in: Silicon Dragon Zoom with Gary

Silicon Dragon Launches Online Weekly Series: Ask A VC Anything

Silicon Dragon has launched an online weekly series, 'Ask A VC Anything'.

Hosted by Silicon Dragon founder Rebecca Fannin, these webinars feature chats with prominent VCs. Online audience ask questions during these sessions.

These webinars provide an up-close profile of leading VCs and their investment strategies and portfolio companies. They give the audience a chance to interact and learn more about how these VCs think. 

On-demand recordings of these sessions are offered for $20. Payment can be made to PayPal account: events@silicondragonventures.com

This weekly series launched in April 2020.

SCHEDULE

April 3: Bill Tai, the VC Who First Backed Zoom, Silicon Valley

April 8: Brian Cohen, NY Venture Partners; First Investor in Pinterest, NYC

April 16: Jim Scheinman, Maven Ventures: The VC Who Named Zoom, Silicon Valley

April 23: Gary Rieschel, Qiming Ventures, the VC Who Pioneered US-China Venturing, Seattle

Sign Up for Gary 

April 29: Jay Eum, Samsung Ventures, the VC with the Best Korean Connections, Silicon Valley/ Seoul

Sign up for Jay

NEXT IN MAY

May 7, Jeff Chi, Vickers Venture Partner, Singapore/ Shanghai
Sign up for Jeff

May 14, Kamran Ansari, Venture Partner, Greycroft, New York City

Sign up for Kamran

Lightspeed Is Latest VC Firm to Beat the Odds and Raise New China Funds

In quick order, another China-focused venture firm has defied the odds and raised more capital for new investments.

Following Qiming Venture last week with a $1.1 billion new fund, now Lightspeed China Partners
comes out swinging with $4 billion of new capital in three funds to invest in early and growth stage startups.

Much credit goes to James Mi, founding partner at Lightspeed China. He's pictured (middle) at a Silicon Dragon awards event in Hong Kong.

Mi has been racking up the wins in China with investments in social commerce startup Pinduoduo and superapp Meituan-Dianping. Both went public in 2018.

You can get an idea of his views of the China market from this quote of his in my latest book,
Tech Titans of China.

"China's enterprise service and deep tech innovation is in the early innings of development. Given China's vast market, deep talent pool and increasing demand for home-grown deep technologies across various industries, we are seeing accelerated growth and significant investment opportunities."

Mi joined Lightspeed in 2008 from heading up M&A for Google in China, where he spearheaded an investment in Baidu. 

China Grabs 23 of 100 Spots for Best VCs in the World

The 2020 ranking of top venture capitalists worldwide underscores several trends in the market.
It demonstrates that China is rising as a tech superpower, while Silicon Valley remains at the top.

Definitely, China is showing its muscle, innovating faster, working harder and going global. On just about every score -- patents, R&D, number of engineers, unicorns, venture capital investments -- China is catching up to the U.S.

On the annual Midas list, China grabbed 23 of the spots, a record. Silicon Valley maintained a strong lead with 54 VCs on the tally. Of the 23 from China, five were notably from Hong Kong. Other markets that placed well were New York and Boston.

Once again, Neil Shen of Sequoia Capital China aced the list of top-performing 100 venture capitalists in the world -- the third year in a row.

The list also showed the prominence of a core group of VCs in China. Of the China firms on the list, Sequoia placed 3, GGV Capital had 3 and Qiming had two.

Investment in several Chinese companies that went on to become tech titans tipped the scales toward VCs in China.  They include social e-commerce startup Pinduoduo, entertainment and news app ByteDance, smartphone maker Xiaomi, delivery superapp Meituan-Dianping, ride hailing service Didi Chuxing, food delivery service Ele.me, video streaming site Bilibili, social commerce platform RED and self-driving car startup Pony.ai.

Let me point out that most of these companies and their venture investors are profiled in-depth in my latest book, Tech Titans of China.

Among the up and comer VCs, China also scored two spots.
In a nod to the newcomer tech hubs in Asia, Singapore counted with one VC.

There were none from India, however. This could change for next year's list, as India picks up as a venture tech hubs.
Overall, the annual ranking has been improved over the years to take into account markets outside the U.S., particularly China, which in some prior had a separate country ranking.

See my list below compiled from the Forbes rankings of the best venture capitalists, with their rank and the company that gave them the edge. 

BEST VCs: 23 from China
Neil Shen, Sequoia Capital China (1),  ByteDance
Richard Liu, Morningside Ventures (6), Xiaomi
Hans Tung, GGV Capital (10), Peloton
JP Gan, INCE Capital (13), Bilibili
Kathy Xu, Capital Today (14), Meituan-Dianping
Zhen Zhang, Gaorong Capital (18), Pinduoduo
Xiaojun Li, IDG Capital (19), Pinduoduo
James Mi, Lightspeed China Partners, (21), Pinduoduo
Xiaoping Xu, ZhenFund, (24), Meicai
Steven Ji, Sequoia Capital (30), Ele.me
Nisa Leung, Qiming Venture Partners (33), Zai Lab
Jenny Lee, GGV Capital (35), Kingsoft, WPS
Allen Zhu, GSR Ventures (40), Didi Chuxing
Tuck Lye Koh, Shunwei Capital (42), Xiaomi
John Lindfors, DST Global (48), Xiaomi
Liu Erhai, Joy Capital (49), Mobike
Yi Cao, Source Code Capital (51), ByteDance
Xiang Gao, Gaorong Capital (68), Huya
Duane Kuang, Qiming Venture (69), RoboRock
Kui Zhou, Sequoia China (70), Pony.ai
Jixun Foo, GGV Capital (76), Qunar
Young Guo, IDG Capital (85), iQiyi
Anna Fang, ZhenFund (91) RED (XiaoHongShu)

Up and Comers
Yungang Huang, Source Code Capital, Relx Technology, Qimg Hotels
Yutong Zhang, GSR Ventures, RED (XiaoHongShu)

Southeast Asia
Shailendra Singh, Sequoia India, (64), Pine Labs

Hong Kong
Neil Shen, Kathy Zhu, Richard Liu, Nisa Leung, John Lindfors

VC Firm Qiming Pulls In $1.1 Billion for New Fund Focused on Healthcare And Tech

Gary Rieschel, Qiming Venture

In a positive sign for the venture capital business during exceedingly tough times, cross-border investment firm Qiming Venture Partners has raised a new $1.1 billion Fund VII focused on early bets in healthcare and tech businesses. 

The Qiming team of partners in China and the U.S. closed the fund at the target amount and on the initial timetable despite challenges caused by the Covid-19 pandemic as well as geopolitical uncertainties. The backdrop to the fund raising is unfavorable US-China relations as the two tech superpowers battle over leadership and an overall drop in venture capital investment globally. 

"It was quite a process.  We reorganized the firm last year, and we knew that the US – China  relationship dynamics presented some of a challenge," said Gary Rieschel, founding managing partner of Qiming Venture Partners. "We also knew that many limited partners are over-allocated against their models to VC.   Add in the Covid pandemic and we had interesting circumstances."  

The firm was restructured in 2019 to reinforce the focus of technology teams on earlier stage investments.  Qiming has several portfolio companies in the healthcare market, working to combat the coronavirus pandemic such as CanSino Bio, which has recently started vaccine tests in China. 

In announcing the fund raising news, Qiming noted the firm distributed more than $1 billion in cash returns to LPs in 2019 and that anchor investor PRINCO or the Princeton University Investment Company, with the firm since its inception, was in tow.  

Good timing?

Downturns are typically regarded as opportune times for venture investors to make new deals with startups. Valuations are often lower, and entrepreneurs hungrier.  Yet startup financing so far this year is taking a hit. Private market funding in the first quarter of 2020 is on pace to reach $77 billion, a 16% decline compared to the previous quarter and down nearly 12% versus Q1 2019, according to CBI Insights. Seed stage funding is predicted to fall by 22% in the first quarter of 2020, versus the previous quarter. 

Qiming got an early start in China tech investing in 2006, spearheaded by Rieschel and Duane Kuang.  

The venture firm's investments include several Chinese tech titans such as smart phone maker Xiaomi, superapp Meituan Dianping and robot maker UBTech. 

More recently, Qiming has opened US offices and invested state-side while continuing its China approach. Qiming manages nine US dollar funds and five RMB funds with $5.3 billion under management. 

China Surpasses US In New Patents For First Time

In an ongoing trend to watch, China has surpassed the U.S. as the top country applying for new international patents in 2019 to the World Intellectual Property Organization. It's the first time that the China has been upended the U.S. since WIPO began tracking patent filings in 1978.
This latest report underscores a battle for tech innovation leadership among the two economic superpowers, the U.S. and China. The two markets have been battling for status in a tech cold war that has seen a "splinternet" or decoupling develop as politics and Silicon Valley markets have collided.
China has logged a 200-fold increase in only 20 years to 58,990 applications in 2019, up from only 276 in 1999, when China's entrepreneurial boom began, pointed out WIPO General Director Francis Gurry. The U.S. weighed in with 57,840 patent applications in 2019, followed by Japan at 52,660 with other countries much further down the ranks.
The 2018 findings showed that the U.S. and China were nearly on par, with the U.S. in the lead at 22 percent of filings, trailed closely by China at 21%.  Observing China's climb, the patent organization had predicted that China would surpass the U.S. in 2020 but that leap occurred a year earlier, in 2019. 
Chinese tech giant Huawei remained the top filer among companies, with 4,411 patent applications, far outdistancing Mitsubishi at 2,661, Samsung at 2,334 and Qualcomm at 2,127. Of the top 10 companies, four are from China, two from Korea, and one each from Germany, Japan, Sweden and the U.S.
Followers of Silicon Dragon will recognize that these latest findings are not to be unexpected. The trends are well-documented in my latest book, Tech Titans of China.

VC Bill Tai Answers Everything in Silicon Dragon Webinar

Venture capitalist Bill Tai offered some valuable advice to startups navigating during these tough times. As the first investor to commit to funding Zoom and several other startups that zoomed, he does seem to have more than a little bit of luck.
But Tai said it's more about timing than anything else. "You have to be able to position yourself for a wave and be in the water paddling to be able to executive at the right time," said Tai on a Silicon Dragon webinar held April 3, the first in a series of,  Ask A VC Anything. Known to be a pro kiteboarder, Tai likes to use the surfing analogies like catching the wave at the right time.
What does he look for when deciding to invest? Timing, market, team, technology of course. But what else?
"I invest in authenticity," he replied, meaning that he goes for founders who are passionate and committed to their business and not just in it for mercenary reasons. He credited three founders he's backed with that special ingredient: Zoom founder Eric Yuan, Canva co-founder Melanie Perkins and Treasure Data founding CEO Hiro Yoshikawa.
Often with early stage tech startups, the market need is not apparent and may not be so recognized for several years. Tai said he's worked with founders for up to seven years, coaching them while they keep the burn rate low until the timing gets better.
What's the biggest lesson Tai has learned as a VC investor over his 30-year career as a seed and angel investor? He's learned that he must trust his gut when making decisions, even if it goes against 'group think.'  He recalls a time when he intuitively felt that a startup wasn't going to work but he went along with a group decision in part to keep everyone happy. He doesn't do that anymore.
Keep the burn rate low 
Finally, what did Tai have to say about startups struggling to survive during the coronavirus criss?
Definitely, keep the burn rate low and concentrate on product market fit.
For VCs, this is a critical time too, he pointed out. If one startup in the portfolio is in trouble, it can tie up time and mental energy and ultimately could leave to friction within partnerships.
Typically though, investing during down times has turned out to be fruitful for VCs because valuations are lower and entrepreneurs more earnest and determined about reaching their goals. 
For more tips from VC supremo Bill Tai, check out Silicon Dragon's on demand recording of the 1-hour long webinar. Email events@silicondragonventures.com for more info.
Next Webinar: April 9
Join us April 9, 11am-noon for our next Ask A VC Anything: Brian Cohen, 1st investor in Pinterest and chairman emeritus, NY Angels.
Sign up here: https://zoomwithvcbriancohen.eventbrite.com