Sunday, May 10, 2020

Ask A VC Anything: A Home for Deep Tech Globally > Jeff Chi, Vickers Venture

For our 6th Silicon Global Online episode, we turned to Shanghai and featured venture capitalist Jeff Chi, vice chairman of Vickers Venture Partners. Jeff described how the firm, which grew out of a successful early bet in 2000 on Chinese search engine Baidu, has emerged as a deep tech investor in breakthrough companies that have the potential to solve big problems.
Jeff described several of the firm's deals: a 'fountain of youth' biotech startup in San Diego that Vickers holds a 3% equity stake at a $12 billion valuation, a biodegradable plastics producer in Georgia, and a geothermal energy business in Canada that operates at a fraction of alternative sources. Vickers recently closed on $200 million toward a fund of $500 million, its sixth since a start in 2005. 

Here are a few takeways from our chat with Jeff Chi online. 

1. Has no regrets about missing the consumer internet boom in China a decade ago. It was too difficult to differentiate the companies and see which one might emerge as a winner. 

2. Instead, Vickers moved to deep tech investing and to a global perspective. "In deep tech, we have a better idea of the market potential so the risk becomes whether the technology can work and the team can execute." 

3. The coronavirus is slowing the investment pace. Usually Vickers does about 10-15 deals per year. For the first quarter, the firm made five deals but the rest of the year will be slower because of market uncertainty. 

4. When Vickers launched, Jeff moved from his home base of Singapore to set up the firm's office Shanghai, a center of the action.  

5. Southeast Asia a decade ago was not happening for startups. But progress is being made, thanks to government funding for startups and the creation of several successful businesses. 

6. Still, Southeast Asia lags China by about 10 years in development of a startup ecosystem and tech company successes. 

7.  He's spending about 80 percent of his time working with portfolio companies on helping them to expand and make connections. And about half of that time currently is spent on helping investee companies deal with the Covid-19 economic crisis.

8. He's encouraging founders to have a runway of at least 12 months before having to raise more funding. It will be very challenging for startups to raise new finance in thish climate. 

9. While many of the firm's companies  have a social impact element, that's not necessarily the investment driver. It's more about the financial returns but often these two go together. 

10. While the firm benefits from an Asian VC angle, having a global perspective helps when evaluating technologies and companies to see possible comparable businesses and to determine how breakthrough the technology might be. 

An on demand recording of the show with Jeff Chi is available: $20 on PayPal or QuickPay with Zelle,


1st Chinese IPO in U.S. Since Covid-19 Blasts Past Headwinds

China's angel investor and tech
entrepreneur Lei Jun
In the first significant IPO since the coronavirus pandemic and the first Chinese listing since the Luckin Coffee fiasco, Kingsoft's cloud spin-off raised $510 million on Nasdaq at a $3.5 billion market cap, despite the tough stock market environment and negative U.S.-China relations. 
As readers of Tech Titans of China know, Kingsoft is the company that famed Chinese serial entrepreneur Lei Jun ran and spearheaded its transformation from a struggling word processing software maker to a games and computer security business and onward to a public listing on the Hong Kong Stock Exchange in 2007. After that listing, Lei returned as chairman to lead Kingsoft into the mobile internet era. 
Now, the spin-off of Kingsoft Cloud as an independently operated company, the deal is a payday for early backers, Xiaomi founder and angel investor Lei and the parent Kingsoft which owned 54 percent, and Chinese private equity firm FutureX Capital and its founder Cynthia Zhang, with 5.7 percent of the shares. The China-based cloud service provider closed up 40 percent on its trading debut on Nasdaq. 
While unprofitable with an operating loss last year of 1.14 billion yuan ($161 milllion), the company grew revenues in 2019 by 78 percent to RMB 3.96 billion ($560 million). Kingsoft Cloud has growth opportunity in China's large and relatively un-penetrated cloud computing market, but faces steep competition from much larger players. The Kingsoft spin-off will use the capital to invest in technology and product development.  Kingsoft is the third largest provider of internet cloud services in China in a market of $23 billion, according to consultancy Frost & Sullivan. It competes against tech titans Tencent Cloud and Alibaba Cloud.  
It was the busiest week for the IPO market since February, with three upsized IPOs, according to IPO tracker Renaissance Capital. The two others were London-based GAN, an Internet gambling software maker, and oncology biotech Ayala Pharmaceutical in the U.S. and Israel. 

Saturday, May 2, 2020

10 Key Takeaways: Jay Eum on Ask A VC Anything

VC Jay Eum

Our 5th episode of Silicon Global Online, Ask A VC Anything, featured Jay Eum, one of the best connectors from Silicon Valley to Seoul and the world. On our one-hour program, Jay shared his view of leading technologies of the future and offered ample advice for startups in the trenches trying to dig out from the impact of the coronavirus.   

Here are several takeaways from our online chat with Jay, recorded April 29, 4-5pm PT. 

1. Startups need to act quickly to counteract the current downturn. Make the hard decisions early -- cut expenses, do layoffs. Those who make the decisions early will have a much better chance to make it through.

2. The bar will be higher to raise venture capital. Startups need to have their house in order first with a track record of revenues before seeking to raise financing. It will be a longer runway to get the funding.

3. Those who get ready now will be in a good position to take advantage of an upturn when that happens. 

4. It matters less about the valuation right now in raising finance and more about raising cash to survive to get to the next milestones.
5. This crisis period for startups will last at least six months.  

6. If few alternatives exists, founders should seek government checks to keep their startups afloat. 

7. If an opportunity comes along for investment from a corporate venture investor, consider it carefully. A strategic investor can be a good fit. But make sure your startup is ready to ramp up quickly. Oftentimes, startups have to race to meet hurdles demanded by their new investor that wants to leverage a strategic fit. 

8. Technologies that will do well in this current environment include robotics that can safely transport goods from warehouses directly to consumers. Robots will also be called upon to handle medical tasks such as cleaning up infectious areas. 

9. South Korea has been able to manage the Covid-19 pandemic effectively compared with other countries because it had experience with prior viruses that swept Asia. It was prepared with medical equipment and prevention measures to fight the virus this time and to act quickly to stop its spread. 

10. The South Korean high-tech scene is quite dynamic now and has seen many unicorns rise such as Coupang in e-commerce and Toss in fintech. Both attracted financing from Sand Hill players - Coupang from Sequoia Capital and Toss from Kleiner Perkins Gaming was an initial growth area for South Korean startups that  got going after the Asian financial crisis of the late 1990s, and gave rise to gaming leader NCSoft

Bio: Jay Eum

Jay Eum is a venture capitalist, angel investor and startup advisor with more than 20 years of experience across the U.S. and Asia. He co-founded TransLink Capital, a Palo Alto-based early stage VC firm, investing in artificial intelligence, fintech/blockchain, and consumer technology. Noteworthy exits including Carbonite (NASDAQ: CARB), Coin (acquired by Fitbit), Enterprise DB (acquired by Peak Equity), and YuMe (NYSE: YUME).
Prior to TransLink, Jay was Managing Director of
Samsung Ventures, where he established and led its US VC operations, handling $50 million of equity investments in 16 startups, and overseeing introductions of more than 600 startups to Samsung business units.
Jay started his VC career at
Vertex Management, Singapore-based venture capital arm of investment firm Temasek Holdings. Jay has recently joined DTCP (Deutsche Telekom Capital Partners) to advise on growth in Asia and help with the firm's new office in Seoul.  

On-demand recordings of Silicon Global Online are available for $20 each. 

Tune in May 7, 4pm PT for our next show, featuring VC Jeff Chi of Vickers Venture Partners.
Sign up here soon and receive an invitation to join a discussion group online after the show.