For our 16th Silicon Global Online episode, Ask A VC Anything, our guest speaker was Andy Tang. Tang
is a partner at Draper University, a co-founder of Draper Dragon, and CEO of
Draper University. In this episode, we discussed the US-China tech “cold war”
and its impact on cross-border investors like Tang, how Covid-19 has impacted
Draper University and Draper’s portfolio companies, and some new investment and
IPO trends that Tang and his partners are looking to capitalize on.
10 Key takeaways:
Online conversation with VC Andy Tang and Rebecca Fannin,
host of Silicon Global Online.
· · The
US-China tech “cold war” can be viewed as a good thing for serious cross-border
investors. Since natural cross-border activity still needs to happen, Tang
views the current turbulence between the two global superpowers as a way to
drive out pure opportunistic players.
·
Some US
investors will be scared to invest in China and the same will go for Chinese
investors looking to invest in the US. But Tang views this as a positive for
Draper Dragon and Draper Associates: “The pie will shrink, there will be less
competition.”
·
Draper
portfolio companies that saw revenue drop in Q1 and Q2 2020 due to Covid-19
have already bounced back in Q3. This includes electric vehicle, online payment
and semiconductor companies. Tang even saw portfolio companies with travel
exposure bounce back in China.
·
Covid-19
has acted as an accelerant for three main industries that had been held back by
regulation: healthcare, education and government tech.
·
In
Tang’s view, no matter who wins the 2020 US Election, the sentiment and policy
towards China will be similar. Trump going for bans on big Chinese apps such as
TikTok and WeChat can be seen as showmanship. Biden might not employ the same
tactics but things won’t necessarily get easier for US/China cross-border
investors if he wins.
·
Although
Tang sees the logic for a tit-for-tat ban of WeChat and TikTok (like China has
banned Google and Facebook), he views a ban as ineffective in the US due to
free speech issues and regulations.
·
Draper
Dragon selectively figures out where their portfolio companies should go public
by gauging the tradeoff between investor reception and regulatory concern. For
example, portfolio company Jing Jin Electric (a developer of high performance
electric motor systems) was going to go public in the US in 2021 but pivoted to
China and its healthier investor appetite.
·
Biotech
is booming in Hong Kong. Draper Dragon portfolio company Fountain Medical (a
large cross-border contract research service for pharmaceutical and medical
device clients) will take advantage of the trend by filing for their IPO in Hong
Kong.
·
Draper
Associates closed its 6th fund in July 2020 and is taking on a
barbell strategy of early-stage and late-stage investments. An example of a late-stage
investment is Carta, a SaaS company that helps companies and investors manage
their cap tables, valuations and investments.
·
Tang
sees three vital opportunities for Blockchain: an optimized exchange to onboard
fiat to crypto currency, a more consumer-friendly graphical user interface, and
the creation of a killer app.
Bio:
Andy Tang, Draper Dragon, Draper University, Draper Associates
Tang
is a partner at Draper Associates in Silicon Valley, since 2015. He was a founding member and is now Managing
Director of the Draper Dragon Fund, a China/US cross-border early stage
investment fund. In 2015, Tang became the CEO at Draper University, a
residential program for young entrepreneurs that has moved online due to
Covid-19 for the foreseeable future.
Tang
has more than 15 years of operating and early-stage investment experience in
high tech. He was a Principal at Infineon Ventures from 2002-2006 and a
Managing Director at ABB Technology Ventures from 2011-2014.
Tang’s
current investment focus is on Blockchain/Fintech and Healthcare AI. His portfolio
at Draper Dragon includes YeePay (e-payment solutions and value added financial
services), Atomwise (healthcare AI for pharmaceutical companies to reduce drug
development time), and Telegram (cloud-based messaging).
Andy
Tang holds a BSEE in engineering from The University of Texas at Austin, an
MSEE in engineering from the Massachusetts Institute of Technology, and an MBA
from the University of Pennsylvania’s Wharton School.
Submitted by Michael Weiss, contributor to
Silicon Global Online
