Monday, September 28, 2020

Ask A VC Anything! Draper VC Andy Tang


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