Endless Frontiers Can Combat China's Tech Rise

 

Twelve years ago, my book Silicon Dragon cautioned that China could win the tech race. Now the U.S. has finally woken up to this threat. The U.S. is moving in the right direction with the largest national increase in science, technology and manufacturing in generations. It's a build back better plan, and with European allies coming aboard, this bold plan counters China's Belt and Road initiative and five-year economic plans. 

China has been gaining on the U.S. for years. State-led blueprints have advanced China as a powerful innovation nation in important world-changing tech sectors. The Chinese have moved from copying innovations in the West to crafting their own inventions. Leading edge technologies for electric vehicles, smart phones, robotics, biotech, finance, retail and more have been adopted very swiftly in China’s digitally savvy market.

Chinese tech titans Baidu, ByteDance, Alibaba and Tencent have emerged as powerful counterweights to Facebook, Amazon, Netflix and Google, which have struggled or been blocked in China.  China’s BAT, as they’re called, have out-innovated the West in many game-changing consumer and business technologies that rely on artificial intelligence. They’ve bulked up internationally too, investing heavily in Southeast Asia and Africa, and previously in America’s Silicon Valleys before a U.S. crackdown on foreign (read China) ownership of sensitive technologies.  Moreover, China has been pumping money into building its semiconductor capabilities. The world’s second-largest economy has its own ambitions for space technology and quantum computing too.  

And as anyone who has traveled to China knows, the country’s modern infrastructure beats our nation’s decaying bridges, highways and airports. There is no Rust Belt in China like our abandoned factories and depleted downtowns in Middle America. China was starting from scratch. No need to rebuild former industrial cities.  Just build for the future is what China has been doing.

Several worrisome indicators point to a shift in power. China surpassed the U.S. in 2019 in the number of patent applications to the World Intellectual Property Organization, and increased that lead in 2020 to a 25 percent share globally, bypassing the U.S. at 21.5 percent.  Moreover, China is catching up to the U.S. lead in global research and development.  The U.S. has a 25 percent share of global R&D spending while the PRC weighs in with 23 percent and growing strongly, according to the National Science Board.  The National Venture Capital Association finds that America’s share of global venture dollars has dropped from 83 percent in 2004 to 51 percent today, with China as the biggest gainer. China’s ByteDance, the maker of TikTok, is the world’s most valued unicorn at $140 billion.

By passing the Endless Frontier Act, the government will fund cutting-edge science to combat China’s increasing challenge to America’s technology prowess. More U.S. technology innovation will be commercialized to retain our global leadership well into the mid-century. The $250 billion bill increases investment in critical scientific and tech fields, funds R&D and manufacturing of key technologies, and creates 10 regional technology hubs.

With this urgently needed funding, the middle of the country could recover from a long downward spiral of lost jobs. A growing number of inland innovation districts stand to prosper. Specialized strongholds such as biotech in Cleveland and robotics in Pittsburgh already have emerged with state funding and local resources such as the Cleveland Clinic and Carnegie Mellon University.

More national funding and venture capital investment is needed to boost our Heartland markets. Two-thirds of startup investing goes to three coastal states (California, New York and Boston). Meanwhile, seven core states of the Rest Belt and Great Lakes capture only about six percent of venture spending nationwide. This gap needs to be closed.

The well-named Endless Frontier Act will send more resources to down-and-out places that need support the most. It will help the USA reclaim its might.  As I pointed out in my pivotal book in 2008, whoever wins the race to the technologies of the future will be the global economic leader.

By Rebecca A. Fannin the author of Silicon Dragon (2008) and Tech Titans of China (2019).

Ask A VC in US-China Tech Cross-currents: Wei Jiang, CatchLight Capital

 

For this 32^nd episode of Ask a VC Anything, our featured guest was CatchLight Capital Partners founding partner, Wei Jiang. In this wide-ranging discussion with Silicon Dragon’s Rebecca Fannin, we covered the early days of Alibaba and Ebay in China, Wei’s insights into the growing tech rift between the U.S. and China, and how CatchLight is in the thick of U.S.-China tech investing.  
See video replay of our April 28, 2021 show. 

 Laying the Ground
Tighter restrictions on foreign investment in the U.S. led to the creation of CatchLight. As a start, the firm absorbed 12 tech startups in the U.S. portfolio of Chinese VC firm ZhenFund, which is no longer actively investing in America.  CatchLight also has raised a fund to invest in emerging technology companies in the U.S., and those Chinese-invested U.S. companies impacted by the regulations.

U.S.-China Cross-currents
CatchLight’s new fund primarily handles secondary transactions, delving into restructuring cap tables for portfolios with Chinese venture investors. This should keep him plenty busy. Wei  noted that the Rhodium Group estimates that close to 3000 U.S. tech startups have Chinese investors, and the technology sector represents the lion’s share of investment in the U.S. from Chinese funds.  

Focal points
CatchLight typically acquires assets in a bundle but also does primary investments. Having raised an initial $30 million fund, Wei is targeting investment in U.S. companies, primarily those that can leverage his social capital and experience in China. He doesn’t expect to invest in China. Wei predicts more restrictions will be coming for Chinese venture investors in the U.S. 

Big Successes and Hot Areas
Wei has one unicorn in his portfolio, and he says two are on the way. One of CatchLight’s stand-out investments is Dandelion Energy, a fast-scaling U.S. home geothermal energy startup that provides heating and cooling as an alternative. Wei drilled deep into what will be the hottest sectors in the coming years: traditional ecommerce as well as newer social, community, and neighborhood ecommerce. Other areas are education, social, mobile payments, and short form videos.

eBay v. Alibaba - 2000’s
When Wei was VP of Category Management at eBay from 2004-2006, eBay was the giant with a hefty amount of capital and Alibaba was small and nimble. Alibaba ultimately won the market, while eBay stumbled. Wei notes that US companies have gained experience in the Chinese market, and pointed to Uber and Airbnb as examples of China launches with fewer errors.

 

Bio: 
Wei is an early-stage venture partner in Silicon Valley. He has built successful startups in both Silicon Valley and China. Wei has held senior executive positions at leading technology companies including Google, eBay, Intuit, and GE.
His venture fund, CatchLight Capital Partners, is focused on cross-border investment opportunities in tech startups. One of its specialties is to restructure companies’ cap tables to avoid compliance issues.
In mid-2019, he founded Momentor Ventures, an early-stage fund helping entrepreneurs from Silicon Valley and beyond, with a focus on cross-border advising and connecting Xooglers and Stanford grads.
Previously, Wei was a venture partner at ZhenFund for three years until the end of 2019. From 2010-2016, he was also a CMO at Google China.
Wei has a BA in Information Systems from Peking University, his MBA from the William E. Simon Graduate School of Business Administration, and his MS in Medical Statics from University of Rochester. 

Contributed by Mike Weiss

Silicon Global Online: Ask A VC: Candice Brackeen, Lightship Capital

 

For this 31^st episode of Ask a VC Anything, our featured guest was Lightship Capital founder and General Partner, Candice Brackeen. In this conversation with Silicon Dragon’s Rebecca Fannin, we covered Lightship’s selection process and successes, why she made her fund so inclusive, and if the rust belt cities can transition to tech. Here's the video replay of the show with Candice.  

 

Selection Process

Lightship Capital has an inbound and an outbound strategy. For the inbound, everybody comes to Lightship Capital, including their website and online show, Twitch Pitch. On the outbound side, Lightship is sourcing deals with co-investment partners. The firm also has accelerators in Detroit, Cincinnati, and Tulsa. Lightship is a seed and Series A fund and is usually looking for companies approaching $100,000 in monthly revenue. Brackeen notes that for industries like AI, that revenue number is less attainable for a seed investment. It is most relevant in sectors like consumer-packaged goods where proving the model is easier.

 

Lightship’s Winners

 Brackeen was proud to talk about some of her winners. She referenced Healthy Roots Dolls, a startup that helps young black girls better love their hair. They recently sold out on Target.com. Then there’s Proov, a progesterone ovulation test, the first urine diagnostic test for women to test for progesterone levels when struggling with fertility. Proov got FDA approval last year. After starting out in only select Target stores, the company is now launching nationwide. Another one of Lightship’s successes is Kare Mobile, a mobile dentistry company. They were just one van when they went through Lightship’s programming in Cincinnati. Kare is now in ten markets around the country and looking to expand. Kare Mobile is doing a pilot in Detroit right now with Ford Motor Company and Delta Dental giving away a $150,000 mobile dentistry van to an up-and-coming dentist in the area! Brackeen’s last example of investment successes is Haute Hijab, America’s only hijab company for modest dressing Muslim women.

 

Diverse Fund

Although Brackeen is a Black VC, she is not only looking for black founders. She notes that although around 85% of the U.S. is not white men, that’s where most of the funding has gone. She feels confident that by focusing on this 85%, she is in a good position. Brackeen is looking to fund women, people of color, and many other historically underserved groups. Brackeen says she believes we will start seeing more women and people of color closing significantly larger and larger funds. She thinks over the next 10-20 years, these diverse funds will be the ones that are innovating and leading the way, and the ones that don’t diversify will get left behind.

 

Problems with Storytelling

One of the biggest problems in the Midwest, according to Brackeen, is with bragging about their successes. She’s convinced that midwestern states can attract talent and investment just like the coasts, but she notes that entrepreneurs from smaller inland cities need to be taught to tell their story effectively and to dream big.

 

Cincinnati, Brackeen’s Silicon Valley

Brackeen grew up in the economically depressed Toledo, Ohio. She describes the wonder of seeing the skyline and professional sports teams of Cincinnati in contrast with her hometown. So for her, on a relative basis, she calls Cincinnati her San Francisco. Brackeen notes that big-time innovation is happening in the city. Look no further than Procter & Gamble, as well as Kroger. Just because these aren’t B2B SaaS companies, doesn’t mean big things aren’t happening. 

 

Bio: 

Candice Brackeen and her husband, Brian Brackeen, run Cincinnati-based Lightship Capital, a rare venture-capital firm managed by black partners. Lightship has just raised a $50 million fund to invest in minority-led founders in the Midwest and has backed eight startups. Brackeen previously ran the Hillman Accelerator, coaching and mentoring founders, and earlier in her career, she founded her own tech startup in the Heartland.  While the venture capital industry is competing to get into hot deals in Silicon Valley, she is convinced that good returns are coming in overlooked businesses outside the mainstream.  Brackeen has a BA in Economics from the University of Cincinnati.

-- Summarized by Silicon Dragon contributor Mike Weiss

Silicon Global Online: Ask Cap'n Hoff About Surviving A Startup

For this 29^th episode of Ask a VC Anything, our featured guest was Founders Space founder and CEO Steve Hoffman (Capt’n Hoff). In this discussion with Silicon Dragon’s Rebecca Fannin, we covered Hoffman’s constantly changing career path, his views on bootstrapping and giving away equity, and how the largely global business at Founders Space has adapted to Covid-19. See Silicon Dragon video of the show with Steve and Rebecca.

What Thrills Capt'n Hoff?

Hoffman has been an angel investor, an LP, serial entrepreneur, game developer, author, and a TV executive before creating Founders Space. He notes, “I’ve had more careers than cats have lives,” but of all of his experiences, he is most passionate about what he’s doing right now. Hoffman is the CEO of Founders Space, a global startup incubator and accelerator with over 50 partners in 22 countries. Before Covid-19, Hoffman was travelling 70% of the time, between countries, and he actually narrowly missed being in Wuhan for a book signing where the original outbreak of Covid-19 happened.

He is an early-stage investor, so companies that he invests in sometimes don’t have revenue, or even users. He puts a large emphasis on the team. Smart people that are open to ideas and exploration will make up a great team. Hoffman is based in Silicon Valley, and Founders Space has five incubators in China.

 

What’s Hot in China

Hoffman mostly invests in software because it’s easier to scale, retain customers, and monetize. Sometimes they’ll invest in hardware with a strong software complement.  Hoffman continues to be impressed by everything eCommerce and social related coming out of China. Citing the growing buying power of the middle class, established companies like Alibaba, TikTok, WeChat (Tencent), and Pinduoduo are on the cutting edge of their respective industries with massive potential for years to come. Hoffman also notes that cleantech is well-backed by the Chinese government. He adds that it might be easier to be a startup in the industry under the new Biden administration than the previous one. Hoffman remains positive on China in almost every tech sector.

 

Still Bullish on Silicon Valley

Positive views about Silicon Valley remaining the gold standard of tech hubs has been waning.  But Hoffman doesn’t see its status at the top of the food chain changing any time soon. “People like to be in proximity to other people with ideas, and money, and with talent. They have an abundance of that in Silicon Valley now.” He does list Austin, Miami, New York, and Boston as up-and-coming tech hubs, each with their own specialties. Hoffman notes, “the reason cities are big is because ambitious people tend to gravitate towards the geographic place where they can maximize their opportunity.”

 Bootstrapping
With the rough estimate that 95% of startups will fail, Hoffman urges entrepreneurs to think twice about taking money from friends or family. Hoffman also warns to take the hints from the market, “if one of these educated angels will not give you money, there’s something wrong with your business”. If you are going to bootstrap, make sure it can be done with a small team of people, and just their time and talent. Although it isn’t the most common, successes like Mailchimp and Salesforce were bootstrapped startups in the beginning. Hoffman also bootstrapped his first startup. 

Equity
Hoffman acknowledges that the way equity in a company is handled differs depending on where you are in the world. For example, in China, it is expected that the CEO and Chairman keep most of the equity. However, in the U.S., there is a much larger percent of equity given to investors and employees. Hoffman feels strongly that, “whatever culture you’re in, you need to reward people in relationship to their expectations, if you want to retain them.” He believes that one employee can be worth, two, three or even five times a mediocre one! If you have someone that you know is that good, pay up to keep them. Sometimes that means giving them equity.

Bio:
Steven Hoffman, or Capt’n Hoff as he's called in Silicon Valley, is the chairman and CEO of Founders Space (FoundersSpace.com), one of the world's leading incubators and accelerators. He’s also an angel investor, limited partner at August Capital, serial entrepreneur, and author of several entrepreneurial books, including his upcoming title, Surviving A Startup.
A former Hollywood TV development executive and founder of two venture-backed gaming and entertainment apps in Silicon Valley, Hoffman went on to launch Founders Space, with the mission to educate and accelerate entrepreneurs. Founders Space has become one of the top startup accelerators in the world, training startup founders and corporate executives in the art of innovation.
Hoffman has a bachelor’s degree in Electrical Computer Engineering from University of California, Santa Barbara as well as a master’s degree in Cinema Television from University of Southern California.

by Silicon Dragon contributor Mike Weiss

Silicon Dragon Global Online: Ask NLVCs Anything!

For this 28^th episode of Ask a VC Anything, our featured guests were VCs Jeffrey Lee and Fiona Yu, both with Northern Light Venture Capital (NLVC).  In a wide-ranging conversation with Silicon Dragon’s Rebecca Fannin, we honed in on NLVC’s investment approach, its successful portfolio companies in China and Korea, and the firm’s focus on healthcare investing, particularly in China. We also covered how Covid is impacting the VC firm’s dealflow. 
See Silicon Dragon channel on YouTube for a replay of the session. 

 

 An Entrepreneur’s VC
“We are super passionate about early-stage, we don’t fear the lack of revenue, we don’t fear the lack of incorporation,” said Lee, during our fireside chat, outlining NLVC’s investment focus. “You really want to be the people behind the stars, the stars are the entrepreneurs,” he added, echoing another plank of the firm’s strategy, shaped initially by NLVC founder Feng Deng. 
As an example, one of the firm’s top deals was China’s group buying superapp Meituan. Founded by CEO Wang Xing, Meituan jumped in as the 3^rd or 4^th player to capitalize on China’s group-buying craze. It was a fourth startup for Xing, who was known as the cloner of other Internet business ideas.
Lee chronicles that at times, NLVC didn’t know if Meituan would make it to their next stage. But today, in a sign of what’s possible in China tech and venture, Meituan is a public company trading for more than $250 billion.
Background on Meituan and its founder can be found in Rebecca Fannin’s book, Tech Titans of China.  

 

Hot Healthcare In China
Seeing exciting trends in China healthcare, NLVC began enhancing its healthcare investment in the sector five years ago. One-third of the firm’s portfolio deals are in healthcare. Across the firm’s 30 medtech portfolio companies, only 20 percent have FDA approval. To partner Yu based in Shanghai, this signals that investors in China are up to taking more risk on early-stage healthcare investments. While the firm typically avoids deals that involve such controversial issues as personal data collection and genomics, the NLVC partners both view the China/Hong Kong healthcare market, and overall economies, as stronger than that of the U.S. right now.

 

Post 90s Deals
The firm is keen on investments in deals positioned for the “Post 90s,” referring to an urban generation born between 1990 and 1999. In a rundown of post 90s online shopping leaders in China, Yu noted: Alibaba is still the biggest engine to buy things, JD is the biggest for grocery, while Kuaishou, a Chinese equivalent to TikTok, offers a buying option on a social media platform.

Korea Tech
The VC firm’s Korean portfolio company Picky is an example of a post 90s generation play. Jumping on the mega-trend of K-Beauty, Picky is a mobile-first content platform providing customers with authentic information in the $250 billion global beauty space.
To capitalize on the growing opportunity in Korean tech, the firm is looking to raise a Korea-specific fund. 

 

Groundbreaker Female VC
Yu is NLVC’s first female investment partner. She has overseen 16 deals over the past seven years, stemming from her start as an intern, to an associate, all the way to her newly minted partner title. Although China is regarded as having more female VC’s on average than the U.S., Yu is aware of the impact she can make on the industry, particularly considering her expertise in healthcare investing in China.

 

Dealflow: In Person Meetings Still Count
With the adoption of Zoom, Lee points out that it’s now easier for the firm to get initial and follow-on meetings from referrals. Yu remarks that China entrepreneurs and VC’s have had to get extra comfortable conducting business over WeChat and Zoom, but she notes that China’s quicker response to Covid-19 leaves open the possibility for in-person meetings. She believes that face-to-face meetings cannot be completely replaced with Zoom calls.

The pandemic caused several portfolio companies to pivot. An example within NLVC’s portfolio is Coyote, which is focused on breakthrough innovations in molecular diagnostics that brings complex clinical testing directly to the patient. Coyote created 30-minute point-of-contact Covid-19 tests with equipment the size of a carry-on bag. The tests were accessible at airports, hotels, and other public places to quickly test large numbers of people.

 

Bios:

Jeffrey Lee has been involved in technology venture capital and entrepreneurship for 20 years with a primary focus on North Asia. He is a Managing Director at Northern Light Venture Capital, an early-stage technology fund focusing on opportunities in China, which he co-founded in 2005 with Feng Dent. At NLVC, Jeffrey chairs the investment committee and oversees strategic planning, investor relations, and value-add activities for the portfolio.
Previously, Jeffrey worked in strategic and product marketing at Agilent Technologies Wireless Semiconductor Division, the predecessor of Broadcom Limited (NASDAQ: AVGO), working on front-end RF components for high-speed wireless networks. This opportunity stemmed from running business development at Wavics Inc., a venture-backed startup developing advanced GaAs wireless components that was acquired by Agilent.
Earlier in his career, Jeff co-founded an early-stage venture fund focused on South Korea, Newton Technology Partners. Jeff began his career in TMT corporate advisory at Salomon Smith Barney and Jardine Fleming, a Hong Kong-UK based merchant bank.
Jeffrey received an AB in economics from Harvard University and an MBA from the Wharton School of the University of Pennsylvania.

Fiona Yu joined Northern Light Venture Capital in 2014, bringing her 10-plus years of experience and understanding of the healthcare industry, as well as strategic consulting skill set to the firm. Prior to NLVC, Fiona worked for Johnson & Johnson for more than seven years. She also worked in Monitor Deloitte, serving local and multi-national healthcare companies on strategic consulting.
Fiona holds a BS degree from Beijing University of Aeronautics and Astronautics, and an MBA from Duke University.

Summarized by Silicon Dragon contributor Mike Weiss

Silicon Dragon Global: Ask Tech Titan Brad Smith Anything! Lessons In Leadership

 

For this edition of Ask a Tech Titan Anything, our featured guest was Brad Smith, executive chairman at Intuit and co-founder of The Wing 2 Wing Foundation. Our conversation covered Smith’s leadership principles for success, design thinking, and his view of  the four disruptive technologies of the future.

Key Takeaways: Online conversation with Brad Smith and Rebecca Fannin, host of Silicon Global Online, January 28, 2021.
See video replay here. 

 

Leadership Principles
Smith remarked that he has never written a line of code in his life, but he has been successful as a company leader by setting a grand challenge and creating a space for employees to do their best work. Here’s how Smith defines leadership:

·       Ability Leadership is a learned trait, everyone can be a leader.

·       Inspire is about winning the heart. When people are passionate about their work, they do amazing things for their customers.

·       Others A leader’s orientation is not about themselves but is in service to others in the organization.

·       Shared Objectives Think about the greater good, not just things in a particular area or team.

 

Design Thinking and Experimentation Culture

At Intuit, design thinking is taught to all 11,000 employees through a formula called Design for Delight. On any given day, some 1,800 experiments are going on throughout Intuit.

Design thinking is about learning by doing and eliminating the false notion that you can research your way to a great business, he said, pointing to its basic elements:

·       Deep customer empathy – It’s about direct observation and analyzing data to get underneath the “why?” and to develop a solution for customer problems.

·       Go broad to go narrow – Taken from the Toyota system in Japan, come up with seven completely different ways to solve a problem to eliminate “group think.”

·       Rapid experiments with real customers – Teams develop a hypothesis with a measurable metric, create an experiment that can get to market in 48 hours or less, and then come back with real data to determine if their metric held up or not.

 

Down Time
Smith highlighted an experimentation culture at Intuit. Modeled after Google’s 20% policy, all Intuit employees are given 10% unstructured time to run experiments for new problem-solving ideas. As CEO, Smith funded all winning experiments for 90 days to get them to the next stage of their business.

 

Four Disruptive Technologies
Smith sees four disruptive technologies that will be catalysts for the future. He outlined the skills needed to succeed with these technologies will be in cybersecurity, data privacy, and data stewardship principles.  
            AI (machine learning, knowledge engineering, and natural language processing)
            Biotechnology (pharmaceutical, environmental, agriculture)
            Internet of Things and edge computing
            5G

Digitization for All
You don’t have to be an engineer to be a part of the digital economy. Digitization will shape all companies into becoming technology companies.

Almost Heaven
“Everything I’ve ever been able to achieve is because of you,” Smith remarked in talking about his home state of West Virginia. He also praised his alma mater, Marshall University and its mantra, “We Are Marshall.”  Smith is investing in his home state and in the university to bring about an entrepreneurial culture. 

Eyes on China
Although Intuit isn’t in China as a company, Smith looks to China as a source of inspiration for new ideas. He said China is producing results that cannot be ignored and the U.S. needs to recognize what’s happening and use these learnings to continue to make strides in innovation. A decade ago, in his travels to Asia, Smith would see Silicon Valley ideas being replicated. Now in Asia, especially in China, he sees design thinking being applied to create their own big successes.

5 P’s

Smith crystalized his learnings for leadership success:

Potential  – A manager coaches performance. A leader inspires.

Purpose – A mission or shared goal gets everybody thinking about “looking out the windshield instead of down at the dashboard."

People – Team players are worth more than great players

Playbook – A methodology or playbook is needed so everybody in the organization can be taught it and be expected to apply it daily.

Pay it Forward – Take what you found and leave it better than you found it, whether it’s your company or your community.

  

Bio: 

Brad D. Smith is Intuit's executive chairman and is chairman of Nordstorm's board of directors as well as a board director of SurveyMonkey. Smith led Intuit’s transformation from a North American desktop software company to a global, cloud-based product and platform company. During his 11 years as Intuit’s CEO, he nearly doubled the company’s revenue and increased its stock price more than 500% while Intuit received several awards for best places to work. In 2018, he co-founded The Wing 2 Wing Foundation with his wife, Alys. The organization’s goal is to advance the great equalizers of education and entrepreneurship in underserved regions. Smith received his BA in marketing from Marshall University in 1986, followed by his MA in leadership development from Aquinas College in 1991. He resides in Menlo Park, CA. 

Summary by Silicon Dragon contributor Mike Weiss

Silicon Global Online: Ask A VC John Chambers of Cisco Fame

 

For this edition of Ask a VC Anything, our featured guest was John Chambers, the founder and CEO of JC2 Ventures and the former CEO and Chairman of Cisco. In this conversation with journalist Rebecca Fannin, we discussed why Silicon Valley is losing talent, what makes a successful CEO, Chambers’ high hopes for India and France as new innovation hubs, and his connection to his home state of West Virginia.

 

Biggest Disruptor: AI

Chambers views the biggest disruptor of the future to be AI. He has made bets in the consumer experience space like India’s Uniphore, a world leader in conversational AI that is poised to radically transform the booming call center market. Another JC2 Ventures’ portfolio company  is Cloudleaf, which is aimed at transforming supply chain into a data-driven strategic asset that could be instrumental in the distribution of the Covid-19 vaccine. Companies like Cloudleaf have an ability to revolutionize the broken supply chain. Chambers sees AI as the technology to go all-in on.

 

Silicon Valley is in Trouble 

Chambers believes that the number one issue businesses face in California is regulation. From privacy to the tax environment, businesses face a wide array of challenges in California’s regulatory environment. Chambers cites the departure of Hewlett Packard (Silicon Valley’s original garage startup) and Charles Schwab (the original financial startup for new ideas) from California as a major sign that the state is losing business talent. Chambers cites the example of portfolio company ASAPP AI (an AI platform radically increasing CX productivity), whose CEO lives in Montana and gets monthly calls from the governor to ensure that the innovative founder is happy in his state.

 

China v. U.S.

China is our top digitization competitor, says Chambers who has long experience in the country having orchestrated the first high-tech VC move in China when he was at Wang Laboratories. He notes that China’s five-year plan to break away from the U.S. has goals of tech leadership and standard of living improvements. Chambers believes that China will soon be the top economy in the world, and that the U.S. and China would benefit more from working together rather than continued conflict.

 

 

What Makes a Successful CEO

1.     + There is a market transition going on in their industry, enabled by new technology

2.     + The founder is a world class leader and wants to be coached, and matches Chambers’ values

3.     + Communication skills

4.     + Value of culture

Chambers believes that culture is the first thing to go when a company is rapidly growing. From overseeing 180 acquisitions while CEO of Cisco, to his 20 investments at JC2 Ventures (with four unicorns), he knows how important culture is to a successful company. He uses his track record of strong relationships and trust to ensure that he is working with the best of the best. Out of the 20 investments of JC2 Ventures, Chambers wants 10-12 to be unicorns.

 

France - Europe’s New Tech Hub

Chambers got to know France’s President Macron dating back to his days as Economic Minister. Macron grasped the importance of a startup attitude for job creation and that France had not innovated enough. Chambers has even taught MBA classes with Macron, and firmly believes in the President’s vision that has helped France increase the number of startups fivefold in the last five years. Chambers views France as the new innovation gateway to Europe, even though he previously believed this title would belong to the likes of the UK or Germany.

 

India – The New Growth Engine of Asia 

Chambers also has a strong relationship with India’s Prime Minister Modi. He notes that India, with a population of 1.3 billion, needs to create 1.2 million jobs a month just to maintain its economy. Chambers views India’s strong IT university system that graduates 600,000 engineers a year as a major asset to execute Prime Minister Modi’s vision for a digital India. Modi made Chambers the chairman of the U.S. India Strategic Partnership Forum, and Chambers was able to leverage his expertise and experience to turn the forum from a trade organization into a major strategic partnership between the two countries. Chambers made sure that along with his strong belief in India’s future success, he also has personal investment to understand the intricacies of India’s startup environment. Two of JC2’s 20 portfolio companies are from India.

 

Hyperloop in West Virginia

Richard Branson’s Virgin Hyperloop plans to open a certification center and a testing track in West Virginia for its transformative transport technology. Chambers was instrumental in bringing together leaders of the state to mobilize and make attracting the Virgin testing site a top priority. West Virginia competed with 17 other states and beat out the likes of Texas and California to win the contract. It is estimated that the new Hyperloop track will create 13,000 jobs in West Virginia. This adds to the long list of contributions Chambers has made to his home state of West Virginia. He remains a strong believer that his home state will emerge as a tech leader in the US.

 

Bio:

John Chambers is the founder and CEO of JC2 Ventures, a Palo Alto-based firm helping disruptive startups from around the world build and scale. Chambers invests in companies across categories and geographies that are leading market transitions, helping them to act before their market shifts, tap customers for strategy, partner for growth, build teams, and create disruptive innovations.

Prior to founding JC2 Ventures, Chambers served as CEO, Chairman, and Executive Chairman at Cisco Systems. During his 25+ years at Cisco, he helped grow the company from $70 million in revenue when he joined in 1991, to $1.2 billion when he became CEO in 1995, to $47 billion when he stepped down as CEO in 2015. Cisco went from 400 to 75,000 employees during Chambers’ tenure and created 10,000 millionaires among its employees. As Executive Chairman, a position Chambers held until December 2017, he led the Board of Directors. His book, Connecting the Dots, shares his management, leadership, and business principles that led to this success.

Chambers has provided industry expertise to government leaders from around the world, including nine U.S. Secretaries of State and Presidents Bill Clinton and George W. Bush. He is the Chairman of the US-India Strategic Partnership Forum (USISPF) and Global Ambassador of French Tech for President Macron. He is widely recognized for his leadership in philanthropy and corporate social responsibility.

He holds a Bachelor of Science/Bachelor of Arts degree in business and a law degree from West Virginia University, as well as an MBA in finance and management from Indiana University.

 By Michael Weiss, contributor to Silicon Dragon Ventures

Silicon Dragon CES 2021: Chat with KPMG's Darren Yong

 

For this Fireside Chat from our 2021 Silicon Dragon CES Event, our featured speaker was Darren Yong, Asia Pacific Head of TMT (Technology, Media and Telecom) at KPMG. In our wide-ranging discussion with Yong, we covered the disruption of banking and finance sectors, 5G telecommunications, innovation cultures in the wide-ranging Asian Pacific markets, the onset of hyper-localization, and data convergence in the home.

 Following are key takeaways. 

Hyper-Localization
In the last five to ten years, a trend away from the strong influence of the U.S. and U.K., and towards local inventiveness in the Asia Pacific has emerged. A prime example is WeChat from China. WeChat evolved from being just a messaging app to then include several more features including payments and marketplaces. This type of local ingenuity has forced big multinationals to innovate quickly or be left to get disrupted by the digital natives innovating in emerging markets.

Finance Ripe for Disruption
Yong notes Asia’s banking and financial sector is ripe for disruption, Yong notes, and has already begun. A recent example can be seen from Singapore telco Singtel and food delivery company Grab being granted a license to set up a fully functional digital bank. To further illustrate this trend, Yong notes that he is currently working with clients in Southeast Asia that are telcos setting up insurance companies as well as with insurance companies moving into finance. A fully digital organization has unique advantages when competing with a traditional bank, which can have less agile data that is harder to combine.  

5G Telecommunications
We're seeing more and more consumer data with the convergence of 5G technology, Internet of Things, and telcos in the home. This is a leading to a wealth of monetization opportunities for businesses such as insurance, health with mass IoT being a core driver. Companies in China have broken many boundaries in trying to get into many new sectors such as Ant Financial. 

The Next Big Thing at Home
Consumers want to be more digitally connected than ever, especially in this Covid-19 era as so many are relegated to long periods in their homes. In-home devices such as smart speakers have emerged as a new market opportunity. Marketers need to gauge how easy a product is to use and incorporate into a consumer’s daily life. For instance, the success of easy-to-wear smart watches contrasts with Google Glass, where a better-integrated and seamless user experience is needed for future home products. 

Data Science Nation Singapore
When asked if Singapore is already a data science nation, Yong was quick to note the huge government imperative driving multinationals to bring in data scientists as well as the encouragement of training and skills programs for coding and developing. 

Change-ready Vietnam
Big ideas are coming out of Asia Pacific’s emerging markets but in varying degrees. For instance, countries such as Singapore have well-developed data ecosystems and established family lifestyles and well-paying jobs, while up and coming nations like Vietnam are hungry and in a position to bring change. The Vietnamese market is driven by a young demographic of those in their 30s who are starting out and are hungry for learning and innovating, and are in a position to embrace change. 

Bio:
Darren Yong is the Head of Client and Market Development and the Head of Technology, Media, and Telecom for KPMG Asia Pacific. He is a highly accomplished executive with more than 20 years of experience in telecommunications and information technology.  Yong concentrates on business model and technology disruption across a wide array of sectors including insurance, banking, health, retail and consumer.
Before his time with KPMG, Yong was the VP of Commercial Management and Strategic Growth Markets at Orange Business Services (a global IT and communications service provider) where he worked on the mining, banking and health sectors. Prior to that, Yong was Head of Solutions and Bid Management for Verizon Asia Pacific where he led teams in Australia, Japan, Korea, Hong Kong, and India. Yong was also the Director of Business Operations at Sprint Asia Pacific before his tenure at Verizon.
He holds a bachelor’s degree in Commerce from the University of Sydney in Australia.

Summary by Silicon Dragon Global contributor Michael Weiss 

 

Silicon Dragon CES 2021: VC & Founder Tech Chat > K-Pop Trends

 

For this Tech Chat from our 2021 Silicon Dragon CES Event, our featured panelists were Jeffrey Lee, Managing Director at Northern Light Venture Capital in Silicon Valley, and Jihong Lee, Founder and CEO of Picky, a newly funded digital skincare community company. This conversation with a founder and VC touched on the emerging opportunities for a connected global world, the growing K-Beauty industry, and if Covid-19 can be a tailwind.

 

Hyper-Connected World
Northern Light Venture Capital has a focus on China with roots in Silicon Valley. Learning from experience investing in China and Silicon Valley, the firm sees a great opportunity emerging of a hyperconnected world where big ideas and execution can happen from anywhere, not just the well-known hubs like Silicon Valley. Northern Light is moving to execute on this premise, and one of its concentrations is in Korea. That’s where new portfolio company Picky factors in. 

Global to The Bone
When asked why Northern Light Venture Capital invested $1.3 million in Picky, Jeffrey gushed about how Jihong is part of a new exciting generation of entrepreneurs who are globally connected. Jeffrey cited Jihong’s experience expanding Supercell’s business in Asia, as well as his time with Google in the U.S. to illustrate Jihong’s ability to be successful around the world. 

Social Norms
When asked if being a male CEO in the beauty industry was strange, Jihong noted the tremendous pressure for Korean men to maintain a rigorous skincare routine for perfect skin. He added there is friction of actually being able to find the right products. Picky is working to build a community based around discussions and reviews of brands and products to break through the friction in hopes that the K-Beauty market will explode with growth. This is part of a trend that Jihong sees of influence going from east to west, rather than west to east like in the past. New generations see beauty and skincare regimens as an expression of themselves, and Picky is confident the startup can capitalize on these trends. 

Content is King 
When asked about Picky’s competitors, Jihong does not see global players that actually focus on content and information for personalized skincare. He does note, however, that there are similar companies in the U.S. that are receiving funding. Jihong believes that the momentum of the K-Beauty industry as well as a dearth of good consumer-friendly content around beauty products can propel Picky into a globally recognized brand. Jihong sees Picky as the Yelp or Tripadvisor of the beauty industry, a platform to help make sense of the cluttered beauty business.

Tailwinds Post Covid-19
Before the onset of Covid-19, it was traditional for a beauty shopper to go into a store to get advice to help them make their choice. Now, going inside a store to have someone in close proximity to your face is a rare and even dangerous endeavor. Picky is benefiting from this move out of brick-and-mortar stores and is welcoming users into their digital community. This trend won’t be reversing anytime soon, and Picky is well-positioned towards Jihong and Jeffrey’s goals of becoming a global player in the massive beauty industry. 

Bios:
Jeffrey Lee is the Managing Director and Co-Founder at Northern Light Venture Capital, an early-stage focused firm operating for over 15 years with six funds and over 200 portfolio companies. The firm is a China concept fund with roots in Silicon Valley. It invests in IT, consumer services, clean tech and health care.
Prior to founding Northern Light, Jeffrey was a General Partner and Co-Founder at Newton Technology Partners (a technology focused venture firm in Korea that backed 18 companies). One of those companies was Wavics, an RFIC company where Lee served as the Director of Business Development.
Lee is a member of several boards, including Habitat for Humanity San Francisco, the Harvard College Fund, and BSPK, a digital marketplace for luxury products, backed by Northern Light.
Lee holds an AB in Economics from Harvard University and an MBA from The Wharton School at the University of Pennsylvania. 

Jihong Lee is the Founder and CEO of Picky, a company building a digital community for discovering and interacting with beauty brands, tailored to the individual.
Prior to founding Picky, Lee was the second employee at Supercell’s Seoul office (Supercell is an extremely popular mobile gaming company and part of the Tencent family). He was also the Mobile Apps Monetization Lead at Google.
Lee holds a BA in Business Administration from Seoul National University. 

Summary by Silicon Dragon Global contributor Michael Weiss

Silicon Dragon Global: Ask A VC - Ray Lane, GreatPoint Ventures

 

For our special edition of our Ask a VC Anything series, held during our Silicon Dragon CES 2021 event, our featured guest was GreatPoint Ventures’ Ray Lane. We had a wide-ranging chat with Lane, the former Oracle COO turned venture capitalist.  Among other takeways, Lane believes that Silicon Valley has peaked. See more takeaways below and video highlights here. 

Online conversation with VC Ray Lane and Rebecca Fannin, host of Silicon Dragon Global Online, January 13, 2021.

 

Silicon Valley Has Peaked 
About half of GreatPoint’s portfolio companies come from outside of Silicon Valley and Lane expects that number to only go up. Lane notes, “I think we’ve seen the peak of number of companies that become successful out of Silicon Valley.” There are new innovation hubs all across the country. Lane cites Austin as foremost but also New York, Pittsburgh and Chicago as places where next great companies are coming from. 

Bringing Operating Experience 
Lane brings many years of operating expertise as a top executive at large company Oracle and 12 years consulting with Fortune 500 companies at Booz Allen Hamilton. From his vast experience in several facets of the business world, Lane distills his operating experience right down to the entrepreneurs within GreatPoint’s portfolio companies.

Consequences of Being Too Large 
GreatPoint Ventures, based in Silicon Valley, is investing from its third fund, currently being raised at $350 Million with a cap at $400 million. Prior funds starting from 2015 were $210 million and $300 million. Lane said he made it a point to not make the fund too large. He says that becoming too large of a fund forces you to delegate too much. When a venture firm gets too big, it is not able to operate at its best, he said, noting that a small group of people at his firm well understand how to pattern match and what to find. 

Covid, Covid, Covid
GreatPoint is making investments remotely in this Covid world without face-to-face meetings, although Lane notes that the firm’s partners are now doing more due diligence on potential deals than before. As an entrepreneur-first firm, GreatPoint spends a lot of time to get to know the founders. GreatPoint would rather have a “good idea led by a great entrepreneur, than a great idea led by a good entrepreneur.” 

Alternative Meats Are Here to Stay
As the first investor in Beyond Meat in 2011, Lane has been involved in the alternative meat market way before it became more mainstream in recent years. Lane visited Beyond Meat founder Ethan Brown in his lab at University of Missouri in 2011. After seeing the process of how proteins can be made into meat-like textures, Lane knew it would be a big deal. He is a member of Beyond Meat’s board. Lane believes that in 10 years, plant/lab-based protein delivery will dominate. 

Find the Villain
With the success of GreatPoint’s Beyond Meat investment, Lane and GreatPoint stumbled upon an investing theme. It is based around finding a “villain”. In the case of Beyond Meat, the villain is red meat. GreatPoint has set out to find other “villains” to root out. Another company GreatPoint invested in is MycoTechnology. In this case the “villain” is sugar, for obvious reasons. MycoTechnology uses sugar reduction technology through mushrooms to trick your taste buds into thinking things are sweeter than they are. It will be exciting to see what other villains Ray and GreatPoint can defeat. 

Bio:

Ray Lane is currently the Managing Partner at GreatPoint Ventures, an early-stage VC firm founded in 2015 by entrepreneurs and operators solving problems around enterprise, healthcare, bio-tech, and food.
Prior to GreatPoint, Ray was the President and COO at Oracle for 8 years where he was a major catalyst for the company’s success during his tenure. Ray was then a Managing Partner at Kleiner Perkins Caufield and Myers. Lane serves as the chairman of the board of trustees of Carnegie Mellon University, where he earned an engineering degree and MBA.  In 2010, Lane funded CMU’s Computational Biology program, with a mission of developing computational cancer research.
Lane is also supporting his alma mater West Virginia University, where he earned his BS in mathematics. With his wife, he funded and named WVU’s Department of Computer Science Electrical Engineering, which has flourished into a program graduating around 500 students a year. More recently, Lane founded the Lane Innovation Hub at WVU. The hub is dedicated to advanced manufacturing and is open to high school students. Lane’s hope is that the hub can expose students to engineering in a life-changing way.

Summary by Michael Weiss, contributor to Silicon Dragon Ventures