For this 28th 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.
“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 3rd or 4th 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, .
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.
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.
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