After a busy morning session with our first ever live blogging in the G-Startup auditorium and queuing up for lunch buffet, we are back to Auditorium 2 for G-Startup’s afternoon session. This afternoon will have one additional panel (How to become the next “Zuckerberg”) and two more competition pitches (both on Growth stage pitches).
Stay tuned and follow us on@technodechina #TheGMIC #gstartup!
14.28
Moderator Bruno Bensaid from Shanghaivest kickstarts with an introduction to the speakers:
- Kui Zhou, Partner, Sequoia Capital
- Paul Asel, Managing Partner, Nokia Growth Partners
- Rob Trice, Senior Managing Director, SK Telecom Ventures
- Mikihide Katsumata, CEO, Mobile Internet Capital
- Ming Guang YONG, New Business Development Manager, Google China
In the next hour, Bruno will tap the brain of the leaders of top VCs who flew in from all parts of the world.
“Raising too much capital can turn into a prisoner’s dilemma”
While asked to share success and failed stories of VC investments, Paul Asel from Nokia Growth Partners recounted disappointing story where a capital sufficient company raised mn that it didn’t need. When economy hit downturn, the company increased the burn rate to justify the new capital. As the economy recovered, the company could not tone down the burn rate and subsequently failed. From this case, he highlighted the importance of understanding the business’ customer acquisition costs and churn rate; raising more capital than required may lead to higher customer acquisition costs and even churn rate, hence decreasing the value cycle of each customer.
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14.43
Importance of evaluating the industry value chain
Zhuo Wei from KPCB shared the investment on Hurray!, which he considered both a success and failure; a success because of the high return, a failure because the business was actually hit by the mobile policy change, has undergone reverse takeover by Ku6 and has since then delisted from Nasdaq.
He highlighted the vulnerability of mobile businesses in China because the industry is subject to regulations and the importance of evaluating carefully the industry value chain before making investments.
Importance of timing the market
He also shared an investment in Datou, mobile reading and information, which is similar to Flipboard on iPad but early mover started 4 years ago, before the mobile revolution took off.
“It’s easy to die being the pioneer – timing is one of the most important factors even for best ideas”, he commented, “Versus the rest of world where first mover has advantage, in China most first movers usually die”.
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14.54
The right time to start your startup is now
Rob Trice from SK Telecom recounted while speaking with a group of students in a seminar being asked, “When do you think I should start my startup?”. He believes, “if you need to think of when to start your startup, don’t do it”. That again echoed with message this morning, where angel investors emphasized the importance of passion and conviction from the founders.
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15.11
On missed opportunity
Rob Trice also looked at LinkedIn as a potential investment, but turned it down because its business model back then was to charge users
Don’t try to guess what VCs like, we are not God!
An advice Zhou Wei gave to a member at the audience; instead of asking what VCs like, ask what is best for the business.
Summary
At the end of the day, VCs are looking to fund top minds and top businesses. For entrepreneurs, gauging the right industry landscape, understand the value chain and picking the right timing is all crucial. Once set on the idea, race against time, focus on business and perfect the execution.
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