Founder of Knight Vision Capital and former Alibaba CEO David Wei delivered a keynote address at the 2021 Global Venture Capital Summit on June 10 in Xi’an. He discussed the current venture capital and startup ecosystem as well as his views on how the tech and VC sectors in China have changed over time.
#1: The conditions for entrepreneurship are more favorable now than ever before
Wei said we are living in a golden age for Chinese entrepreneurship. In particular, he was bullish on startups in consumer goods, technology, and life sciences. He pointed out that 15 to 20 years ago, China’s venture capital sector was inextricably linked to the internet industry, with tech companies dominating the funding scene.
But this has changed, with Chinese venture capital looking at startups in a host of areas. “We believe that in the next ten years, at least 100 companies will reach a market value of RMB 100 billion within each of these areas,” Wei told the audience in Xi’an.
Last year, seven consumer goods startups that Knight Vision Capital invested in went public, four of which have a market value of RMB 100 billion. For reference, in the last three decades, 200 companies listed on Chinese capital markets have exceeded RMB 100 billion in market value.
#2: People matter. Invest in talent and management.
When creating a company, is it more important to set the strategy first and then build the team, or the other way around? Wei explained that for early-stage startups, assembling a strong team should be the priority, before determining a strategy. But for businesses of a certain scale, it is more efficient to define a goal and vision, and then try to recruit talent that can advance these objectives.
Startups can also benefit from a diverse team with varying backgrounds and skillsets, Wei said. For example, Xi’an has ample computer science and engineering talent, but if a startup is too technical, it will limit the company’s business development. “Ideally, teams should be made up of men and women, old and young, with backgrounds in both the arts and sciences,” he said.
#3: Domestic capital has ballooned
Chinese entrepreneurs today also enjoy a more favorable funding environment thanks to the rise of domestic capital.
“When starting a business 20 years ago in China, there were almost no local investment institutions. To get investment, you needed to be able to speak some English, because it was the language of the investors at the time. But this is no longer a problem. We can invest even if you don’t speak Mandarin well with a heavy Shaanxi dialect,” Wei said.
Analyzing the current investment landscape in China, Wei said that small and medium-sized enterprises are often overlooked by large institutional investors and foreign capital. This is where the Chinese VC and private equity community has an advantage and can seize opportunities. Wei closed by affirming his confidence in China’s startup ecosystem, underscoring Knight Vision Capital’s commitment to high-quality projects in consumer goods, technology, and life sciences.
KrASIA Connection features translated and adapted content published by 36Kr. This article was originally written by Jia Qiang for 36Kr Shaanxi.