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On Investing in China’s Early Stage Startups


I’m a sucker for a good SlideShare and Tayler Cox has put together a very good one. Tayler’s an investment associate at the Zhen Fund, a startup investment fund masterminded by Xu Xiaoping, the co-founder of New Oriental Education (NYSE: EDU). It covers the nuts and bolts of early stage investing in Chinese Internet startups. Enjoy.


I’ll highlight three points here:

  1. Investments in Chinese startups exploded last year. Many China VCs raised huge funds last year, so while valuations have come down slightly, there’s still a lot of money chasing entrepreneurs. E-commerce takes the lion’s share of overall investment.
  2. The exit strategy: IPO or bust. M&A is still rare in China. One positive sign: after many years of nothing, big Chinese companies like Tencent and Baidu are finally shelling out for major strategic investments.
  3. Cultural conservatism is still the rule: 1) There’s a lack of trust and sharing; 2) Potential Chinese founders are more risk-averse; 3) VCs are less willing to fund new, unproven models–though I’m unconvinced that investing in the 12th Groupon clone is any less risky in financial terms. In reputation, perhaps.


Article Written by Kai LuKoff &  Originally Published on new Chinese Blog Partners of Shoe String Media.



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