It was Day 3 of Company visits in Beijing and our very first with an Investor on this Overseas Study Mission trip; and what better place to have that than in Tsinghua University – commonly known as one of the top Universities in China. I was extremely gladdened by the fact that we were finally going to interact with an investor, yet there was a tinny bit of nervousness in me as I had grown accustomed to perceiving investors as an intimidating lot of individuals.

Nevertheless, after seeing our guest speaker for the day, Mr Chris Evdemon, casual dressed with an easy going and relaxed attitude to follow suit, I was convinced that the perception that I had learnt to accept is nothing but a myth. Chris Evdemon, a renowned early stage investor and Venture Capitalist who is currently heavily focusing on the Chinese market has many titles to add to his list of credentials. From being the director of Business Angels Network Southeast Asia (BANSEA) to being on the management team of China Business Angels Network (CBAN) and Eastern Bell Venture Capital (EBVC) and to managing a newly set up company called Innovation Works together with Dr Kai Fu Lee. Along with Chris were also a few other guests, who had also arrived for the presentation, Mr Fernando and his business partner and Professor Kau from Tsinghua University.

Chris’s presentation was a very interesting and relevant one to any budding entrepreneur who is keen on starting up in China. Chris started the presentation by providing the opportunities in the Chinese consumer market where he highlighted the emergence of a middle class market with the younger generation of Chinese becoming more consumer minded. He also touched on the set of challenges unique to the China market including the market itself being very fragmented, the Chinese preferring the local brands over international ones, the environment being competitive and the Chinese also being more prices sensitive. Though, these are all known facts, I believe that by highlighting them, Chris has enabled me to better understand the environment for early stage start ups wanting to venture into the China market.

In terms of understanding the Venture Capital Market in China, Chris also presented to us the opportunities and challenges in terms of raising funds in China. He mentioned about China going big on homegrown entrepreneurs expanding their companies. Though, the VC market in China is the second largest in the world but only one-fifth the size of USA’s VC market, he feels that the China VC market has a lot of catching up to do and is heading in the right direction in order to do so. Moreover, even with the financial crisis of 2008, there is still a lot more capital at hand in China than in the United States which means that China VC market is able to reduce the gap between itself and the US VC market in a shorter period of time than expected. Furthermore, with the local government stepping in this year to encourage more RMB denominated funds than US denominated funds, I believe that this will lead to more money being raised for start ups locally with local venture capitalists coming forth to invest.

Though the VC market in China is following a positive trend, there are many obstacles hindering its growth, for instance, the many legal issues and regulations that China expects companies to abide to. Moreover, local entrepreneurs see their investors as cash providers and do not take the effort to build relationships with them. Homegrown companies also do not seem to have the knack for an early exit unlike US companies. Moreover, Chris also mentioned that with the local government investing directly into VC funds and becoming limited partners in company, it leads to a conflict of interest between both the VC and investing government. Though, I agree with this, I also believe that by getting the local government more involved will enable the company to have more opportunities and become successful in the long run.

Given the challenges that aspiring entrepreneurs face in China, Chris together with Dr Kai Fu Lee are managing a company, Innovation works which was founded in September this year, that tries to address these issues by helping entrepreneurs in their start up process and I believe that this is one of the most sincerest and best ways to help start ups to get off the right foot especially in China. The focus of the investment company is in the Internet accessible Digital Entertainment, mobile internet and cloud computing business as Chris believes that these sectors are growing rapidly and see huge opportunities in the China market for each of the mentioned sectors. Therefore, personally I believe that Chris being an investor has to constantly update himself a lot of information in various industries which in turn allows him to pre-empt and envision sectors that has the potential for huge growth. Being an investor, this is important, as it will allow him to go into markets that he believes will prosper. In addition, being budding entrepreneur, we should also have knowledge in these areas and find a niche segment in the market which has an unfulfilled need enabling us to come in and provide for it. Through the presentation, I also learnt that it is not only sufficient to go into markets that are large and have the potential for growth but to also go in at the right time and to adapt the company to changes in the market. Seeing Chris, I believe that he is able to analyze and predict how the macro environment for entrepreneurs would change in China given the adoption of policies or changes in the surrounding environment, which is in a way a skill that any entrepreneur/investor should hone.

I also learnt that as an early stage investor, one should not only be looking at receiving exponential returns but should enjoy the thrill of helping start up companies grow and provide value added services. As an entrepreneur, one should not only look at investors as cash providers but to also have a good relationship with them and to get them involved in the running of the company and to tap into the investor’s networks, experiences and resources. Moreover, understanding what matters most to investors in order to receive the required funding would also enable budding entrepreneurs to tailor their pitches and business plan to address them. According to Chris, the most important factor that leads to him investing in a company is its people. The entrepreneur should have the commitment and passion while the management team should have high caliber and relevant experience. With Chris’s advice, I also learnt the importance of broadening ones mindset in order to cultivate creativity and the need to break away from our comfort zone and play on our strengths in order to realize the opportunities that we may never have been able to see before.

After the presentation by Chris, Mr Fernando an experience entrepreneur was also invited to share his experience of starting up business. He stressed that in order to become a successful entrepreneur one must be innovative, open to competition in order to improve oneself, to become an entrepreneur not for monetary gains but for the right reason, for instance having a vision to benefit customers or society through its products and services. He also highlighted on the need to make the right connections and the need for entrepreneurs to go global with their businesses.

In summary, the presentation was extremely relevant for me as it helped me to understand the point of view of investors before and after they invest into any start up company. Chris Evdemon’s insight is definitely helpful to any budding entrepreneur who is interested to start up in China; from learning the market opportunities and challenges to investment opportunities and challenges in China. The takeaways for me as a wannabee entrepreneur is first to have a vision in mind, next to have the passion and drive to achieve it which will lead to other people – investors, management team and employees to believe in it as well and with an open mind, flexibility and intuitiveness to incorporate good suggestions, pre-empt changes in marketplace and to constantly upgrade myself. This I believe can lead one to become a promising entrepreneur that attracts good investors which all leads to a higher possibility of having a successful business.

This entry was posted on Thursday, December 17th, 2009 at 1:21 pm and is filed under Talks, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.