Q&A: GGV Capital's Jenny Lee

The following is taken from an interview for AVCJ TV conducted late last year

Q: GGV's most recent fund comprises multiple vehicles with different strategies. Why is this?

A: Our latest fund is structured as an early-stage fund – the discovery fund – which allows us to invest in entrepreneurs very early on, and then a later-stage fund, which is our main fund, and allows us to continue to help companies as they grow from Series A onward, even up to IPO. The reason we did this is that we want the fund to cater to the entrepreneur. So if you're an entrepreneur who is starting to think about who you want to talk to, the opportunity to find investors who can come in earlier and understand the risks you are taking is very important.

Q: Do you need additional internal resources to execute this strategy?

A: If we have one fund with 40 portfolio companies, all around late Series A or Series B, then obviously we don't need to offer a lot more support. But with the discovery fund, we do expect to be engaging with CEOs at different stages of development. To support them, GGV has over the last two to three years built up what we call a portfolio services support team, which covers functions like legal, finance, PR, marketing, even government relations. If you are a two-person start-up at seed or early Series A stage, you aren't going to need a lot of strategic advice. It's more on the level of hiring the right management team, and we can get our HR recruitment team to help on this. As companies grow, their needs may grow. So if they want to expand from China to the US or from China to Southeast Asia, a PR or marketing team can also be of assistance there.

Q: How has GGV's cross-border strategy evolved?

A: When we first started I would say that most entrepreneurs and companies were more local. US companies focused just on addressing the US market, Chinese companies said let's win the China market first. The mobile internet is bringing global markets closer together with technology. And because of that we are now seeing start-ups actually think a lot more about being global from day one. I wouldn't say that 100% of companies think about being global, but of the ones we're meeting, at least 30-40% think that way. Increasingly the world is becoming more integrated and technology platforms are becoming more standardized, which means that companies will have to thinking global earlier on. Uber should have thought about ride-sharing globally first. The fact that the company came to China late meant it gave Chinese players a chance to do it locally.

Q: What must a US start-up do to be successful in China?

A: While the products and services may look similar it's actually very important for US companies to realize that the target audience is different. You may be catering to a US consumer group with a particular product, but the Chinese consumer might not react in the same way as a US consumer, even though the technology stack may be the same. First of all, US companies need to understand that the consumer market is actually different, they need to be ready to localize their product, even change features to address local conditions. Second, the Chinese market is not just another city in the US. It's a completely different country with a different regulatory framework and a different history in terms of the last 15 years of technology growth. And so you definitely have to respect the market and work with the local players and regulators, and if need be consider a completely separate team who can run autonomously in the China market.

Q: What do you see as the next big tech sector development?

A: When PC internet first started, it was all about horizontal players. You had the Alibaba doing e-commerce, Baidu doing search, Tencent doing social. They were able to take on a huge horizontal need in the market. As the PC became more mature, you started to see the internet becoming more vertical. There was a Ctrip or Qunar for travel, Shanda, Perfect World and Netease for gaming, and 51job for HR. We have seen more verticalization and specific services that grow from the internet, and we think the same thing is going to happen with mobile internet. Mobile internet has now gone beyond just a reading device or a dashboard. We now use it as a tool to actually get access to services: to order your rides, to get your food delivered, to get information about buying your next house. Mobile is now an enabling device to get you better services in your daily life. And with the very personalized data you collect, you can start to have very good recommendations. When people talk about learning technology or artificial intelligence, the concept may be huge, but actually it's about giving you what you need at the time you need it. To do that you require data, and because you carry your smart phone with you all the time that level of data enables a lot better and more personalized services. 

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• Topics
• Greater China
• Venture
• Technology
• Early-stage
• China
• GGV Capital
• TMT