Profile: CCV's Wei Zhou

Wei Zhou began his first job in his third year at the University of Electronic Science & Technology in Chengdu, using the opportunity to design the hardware and software of China’s first-ever point-of-sale credit card payment machine. Venture capital wasn’t on the radar at the time, but the entrepreneurial nature of the experience helped lay a path to the career that would follow. 

The usual formula for work-experience programs at Chinese universities in the 1990s was geared toward channeling graduates into jobs at state-owned corporations. In that way, campus-connected financial technology start-up Start Computer Group (SCG) was an anomaly, and Zhou embraced it completely. By 1996, only one year after graduating, he was general partner for the Hunan province branch at the age of 23. 

Zhou got 10 promotions at SCG within eight years, a feat he attributes to the opportunities that come with fast growth and a culture of meritocracy. The Hunan branch ended up delivering about one-third of the revenue for the company’s payments business and by 1998 he was head of the western China division with subordinates including one of his former university professors. 

“I loved that company. It was a group of young guys, like 25 years old, working hard together in an office in our university building,” Zhou says. “After work, we’d have dinner together, then go back and work another few hours, then sleep on the floor, get up in the morning and do it again. It was very much Silicon Valley-style. I didn’t know about Silicon Valley then, but I loved the style. I couldn’t imagine working at a big institution or state-owned company and having a routine life.”

In 2000, not long after going public, SCG faced a crossroads with an influential group of new investors who had different ideas about where to take the company. These included explorations into unfamiliar areas such as real estate that raised alarm among the existing tech-minded team. Eventually, the friction led Zhou to stake out on his own with a fintech start-up called Hanbo and a germinating interest in strategic control beyond the authority of a mere technician. 

 “I realized that the investors could sometimes have more power than the entrepreneurs in deciding the future of a company and doing things that were either very damaging or very helpful,” he says. “No matter how hard the [SCG] operational executives like me argued, we could not direct the course of the company. So, that was the moment that I started thinking it might be interesting to invest.”

Liver pressure

Zhou began dabbling in angel investment with little success, mostly involving internet companies with copycat ideas in the vein of “the Chinese Facebook.” All the while, he grinded forward in a business environment that was quite literally toxic. Zhou describes this phase – spanning work with SCG and Hanbo – as akin to the atmosphere of a hard-partying US fraternity and the decadence of ancient Rome. Something had to give. 

“At that time in China, drinking was routine in business, and I had to drink with my clients every two days,” Zhou says. “At one point, there was a bank client with 23 branches in one province, and we had to train them on our technology in each city, drinking three rounds with every person. My wife was so angry, and my health was in danger. It was awful. After 11 years of that, my wife and I really wanted to change lifestyle.”

Change came with a move to the US to earn a degree in venture capital and entrepreneurship from the Wharton School at the University of Pennsylvania. Zhou knew he didn’t need any further training in operations, business or technology, but he still lacked financial skills. Having worked with SCG’s Silicon Valley-based suppliers for several years, he knew the US well. But his English was still patchy, and his first semester at Wharton turned out to be a trial by fire. 

“I was a CEO of my own company with more than 200 employees, and before that, I was a top executive in a public company with more than 6,000 employees. Suddenly I’m a student, carrying a bag and going to class every day,” Zhou remembers. “Most of the students around me were about 25 years old. I was 34. So, it was a pretty difficult adjustment for me but a good experience. Sometimes you have to bear the pain to gain something.”

A key moment came in 2006, when Ted Schlein, a University of Pennsylvania alumnus and a managing partner at Kleiner Perkins, delivered a speech on campus about start-ups and venture. Zhou parlayed the visit into a relationship with Kleiner, which was behind-trend among leading US VCs with no China-focused fund to date. One month before graduating at Wharton, Zhou was part of the founding team of Kleiner’s new China unit.  

He spent 10 years with Kleiner China, going on to head its telecom, media and technology team in 2010. Hunting was good, with 30% of Zhou’s investments going on to achieve unicorn status. This track record facilitated fundraising when Zhou noticed a shift in the market and an opportunity to once again stake out on his own with China Creation Ventures (CCV). 

“After 2011, China was changing so fast, and we started seeing models that had never happened in the US,” he says. “They were purely Chinese consumer behavior-driven businesses, and they were growing a lot faster than before. The investment window was shortening significantly. In China, you have to have a decision system supporting that pace of change.” 

The wisdom of this perspective was perhaps best illustrated with Kleiner’s investment in JD.com. Zhou knew Shengqiang Chen, now CEO of JD Digits and previously CFO of JD.com, from when Chen led the financial team at SCG in the late 1990s. Two attempts to leverage this connection with the then-emerging e-commerce leader were dismissed by Kleiner’s global investment committee in 2008 and 2009 before a deal was finally approved in 2010.  

“If you’re not on the ground, you cannot feel the company and feel the trend,” Zhou says. “You can look at the numbers and margins, but you won’t know the power of the company. It’s very difficult to commit in China if you’re not seeing what’s happening in the country.”

Entrepreneurial instincts

This backstory served Zhou well when he set up CCV in 2016. At the time, a recent flurry of similar VC team spinouts had already run its course, and CCV appeared to be late to the party. LPs poured in anyway, with the firm’s debut US dollar and renminbi funds quickly closing at $200 million and RMB1.5 billion ($209 million), respectively. 

The CCV team started out with five investment professionals, including Zhou plus four colleagues from Kleiner China, and now totals 12, many of whom started their careers in non-financial circles. The idea has been to breed a culture that connects with a carefully selected group of founders at the company level rather than simply targeting economic themes and methodically spreading risk. 

“Most investors’ backgrounds are in finance, so I think my entrepreneurial background gives me different angles,” Zhou says. “I really try to be a partner with start-up teams and spend time helping them like a team member. That’s why we don’t want to invest a lot of companies with similar business models and then watch them compete. As an entrepreneur, I would hate that. We want to put in all our resources every time to support the company and make it win.”

Perhaps most interestingly, this approach is not just a matter of philosophical preference – it’s a matter of survival. Zhou observes – offhandedly but with some deliberation – that the number of start-ups in China has increased one hundredfold since the early 2000s, while the number of local VCs has grown fiftyfold. At the same time, the growth rates of start-ups have accelerated. A decade ago, typical development periods from inception to IPO averaged eight years. Now, that timeframe is often halved. 

Rising competition among entrepreneurs in China is a well-documented phenomenon, especially in the case of the so-called “996” work schedule, which requires employees to work 9 a.m. to 9 p.m., six days a week. Less talked about is the effect on VCs. Zhou has been in the game for 12 years and confirms it’s not for the faint of heart. But with lofty long-term goals of shaping CCV into one of the country’s top-tier VCs, he has no intention of backing away from the challenge. 

“Doing early-stage investment in China nowadays is very hard work – meeting founders every day and night, no holidays. If you don’t have the passion for it and the entrepreneurial spirit, after 12 years, most people move into later-stage private equity, which is more relaxed,” Zhou says. “You also need to be idealistic and do it not just for money but to make positive changes in people’s lives. It’s tough and time-consuming, but if you can do this well, it’s the best thing you can do.”   

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Early-stage
• Technology
• China
• China Creation Ventures
• Venture