Profile: GGV Capital's Jenny Lee

"A few days ago I met a drone start-up in Beijing and the founder tried to explain to me how drones work. I said, ‘It's okay, I learned all this 20 years ago,'" Jenny Lee, managing partner at Sino-US venture capital firm GGV Capital, says with smile. "Drone technology and application is a very hot space right now but in the old days, most people did not know about it. These were unmanned aerial vehicles mostly used for defense applications and deployment."

Lee is well versed in this area. Born in Singapore, she majored in electrical engineering at Cornell University in the US via a scholarship program run by Singapore Technologies Group. Her first job was in the electronic warfare division at Singapore Technology Aerospace - and her first project involved drones.

As a systems technician, Lee was responsible for retrofitting fighter jets and devising the weapons set-up and rules of engagement for different conflict situations.

"It was like war-gaming," says Lee. "I call myself a geek. I love to see how technology can evolve from defense to commercial, industrial and consumer applications. Many of today's internet technologies came from defense, such as man-machine interfaces, security and encryption."

Early starter

Lee's ambitions to become a venture capital investor date back to time at Cornell, when she sat in on some business classes. One day a professor gave a lecture on how VC funds allow companies to get financing.

"I talked to my professor and he said that if I wanted to be a good venture capitalist, I must either learn from good VC mentors - who are hard to find - or go and work for a company and then come back into the VC world with industry experience," Lee says, "So I worked as an engineer for a few years."

The five years spent in aerospace taught her how the commercialization of technology can change lives. This was followed by an MBA in the US. Lee subsequently found her way into investment banking with Morgan Stanley in Hong Kong in 2001. This was the first time she set foot in Greater China, although the job itself, while providing a valuable grounding in capital markets, wasn't as "cool" as she had imagined.

"For me, it's important to know in life what I want and what I don't like or what I'm not good at," Lee says. "Once I have that figured out, I don't waste time and just move on to the next task."

However, she did not expect to end up working in China. After a year at Morgan Stanley, Lee moved to Jafco and saw first-hand the burgeoning technology scene. This was the period in which the likes of Alibaba Group and Baidu were receiving their first VC funding. A job opportunity presented itself at GGV and Lee helped set up the firm's China office in 2005.

To begin with, she had to fly from Hong Kong to Shanghai once a month with a suitcase full of cash. "This was before the company had a bank account in China, so I had to bring in renminbi to pay the staff and local lawyers," she recalls.

Gender imbalance

Ten years ago, China's VC industry was in its nascent stages and few entrepreneurs really understood how the process worked. Lee therefore was an educator as well as an investor.

"I spent a lot of time explaining term sheets to CEOs. Companies used to have a common share structure and there was no concept of preferred shares. A VC term sheet included a list of rights - preferred shares, liquidation - and they didn't understand," she says. "Now the market is more advanced and entrepreneurs can negotiate."

One aspect of venture capital that has not changed is male dominance. Lee doesn't mind being a woman in a man's world, saying her personality allows her to fit in. She adds that there are fewer networking activities in China venture capital compared to traditional private equity, while the younger generation of entrepreneurs "aren't that crazy for partying."

The biggest challenge remains understanding how these entrepreneurs think - and being able to take, and explain, tough decisions. "If a company runs out of cash, you have to tell them it's game over," notes Lee. "When the product is really too early or not suitable for the market, you may have to close the business. Women in VC have to be very strong and not be afraid to have their own views. It's a lonely job."

Lee's portfolio at GGV includes social networking platform YY, which went public in 2012; 21Vianet, the largest carrier-neutral internet data center service provider with market cap of around $1 billion; and HiSoft, which merged with VanceInfo to become Pactera.

She still sees huge opportunities in mobile technology, which is disrupting traditional businesses. "The big giants [Alibaba, Tencent and Baidu] can't do everything. They're trying hard to understand the new market through M&A or investments. In areas like the internet of things, on-demand services, cross-border mobile convergence, online-to-offline, they are not dominant," Lee says.

At the same time, the VC industry is becoming more global. Winning deals in China relies not only on knowledge of a particular technology, but also understanding how to engage with local entrepreneurs. Lee believes that established GPs with strong reputations will prevail in this more competitive environment.

"It is very tough for new funds coming into the industry," she says. "If you're in the US and trying to set up a fund in China, I would say ‘Do not come here or you will die'. Even smaller funds that have been her for a couple of years have greater local advantages. We have been in China for 14 years, so how can you compete?"

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