9月25日,国内男装订阅制电商领头羊“垂衣Champzee”宣布已完成A3轮融资,领投方为蚂蚁金服,宽带资本旗下晨山资本参与跟投,奕秋资本担任财务顾问。在此之前,云九资本领投了垂衣A2轮融资。结合先前由SIG领投的A1轮融资,垂衣A轮整体融资额接近3000万美元,成为迄今为止订阅制电商领域内融资额最高的创业企业。

定位于男性专家化订阅制电商平台的垂衣Champzee,由陈曦创立于2015年4月。在创业之前,陈曦曾在华尔街一家对冲基金担任亚洲区交易主管。正是因为发现了国内在消费升级大背景下,不少男性用户既渴望自己能在不同场合下穿着得体,但又没有时间和能力挑选真正适合自己的着装风格这一“痛点”,陈曦毅然决定回国创办针对男性用户的专家化订阅制电商“垂衣”。

具体来说,垂衣所定义的“专家化男士着装解决方案”是以一套基于数据挖掘的推荐算法加专业理型师结合的方式,根据用户的特定需求与特征为其精准地推荐所需商品。用户在成为垂衣的订阅会员之后,将填写一份详细的身材尺码与着装风格的调查表,垂衣将根据这一基础数据为用户匹配专属理型师进行沟通,并为其完成一盒服饰搭配的商品。用户在收到盒子并试穿后,留下喜欢的,其余的免费退回给垂衣。进而,垂衣将根据用户的反馈,对下一次的推荐商品进行调整,并提供周期性订阅服务。


陈曦认为,未来的零售趋势将不再是“人找货”,用户不需要去找、去逛、去挑,而是通过一种“算法+人工”的方式实现“货找人”,把用户真正想要的商品直接送到他们面前。事实上,在电商领域内,从货架式电商到社交电商再到订阅制电商的演进,正是由于供应链端的过于丰富使得“人找货”的效率日趋降低,从而转换为“货找人”的全新路径。因此,对垂衣而言,通过持续学习用户需求并匹配正确的商品,让用户长期留存在垂衣平台上实现持续购买,是实现其用户价值与商业价值的根本。

有趣的是,这一趋势在资讯行业内也得到了佐证,从新闻门户到搜索引擎和RSS聚合器,再到今日头条这类个性化推荐的信息获取平台,“人、信息、场景”三者间精准匹配的重要性越来越凸显。

9月19日,36氪2018未来峰会在上海举办。峰会分为未来出行、未来金融、未来消费三大会场,邀请了近二十位行业风口企业家、知名投资人到场演讲。云九资本合伙人王京受邀出席,站在投资人角度,就未来出行话题分享自己的观点。


随着全球科技创新进入新的阶段,自动驾驶、新能源汽车、车联网以及人工智能的出现和应用,人们出行的方式越来越多样化,出行的体验越来越便捷化。尖端造车技术层出不穷,而出行方式的革新也改变了普通人的生活方式,汽车和出行的未来时代已然到来。


云九资本合伙人王京认为,这个行业从未像此时一样人才辈出、生机勃勃,充满希望。但是,我们亦不可忽视技术创新和基础建设之间发展不平衡的问题。汽车过量导致城道路堵、停车位数量严重不足、城市道路规划欠缺合理、倡导电动汽车从而大量发电造成的潜在碳排放增加……这些都是不容忽视的问题。技术的发展不仅仅意味着生产更新的产品、提供更优的体验,还应该处理好人与城市、车与城市的关系,体现对可持续发展的关切。


会上,来自汽车制造、汽车租赁、汽车共享、旅游、智能硬件等多个细分领域的优秀企业家各抒己见,分享最前沿的技术和理念。出行服务将进一步提升用户体验、匹配其出行需求,汽车行业也正与科技公司迅速融合,运用大数据设计出具有人文关怀的产品,以此来贴合人性需求和出行场景的交互。

“资本是加速器,作为投资人我们更多充当一个观察者的角色,我们观察和理解这个世界,真正推动这个世界的是每一位企业家、每一名从业者,和每一个人。”创新改变生活,而资本为创新赋能。未来已来,行业格局的跃迁,你我都在见证。

9月4日,36氪2018中国投资人未来峰会暨“中国最受创业者欢迎投资机构/投资人”颁奖盛典在北京举行。云九资本及其创始人&合伙人曹大容分别入选 “中国最受创业者欢迎投资机构TOP100”、“中国最受创业者欢迎投资人TOP100”。云九资本还入选了2018中国企业服务领域投资机构TOP20。


过去4年,创投行业急速发展,成就了一批独角兽公司和明星创业者。到2018年,这个曾呈现几何级成长的行业进入资本寒冬,迎来一次全面的自我审视。投资人和创业者,作为中国新经济发展过程中最重要的参与者,也从淘金时代跨进炼金时代,逐步回归商业价值。

同业竞争愈发激烈的背景下,创业者更需要能共历时艰、同创价值的投资人。寒冬之中,合格的投资人要有发现价值的能力、投后赋能的能力,也要有耐得下性子、长期陪跑的能力。36氪向3700家创投机构发出调研邀约,并对800家创业公司创始人进行问卷调研,综合评定后,发布2018中国最受创业者欢迎投资机构/投资人TOP100榜单。


企业服务是云九资本重点关注的领域之一。凭借对领域内前沿技术和模式的敏锐嗅觉,云九团队投出了青云(Qingcloud)、找油网等优秀公司。云九资本始终看好中国的企业服务市场机会,未来,云九资本还将继续深耕行业,期待与创业者一起,发现新一代改变世界的产品、技术和商业模式。

HONG KONG: Home Inc, a social e-commerce platform for the home furnishing industry, recently announced the completion of a US$5mil Series A+ round of financing led by Sky9 Capital with participation from existing investor Capital Today.

Home Inc is a leading social e-commerce platform for furniture and home furnishings in China. The Hangzhou-based company provides an online platform that utilises an innovative, sharing-economy approach to sales and marketing, connecting prospective customers with prior customers both online and offline.

The company is different from other furniture e-commerce companies because it provides a network of virtual showrooms, called “Lifestyle Homes”, for prospective customers to personally experience the products in a real offline home environment.

The prospective customer can also interact with existing furniture owners either online or offline at these Lifestyle Homes for detailed information on the products prior to purchasing, resulting in improved customer experience and satisfaction.

Home Inc’s founder and CEO Qiming Zhao commented: “The furniture industry is complicated, so I have been very selective about potential investors. Sky9’s team has a strong track record of investing in some of the leading sharing economy and social e-commerce companies in China, like Tujia, PinDuoDuo, MaMaDaV, and XiaoHongChun.

“I look forward to continuing to work with the partners of Sky9 as I value their experience and strategic insights.”

“As a serial entrepreneur in the furnishing business, Qiming has demonstrated his operating strength as well as his insight into how the industry will evolve in the future,” said Sky9 Capital Founder and Managing Director Ron Cao.

“His authenticity and leadership qualities are truly impressive, and we are excited to be part of this unique opportunity to build a truly differentiated business.” Home Inc. currently has 20,000+ registers members and a network of 300+ virtual showrooms in cities such as Hangzhou, Beijing, Wuhan, and Xiamen. – Bernama.

Sky9 Ron Cao

There are few investors in China as experienced as Ron Cao. Founder and managing director of Sky9 Capital, Cao has headed three venture capital firms over nearly two decades of investing in tech companies in the US and China.

Specifically, Cao seems to have a knack for picking up on trends at the right time. The Wuxi native has led a number of investments in leading technology companies in China – from Tujia, dubbed the Airbnb of China, to food delivery and daily deals unicorn Dianping (now Meituan-Dianping). He’s vetted peer-to-peer lending companies, cloud service startups, and even an ecommerce platform for moms to sell to other moms.

Now, over a year into founding his VC firm Sky9 Capital, Cao is as bullish on China as ever.

“I feel like China is just getting started,” he says. Urbanization, high-end consumerism, increasing savviness around financial products – all of it is happening in real time, he emphasizes.

Like many tech elites in China, Cao has extensive overseas experience. He earned a Bachelor’s and Master’s degree in electrical engineering and computer science at MIT before working at Goldman Sachs and Intel. His investment experience would pull him back towards China, however, with cross-border investors like Lightspeed Venture Partners – he was the founding partner for the firm’s China arm in 2006 – straddling tech ecosystems in both Silicon Valley and China.

At Sky9 Capital, Cao is focusing exclusively on early-stage Chinese startups. When I asked him why he started Sky9, he said he felt the opportunity in China was so great, “I just had to start my own firm.”

We caught up with Cao in Shanghai to learn more about trends in China’s investment landscape, how early-stage investors evaluate startups, and other lessons he’s learned over 18 years of investing. Below is an edited transcript of our conversation.

As someone who has investment experience in both the US and China, have you noticed any differences between early-stage VCs in the two countries?

I don’t think so. I think the top funds around the world have the same formulation. It’s to be extremely people-focused and talent-focused. How you judge talent might be different, but overall early-stage investing is really about investing in talent.

As an investor, how do you get to know founders when you’re vetting them?

After you have been doing this for awhile, you can have a pretty good feel for a founder’s strengths and weaknesses – and with a high degree after two or three meetings.

Generally, we look for two things. One is their capability – the ability to create, manage, lead, and have a vision and strategy.

Two is sort of an all-encompassing phrase: authenticity. It’s about seeing through a person, seeing what’s really inside, and really trying to understand what’s driving them. The core question is: are they true to what they are doing?

Take Richard Huang, the CEO of [enterprise cloud services startup] QingCloud. For him, it’s a sense of mission. He truly believes in his deepest of hearts that he was born to make cloud as accessible as water.

When you see that moment – and those things come in flashes – you have to take it as truth and a lot of times that can sway your decision, especially early decisions with little data.

I think that’s something you get good at after years of just seeing thousands of people. Authenticity. Either they love being entrepreneurs or they love doing what they’re doing.

What about foreign entrepreneurs interested in entering China? What advice would you give them?

It’s similar to a Chinese entrepreneur going to the US to start a company. I don’t know if there’s any advice one can give to help them succeed. It’s very tough. For a Chinese person that’s never lived or studied in the US – or entered their society in some way – the chances of the startup succeeding are almost zero. The opposite is true too.

If you do have a competitive advantage, it’s most likely some sort of technology. You own a kind of technology and you want to enter China to find a team and turn this technology into a business model or business. I think that’s possible.

Why do you think locals have such an advantage?

A lot of teams in China rely on their business model, their operations, and execution to succeed. As a foreigner, you probably do not understand these things, as well as local entrepreneurs, do.

Whoever wants to come needs to know what their competitive advantage is. And information is no longer a competitive advantage because data is so accessible now. Whatever [models or businesses are] successful overseas, Chinese people can do it here.

China’s tech industry has different boom-and-bust cycles, where new businesses develop in a gray area until the government cracks down with new rules. As an investor, how do you help your portfolio companies navigate that?

In our industry, there are a lot of cases that don’t have clear policies, especially for innovative companies at the early-stage. These are typically disruptive verticals where startups come up with new business models or a new way to make things more efficient. In these situations, the policies often will follow the business.

In the case of Tujia, for instance, there were a lot of details that weren’t clear from the policy perspective at the beginning. Can individuals rent to individuals? Does one need to show ID? Who pays taxes? If there are issues with the rental, who is responsible?

All these details were unclear. So Tujia has to cooperate with different regional governments wherever it goes to create certain rules and best practices. We also want to resolve these issues – it’s just that no one had done it before.

See: Why the Airbnb of China is Tujia and not Airbnb

For [consumer lending platform] PPDai and many of our portfolio companies, they are constantly in touch with and working with various government entities, partly to be transparent in what we are doing and partly to help governments to think about how to work with these new technology companies.

For startups in China, government relations is important. At Sky9, our team works hard to introduce our founders to the right people, and help them develop relationships so that they are building their businesses in a sustainable and responsible way. The relationships and learnings are something we’ve accumulated over time.

You mentioned that a lot of Chinese investors are going into Southeast Asia now. What do you see as a future trend of China’s investment landscape?

I think another trend will be about the US market – Chinese funds investing in the US.

Why? Because the US market and the Chinese market are the two biggest markets, and there are a lot of similarities in terms of business models and consumer behavior.

In many situations, China VCs and entrepreneurs are also perhaps more sophisticated than their US counterparts as the China market has moved ahead in some consumer business models.

We see more and more ideas being generated in China first and taken to the US market second. Live streaming is a perfect example. China’s live streaming industry is the largest in the world. In the future, China will come up with more and more of these trends first. And then the US will follow, especially on the consumer side.

There will be a reverse flow of cross-border investment. Chinese people, Chinese money, Chinese ideas – Chinese outbound. We’re not talking about tourism. We’re talking about China outbound of money and talent and innovation.

What are some lessons that you’ve learned in your career as an investor?

Starting a company and making it successful is the hardest thing there is to do. If that’s the hardest thing to do, why not do something big?

One thing we learned over the years is that it is just as hard to do something small as it is to do something big. There are no sure bets – no low risk, stable return bets. They’re all high risk. So go for the high return ventures. Believe it or not, if you go for the high return ventures, your risk is actually lower.

Why do you say that?

Because the biggest ideas always come from the strongest people. There’s a positive natural selection for talent. The CEOs are usually the big, crazy visionaries.

Big ideas can also attract more capital and also higher quality leaders. So there’s a good chance that with a big idea, you can get into this positive cycle of talent, capital, and talent, which ultimately results in a much higher chance for success and higher impact outcome.

How do you differentiate the big ideas from the crazy ones?

Sometimes it’s hard. That’s where the risk is.

I also think a lot of the risk that we measure is psychological. But in reality, a lot of things are not that risky. If no one is doing a deal and you’re doing it, you feel risky. Doesn’t mean it’s any riskier.

That’s the other thing we learned over the years, which is to have a different perspective on risk. The difficult thing about investing is that you almost always have to be a contrarian to be able to invest in something big. The hard part is to be a contrarian and also be right.

Sometimes investors confuse perceived risk and actual risk. To be able to understand and assess that difference is one of the key skillsets early-stage investors have to learn over time.

The Four Features of a Company that Scales Quickly.

Before becoming a co-founding partner of Sky9 Capital, I was the Executive Director of Lightspeed China Partners, and my major investment areas included social networks, mobile platforms, and e-commerce, among others. I participated in a series of projects including investing in Pinduoduo, eBroker, FaceU, and DaVdian.

For an early-stage VC investor, to be able to find and invest in a “company that can scale quickly” is certainly the most exciting and most challenging part of the job.

Recently, among the start-ups that I invested in, there were two that scaled to RMB10 billion within one year. One was the social e-commerce platform “Pinduoduo” that I invested in while I was at Lightspeed China Partners; the other was the Internet-based financial platform “eBroker” where Lightspeed China Partners did the Series A and Sky9 Capital invested in the Series A+ round.

Based on my experience, I’ve noticed that a company that can scale extremely quickly usually has the following features:

First, it’s fresh and new. Only new and interesting things can distinguish themselves from things that exist already, and this can, of course, bring more opportunities.

Pinduoduo is the e-commerce platform that was the earliest to adopt the WeChat group-shopping model. In 2015when I got in touch with Pinduoduo, what the consumers on the internet were used to was still the B2C e-commerce model. Pinduoduo used WeChat and popular social networks to obtain traffic, marking the start of a new method of obtaining traffic that is more in line with the mobile internet era, and so it was able to expand its scale very quickly and smoothly.

eBroker’s explosive growth was because it provided a new service for customers and agents of international financial planning products. Originally, these international financial planning products lacked transparency, there was information asymmetry, and consumers lacked efficient and high-quality service providers. Also, because there were only a few companies monopolizing the market, customers could not get good financial returns. eBroker used the internet to establish a centralized platform for agents, which removed the middleman. This platform enabled the agents to improve their income while also making available a wider variety of products to consumers.

The second feature is lightness, specifically, asset-light. These companies do not rely on burning money for expansion.

In the market, there are certainly companies that scaled to RMB10 billion in a period of 3–5 years, but the difference between them and companies like Pinduoduo and eBroker is that these companies had an asset-heavy model. Their logic was to “First establish the brand and develop the customers, and then expand the company size.” A common practice of this type of company is to spend a great deal of money to offer subsidized services, or give away products free of charge, in order to attract users. They advertise aggressively on the subway, on the sides of buildings, outdoors, and internet streaming commercials and they will need a great deal of financing to support their subsidies and giveaways. Some technology-oriented companies also have a similar development track, as they usually need large funds for technology research, and only after their investment has reached a certain scale will they be able to harvest users and growth.

Yet, it is hard to estimate the effect of this kind of subsidy and promotion war, and success is slower. Unlike those companies, a platform like Pinduoduo is extremely asset light. Its expansion is not achieved through low prices achieved through subsidies, but instead through the organic growth of their business model. Through group-buying e-commerce, each group often has 4–5 users placing orders together; they focus on low-ticket items that are attractive and high-quality to attract users to place orders, and then they utilize users’ normal, social behavior to promote brand propagation and finally achieve explosive growth. This process does not cost a lot of money and at the same time can expand very fast.

In my opinionVC’s should invest around the concept of “lightness”. A counter-example is O2O, which was popular throughout China in 2012. That was an asset-heavy model. Currently, most companies using that model have struggled. The results speak for themselves.

Third, successful companies are broad. That is, they have a broad and high-quality user base as their foundation.

At the very start, Pinduoduo got its start doing group-sales of fruit, and what they relied on was the rising middle-class consumers. Purchase of imported fruit is an embodiment of the consumption upgrading of this group of people. Similarly, eBroker targeted the large consumer population who, during the period of RMB depreciation in 2016, held large amounts of United States currency and hoped to buy international financial planning products. Having a broad user base with massive consumption power is the foundation for scaling.

Fourth, change. That refers to the ability to grasp opportunities that appear as the industry changes with the times.

Now, when I look back and try to sum up my experiences from investing in Pinduoduo and eBroker, I find that behind the growth of the two companies, there are certain specific contexts for the timing of when they found their success. For instance, only the shift from data traffic primarily originating from PCs to being primarily mobile traffic could have led to the birth of group-buying e-commerce. Only people changing their fund management concepts could have led to the foundation of the large-scale development of eBroker. Pioneering companies that are able to expand their scale in a short period of time usually have a more acute sense of smell than most people. They have seized the core of the changing times and taken action to innovate to seize the opportunities of the day.

How to View Barriers to Entry

Howeverleading corporations with these features are often neglected by many investors. When we began to invest in eBroker, there were hardly any other funds vying with us; when we invested in Pinduoduo, the competition was not intense, either. Why was this true of both cases? The reason is: as far as many investors and investment institutions are concerned, such corporations have no barrier. Without a barrier, the investment risks are considered to be too high.

Most people think the barrier must be related to something technical or to its business model and they would think that the platform model and traffic collection model of Pinduoduo and eBroker really have no strong barrier. But, in my opinion, the pioneering companies’ perfect timing for entering the market, combined with the strong growth and vitality of their business model, in and of themselves constitute a “barrier of scale”.

For example, Pinduoduo entered the e-commerce market quite early in the growth stage of mobile internet, and so it was able to seize consumers’ attention very quickly through social networks. Then it achieved a scale effect and built up their brand, which formed a barrier against other mobile e-commerce competitors.

Of course, when investing in an early-stage company, investors will try to use history to forecast the future. But for such a company, we usually have no history for reference. So that would require the investor to have the courage to bear this kind of risk.

When I paid close attention to eBroker, many venture firms thought overseas financial planning products was too risky. But I felt, when weighed against the possible return, this risk was still manageable. At that time, we had worries about risks too, but this apprehension does not change the consumer megatrends. Indeed, at this point, the RMB rate has become more stable, and people’s demand for overseas financing has become more diversified, thus, eBroker has gradually grown into a comprehensive platform for overseas financial management products.

When we face an early-stage, high-risk project, the judgment of the founder is also a very important factor. The founder of a pioneering corporation that can expand its scale very fast in a short period should have proven themselves to be a strategic thinker.

I still remember when I chatted with Zheng Huang, the Founder of Pinduoduo, about this company for the first time in 2015, he was not clear about the business model yet. Yet he knew clearly that, 10 years into the future, the e-commerce environment would not be the same. The era of mobile internet has come, so, there must emerge new companies to change the e-commerce pattern of the PC era. That means, he did not establish a business because of a pursuit of some fashion or trend, but rather, his decision was made on the basis of his judgment about the change of the entire era that would affect everybody and about the business environment. It was this vision of Zheng Huang’s that made me believe he could accomplish this thing.

Where Can the “Next” Possibility of E-commerce Lie

Now, a question I think about every day is: where is the next company that can scale to RMB10 billion within one yearI am sure, most early-stage investors are thinking along the same lines.

Judging from the project type, rather than the popular companies that spread extensively by relying on offline methods such as new retail and sharing economy, I prefer to find pioneering deals that are pure internet plays. That is why I pay close attention to the apps favored by Chinese youth now. To become a user of such apps and to enhance my understanding of the latest trends are lessons I try to keep up with every day. And I still firmly believe that asset-light companies are more suitable for early-stage investment.

In the past, I invested in many e-commerce and consumption-related projects. Some people think that the e-commerce industry has already stagnated and is saturated, but I do not think so. In my opinion, entrepreneurs in e-commerce can still seek opportunities in the following four areas

First of all, new markets. In selling Chinese things abroad, we have a very big advantage –a large variety of SKUs. Nowadays, the development of overseas e-commerce platforms is about a decade behind China, and so, in Southeast Asia, India, Russia and other regions, we still have chances to establish platforms.

Secondly, new groups of people. Nowadays, many platforms aim mainly at the middle-class, and there are indeed good opportunities. Yet, the future mainstream consumers will be the younger generation, and we should also have different ways of operating to adapt to these new groups of people. Also, will other groups of people increase their demand for e-commerce shopping gradually? How can we meet their demands?

Thirdly, new ways of obtaining traffic. Pinduoduo has utilized the advantage of WeChat to innovate the method for e-commerce customer acquisition. Now, it has also become very common to obtain traffic through social networking and content-driven methods. In the future, entrepreneurs should be thinking: what other new ways can we have to obtain traffic, and how can e-commerce be innovated around this point.

Finally, new categories. Vertical e-commerce has already entered a bottleneck stageas the driving force for shopping guides and content has become very weak. There are very few chances left in these categories, and in my opinion, furniture and fresh edible goods might be the last remaining frontiers.

On the whole, the requirements for entrepreneurs in the e-commerce field will become higher and higher. Selling can be both very simple and very complicated. The entrepreneur should not only focus on online consumers but also know how to manage the “traditional people” such as the suppliers. He or she should not only be familiar with the entire supply chain but also get along well with competitors and rivals. So, it is very hard to establish a new business in existing e-commerce categories. Looking at companies in the e-commerce sector, besides their views and patterns, I also pay close attention to these entrepreneurs’ experience in internet products.

 

Sky9 Capital (www.sky9capital.com) is an early-stage venture capital firm focused on the Chinese market, with a focus on consumer internet, enterprise services, and deep technology.

HONG KONG, Aug. 29, 2017 (GLOBE NEWSWIRE) — Zhaoyou, a Sky9 Capital portfolio company, announced the completion of a $32 million Series B financing.

Zhaoyou (51zhaoyou.com) is China’s leading business-to-business e-commerce platform for the petroleum industry.  Sky9 Capital led a $18 million Series A+ financing earlier this year, and the company recently announced the completion of a $32 million Series B financing led by DCM Capital and strategic investor Huochebang.  Other investors include GGV, SIG, Yunqi Partners, and PartnerAngel.

Founded in 2015, 51zhaoyou.com is the largest and most efficient transaction platform in the petroleum industry, providing comprehensive fuel trading, logistics, and financial services to its customers, which include some of China’s leading logistics companies. Zhaoyou currently has offices in four major Chinese provinces, Jiangsu, Zhejiang, Guangdong, and Hubei, covering over 40 cities.

Last year, the platform recorded cumulative transactions of over RMB500 million (US$75 million).  As of June this year, the company’s turnover exceeded RMB1.5 billion (US$230 million) and is expected to reach RMB5 billion (US$750 million) for all of 2017.

Zhaoyou CEO Tony Lv said, “I’m really excited to have the support of such great financial and strategic investors.  I appreciate the support that Sky9 Capital has provided over the course of the last six months, especially in terms of strategic direction and HR-related help.  We share a common vision in building a meaningful enterprise which provides more efficient products and services to this exciting and dynamic industry.”

Sky9 Capital’s founding partner Ron Cao said, “We are excited to work with a world-class entrepreneur such as Mr. Lv. His knowledge and experience in this industry combined with his passion and vision enable him to affect change and achieve such amazing success.  We are excited to accompany him on this exciting journey ahead.”

 

About Sky9 Capital 

Sky9 Capital is a leading early-stage China-focused technology venture capital firm.  With its mission to partner with bold innovators to build world-class companies together and to make a positive impact on the world, Sky9 Capital specializes in the consumer Internet, enterprise, and deep technology sectors.  With presence in Beijing, Shanghai, Shenzhen, and Silicon Valley, Sky9 approaches investing with a global perspective and selectively partners with early-stage companies that have exceptional founding teams, disruptive and scalable business models, or innovative and transformational technology.  For more information, please visit www.sky9capital.com.

Leaderette:

In June 2016, Ron Cao, the founder of Lightspeed China, published an open letter establishing a new fund – Sky9 Capital. Since then, Sky9 has established a USD fund of 200 million dollars as well as an RMB fund; established a 15-person team of veterans spread across Beijing, Shanghai, Shenzhen, and the US; and invested in six projects, including www.51zhaoyou.com, www.edaili.com, and www.enmonster.com.

Recently, Ron Cao agreed to a special interview with a reporter from www.36kr.com, in which he shared his thoughts over the past year as an entrepreneur, answering the following questions:

— Why does Fintech– which is frequently regarded as an underdog– still have a lot of room to grow?

— How can an “intensive cultivation” strategy be used effectively in a “fallow” period [with fewer projects]?

— What characteristics determine whether a projects is worthy of investment?

—-What points should we pay attention to when evaluating people?

Since establishing Sky9 Capital last year, I have paid a great deal of attention to the fields of Fintech (finance or financial technology), enterprise services, and deep technology. Whether we call it “Internet Finance”– a buzzword which was at one point on everybody’s lips in China– or “Fintech”, which has now become the more popular term for it, start-up companies in this field have encountered bigger and bigger difficulties.

One reason is that, over the past few years, most relatively clear start-up opportunities have already been seized; another is that domestic internet tycoons have, through their investments and business, become relatively established in the finance sector, leaving fewer opportunities for those coming in later.
However, I think the present state of affairs still presents opportunities for Fintech. When looked at from a macro-environment perspective, the negative news about a batch of P2P online loan platforms here in the past has made domestic users more cautious about P2P loans and even internet financing and investment. However, this period of “chaos” at the very beginning is now long past, and the situation has become relatively stable. Currently, domestic users’ understanding of internet financial services is more rational than before. Through the rise of these large finance players, people have come to know more about finance and risk. For entrepreneurs, the environment is clearer: there are a series of rules that should be followed, and there are bigger possibilities for people to succeed in the relevant start-up white spaces.

Looking back to www.ppdai.com and www.rong360.com, which I have invested in previously, I believe that they used the most fundamental business models we could follow at that time. Unlike the relatively perfect financial and credit reporting systems of the USA, the domestic loans, financing, and investment services in China are still at an early stage of development. For example, www.ppdai.com gives credit ratings via data, leveraging financing through an online platform to meet the financial service needs of some users who cannot obtain bank loans. However, when a greater number of enterprises begin to operate this model, we will be able to better judge its positives and negatives, and how it could be innovated upon. Entrepreneurs in this field should clearly recognize that Fintech will become a basic part of the infrastructure of internet-enabled society, and it will be integrated into a wide range of business models, just like computer technology and the internet itself were in the past, and artificial intelligence is set to be in the future.

Therefore, Fintech has a very big potential market. Through various channels, including the internet, Fintech will enable financial technology companies to solve the demands of those not yet involved in the “traditional” financial industry, as well as help enterprises optimize financial services, improve customers’ experiences, and promote innovation efficiency, pricing, and risk management, establishing a mutually beneficial and trust-based relationship with customers.

The Three Standards Behind “Investing in Quality Over Quantity”

I have always believed in “investing in quality over quantity”. As I have said many times before, “China has around 15 start-ups worth investing in every year”, meaning that we do not need to focus on quantity in investment. After founding Sky9, our team still firmly believes in this. Over the past year, our team met with nearly 600 start-ups, but we ultimately invested in just six projects, so our investment ratio was almost one out of 100.

Why do we continue to persist with such “precision plowing”? Ultimately, every investor’s goal is financial returns. Among the companies that have received VC investment over the past decade, around 70 companies have been able to reach the proverbial “unicorn” status, or are in the process of becoming unicorns. Breaking that down further, that means that less than 10 companies each year will eventually become unicorns. As an early-stage investor managing over $100 million, our returns mainly depend on these big deals. Therefore, we should simply not invest rather than make investments just to chase a trend or feel some sense of participation.

Following this principle, knowing how to guarantee precision in our investments becomes a critical factor. I don’t worry about whether I can find enough good projects; I worry about whether my judgment of them will be correct. These days, finding a large number of projects isn’t a challenge, but judging projects correctly is very difficult indeed, especially at the early stages of the company’s development.

To help overcome this challenge, most Sky9 team members have between 7 and 8 years of investment experience. During that time, each member of the team has found which fields they have a knack for. So now is the “harvest” period for them, in which they reap the benefits of this knowledge and experience that they’ve built up, where they have the ability to analyze entrepreneurs and projects more accurately. Currently, Sky9 is primarily focused on “to C” business models with a platform effect, such as new models of consumption via the internet, social networking, e-commerce, Fintech, O2O, etc. With our sights firmly set within these sectors, Sky9 has formed a common understanding internally, which is that the companies we invest in must have at least one of the following three features:

Firstly, an excellent CEO. Whether a CEO has entrepreneurship experience, strong leadership, personal charisma, sensitivity to his industry, and good industry connections will determine whether he can succeed or not.

Many investors believe that it’s necessary to evaluate people, but what exactly does this mean? In my experience, the criteria for evaluating an entrepreneur should include whether this entrepreneur is able to endure pressure, whether they have an big enough vision, whether they have the strength and comprehension to take the right risks, and what exactly is the relationship between the founder and the enterprise itself. As an investor, I am accustomed to evaluating an entrepreneur through long one-on-one discussions, through which I make sure that they are doing something they have confidence and desire that emanates from deep within their heart, and not just chasing some currently popular trend.

Secondly, an innovative business model. More precisely, the main factors we survey are whether they are able to iterate quickly, scale rapidly, and become a platform in a relatively short period of time.

As for the sectors that Sky9 focuses on, platform-type “to C’ businesses with the largest market opportunities are able to magnify their market strength as they get bigger. For early-stage investors, it is necessary to form a judgment about the platform potential of a start-up early in the company’s lifecycle, and this is exactly what Sky9 Capital’s team excels at.

Thirdly, new technology and new sectors. Our belief is that the creation of new sectors or even entire industries is driven by the development of new technologies. So, currently we also pay attention to start-ups in the fields of autonomous driving, artificial intelligence, deep learning, etc.

When considering new technologies, we must ask ourselves whether they have the potential to drive an entire market or industry in the future. For example, artificial intelligence is a mega-trend, and also a hot spot that we are monitoring. I would monitor whether artificial intelligence could become involved in every aspect of our lives, and so what specific industries or fields would best demonstrate artificial intelligence’s strengths, which industries would AI disrupt, and how would this disruption play out.

Artificial intelligence has great prospects, but still, it will take some time to mature into practical applications, and it cannot be achieved by relying on simple business model innovation. For now, investing in artificial intelligence is still investing in the concept stage. Early entrants certainly have advantages, but they may also become martyrs.

VC is not a “you win and I lose” industry

It has been more than a year since the founding of Sky9. To some degree, I feel like I myself am an entrepreneur. The feeling of owning my own brand is just like the sense of achievement after graduating from university and finding a job. You are not just a school’s student or somebody’s son anymore, but you are your own person.

As can be seen from looking at my career over the past decades, I previously focused on how to find and invest in the right start-ups. Now, I must also consider how to operate Sky9 as best as possible, and the core of my work is done by surrounding myself with the right people, including establishing my team and thinking about the core culture we want to have at Sky9.

We want to be a VC that knows how to share. Entrepreneurship is too hard. If we have very good stories, experiences, and thoughts, and have come to some insightful conclusions, we will share these with others through our public WeChat account. Additionally, Sky9 plans to produce some short videos to help communicate our ideas.

I firmly believe that the best VC should have good judgment, excellent teamwork skills, and the capacity to positively affect others. The last point in particular is one of the main reasons why I pay attention to sharing. It is somewhat like the concept of a “coach”, as opposed to a trainer who has a more hierarchical relationship with their trainees. I want to truly become an equal partner of entrepreneurs, and to be a kind person. In this aspect, I was much affected by my grandfather.

I was raised by my grandfather between the ages of 4 and 10. My grandfather had been a business owner before China’s liberation, and he had washed toilets after China’s liberation right until the end. But still, he had his own pride. He was worthy of his place on both heaven and earth. My grandfather instilled in me two lessons: The first is to be number one in everything, and compare myself only to myself, instead of to others; and the second is to make sure that I am a good person who is kind to others.

Some people think that being kind clashes with the “wolf principle” many investors in China believe in, because they think this industry is purely “dog-eat-dog”. In my opinion, while kindness certainly conflicts with the wolf principle, it does not conflict with aspiring for excellence. Kindness is a mental state in which we treat others as we would want to be treated, and it reflects our own relationship with the world—being willing to help and believe in others.

Over my career, I have met many investors who firmly adhere to the wolf principle. They compete and fight for more shares and equity, but ultimately to what end? Rather than shares, I pay more attention to “health”. Having more shares should not be our one goal to the exclusion of all else. Instead, we should consider how to create win-win and multi-win scenarios, and help the CEO go further.

Venture capital is not a zero-sum-game industry, but an industry where you and I could create higher value together. This is the difference of VC from PE. PE focusing on later stages is like sharing a pie, while VC is creating that pie. Actually, all people engaging in VC adhere to wolf principle to some degree, but it is not enough to have this wolf principle; we should also strive to be “kind people” as well, and consider further whether our judgment as investors is aiming for what is best for the health of entrepreneurs as a whole.

 

Sky9 Capital (www.sky9capital.com) is an early-stage venture capital firm focused on the Chinese market, with a focus on consumer internet, enterprise services, and deep technology.

HONG KONG, Aug. 09, 2017 (GLOBE NEWSWIRE) — Sky9 Capital, a leading China venture capital firm, announced that China industry veterans KS Chay, Dr. Kok Peng Teh, Bob Xu, and Jason Zeng have joined its Advisory Board to provide strategic advice and foster long-term partnerships.

KS Chay is Founder and Chairman of Enspire Capital, and previously he co-founded Singapore’s first Nasdaq-listed technology company, Creative Technology Ltd (SGX:C76). Dr. Kok Peng Teh is currently Senior Advisor and Board Member for China International Capital Corporation, and he was President of Government of Singapore Special Investments (GIC) for over a decade until 2011. Mr. Bob Xu co-founded New Oriental Education & Technology Group (NYSE:EDU), the largest provider of private education in China, and is one of China’s most successful angel investors having founded ZhenFund in 2010. Mr. Jason Zeng co-founded Tencent Holdings Ltd (HK:0700) and is currently Chairman of the angel-stage investment firm Decent Capital.

“We are honored to have industry veterans like KS Chay, Dr. Kok Peng Teh, Bob Xu, and Jason Zeng join our firm as our board of advisors,” said Ron Cao, Founder and Managing Director of Sky9 Capital. “Mr. Chay and Dr. Teh come from a strong institutional approach to investing and can provide us with great guidance on how to continue to build out our organization. Bob and Jason are two of China’s most successful entrepreneurs, so we gain great insights from their operational background as well as inspiration on how to build great businesses together with entrepreneurs.”

Founded by China venture capital veteran Ron Cao, Sky9 Capital’s mission is to partner with the next generation of entrepreneurs to create world-class companies that also have societal impact. With over 17 years of VC experience in both the US and China, Ron has invested in some of China’s leading technology companies including: Tujia, China’s largest AirBnB player; FangDuoDuo, China’s largest online-to-offline real estate transaction platform; PPDai, China’s largest pure-play microlending platform; and QingCloud, China’s leading enterprise-grade cloud computing platform.  Ron has been named by Forbes China as one of China’s “Top Venture Capitalists” over multiple years and is honored by the World Economic Forum as one of its “Young Global Leaders”.

Sky9 Capital’s senior team consists of additional partners with strong venture capital and start-up experience. The team of Wei Hao, Jing Wang, Jonathan Qiu, and Tony Lo, have collectively over 30 years of venture capital experience in the US and China, and they previously worked at world-class technology companies such as Intel, Trilogy, Cisco, and Tencent. Their investments include PinDuoDuo, FaceU, Rong360, ZhaoGangWang, MaMaDaV, FangDuoDuo, JuMei, JingFuZhi, LuckyPai, and Dianping.

Sky9 Capital has completed six investments in its new fund, including ZhaoYouWang, the largest B2B marketplace for petroleum-related products in China; EZbuy, the leading Chinese cross-border e-commerce platform targeting the Southeast Asia market; and eBroker, the leading online platform for wealth management.

 

About Sky9 Capital 

Sky9 Capital is a leading early-stage China-focused technology venture capital firm. With its mission to partner with bold innovators to build world-class companies together and to make a positive impact on the world, Sky9 Capital specializes in the consumer Internet, enterprise, and deep technology sectors.  With presence in Beijing, Shanghai, Shenzhen, and Silicon Valley, our firm approaches investing with a global perspective and selectively partners with early-stage companies that have exceptional founding teams, disruptive and scalable business models, or innovative and transformational technology. For more information, please visit www.sky9capital.com.

“China has a vast amount of local capital, and talent in the region is world-class. Entrepreneurial ideas in China are among the world’s most advanced , so the growth opportunities are huge.” According to Ron Cao, Founder of Sky9 Capital, a great environment and eco-system has emerged for venture capital in China. China’s VC industry is set to experience a powerful growth phase, and Chinese projects “going global” will become a mega-trend.

Ron has been a venture capital investor for more than 18 years, having worked in both Silicon Valley and China, and at both startup companies and big tech companies like Intel. After returning to China in 2003, Ron foresaw the vast potential of the investment sector in China. He brought Lightspeed Venture Partners to China and founded Lightspeed China Partners. Over the last decade, he has invested in many industry leaders, including Tujia, PPDai, QingCloud, and Fangduoduo.

Sky9 Ron Cao

Ron founded Sky9 Capital in 2016. Once again, he is challenging himself to take his career to new heights. He explained, “Currently, the entrepreneurship and investment environment in China is still just warming up. Although a lot of people have started their own businesses, this just means that we are realizing that entrepreneurship is worth trying. Only when we really begin to act on it can we truly understand and appreciate that there is still a great deal of potential compared to a more mature market like the United States.”

The Trend of the Technology-driven Model

Ron explained to Securities Times that Sky9 Capital will mainly focus on the sectors of consumer-oriented internet, enterprise IT, and deep technology.

He points out that judging from the current situation in China, consumer-oriented internet represents the biggest opportunity, with social networking, e-commerce, fintech, and many more business models all included under this umbrella. In this sector, investors need to pay particular attention to founders from the younger generation and focus on their entrepreneurial experience. “Having a good business model is critical for consumer-oriented internet companies; the business model itself will determine whether the company can scale into a successful platform. After the start-up reaches critical mass, then the real test of the CEO’s capabilities and his or her potential will begin.”

He believes that consumption upgrading is already becoming a dominant trend. From a funding perspective, he prefers technology-driven business models because they can have long-term barriers to entry and viral network effects. As a result, traditional retail stores may not be a good fit for Sky9. He points out that although this model represents a very large market opportunity, its potential for explosive growth is rather limited and the model is fairly asset-heavy. “Therefore, we believe that if we have a consumption upgrading team focused on internet DNA, we can combine both online and offline playbooks to build brands, set up channels, and win consumers’ trust, so as to scale more quickly.”

Ron believes that there’s nothing inherently wrong with the currently trending topic of next-generation offline customer acquisition. Since online customer acquisition has gotten so expensive, people need new playbooks for finding customers. However, from the perspective of early-stage TMT investment, he would like to see more tech innovation, since startup companies need to create long-term core value if they are going to be able to compete with BAT and other such giants in the future.

In Ron’s opinion, enterprise IT is underdeveloped in China right now, with a huge gap between China and the United States. From what he understands, enterprise IT requires founders who are more mature and have a deeper understanding of their industry. Enterprise IT business models are relatively straightforward, typically selling products via channels and providing services via the cloud. Since this sector is technology-driven, more attention and emphasis should be given to the technology itself. This is also a field that he pays a lot of attention to. “In fact, internationally, enterprise IT companies create much more value and generate greater returns than consumer-oriented internet. However, this sector has only just gotten started in China.”

In terms of deep technology, Ron believes that these technologies are being applied to many different sectors and industries, and their overall potential is huge. However, he also contends that technologies like deep learning and blockchain will need some time to evolve.

The Cycle of “Next Big Things” Is Around Six-Twelve Months

Ron also shared his opinions about other technologies like VR and AI. Ron thinks that VR is an industry whose breakout moment is something the whole world is anticipating. The reason why it is cooling down at the moment is that both its hardware and products are not yet mature enough and so the user experience remains at an early- or medium-term stage. In his opinion, VR is sure to be a trend but is still a long way from having a mature hardware platform where mature applications can be developed.

He believes that AI will be a massive trend, leveraging big data technologies and that its applications will be used very broadly. In the future, maybe all businesses and industries will benefit from using AI to make them more effective and efficient. As a result, in his early-stage investments, Ron also takes into consideration how AI may influence or be applicable to the company.

He has also noticed that domestic investors and entrepreneurs seem to like “chasing trends”– pursuing what they consider to be the next big thing. When they establish and select companies, they often like to be involved with whatever trend is ‘hot’at that moment, resulting in the phenomenon where people “swarm” to invest in these popular themes. However, when the popularity of this theme cools down, “the tide of death” quickly appears. “Actually, entrepreneurs and capital in China closely resemble those in other countries. Most entrepreneurs have no clear idea what they would like to do, while capital itself likes some concepts more than others. Companies ultimately have to rely on their core teams. And ultimately, investing in a company is also about investing in people. Generally speaking, trend cycles usually last six months to a year.”

Ron summarized the biggest lessons he’d learned over his more than 18 years of VC experience: if an investor finds the right partner, then he or she is already halfway to success. Most of the other half is divided into control over technology, risk, and business model, and the remaining portion is in the hands of destiny. “How great a return you can generate will take some luck and depends on numerous uncertain factors. Among these factors, people are the most difficult to judge and the most difficult to change. In my opinion, the ultimate bottleneck of a company is that of its CEO’s growth. In terms of funding, we should not only consider how to cultivate our own team but also take into account how to help our CEOs grow,” said Ron.

Therefore, how to spend time building a team has become a task that Ron has spent the most time on during the past year. In his view, an ideal team can use a systematic process to face and solve problems, and details, lessons learned, and methods of this process can be systematized. “Sky9 Capital is not about any one specific person. It has a set of systems and a culture of its own. It has a set of processes to make complicated decisions. Therefore, we need to cultivate the spirit to take risks and take responsibility.”

We Need a Foundation of Localization While Accelerating Internationalization

“Personally, I pay more attention to what opportunities China’s venture capital will have in the next five years, as well as how we should adjust ourselves.” Ron believes that VC is a team sport with its foundations in a company culture and corresponding systems that the whole team follows. “No one can be 100% sure as to which companies will grow up to be unicorns. What we can do is to create an environment so that when a unicorn shows up, we can catch it.”

In his view, when China’s start-up companies wish to expand internationally, they have several advantages. First, most of China’s start-up companies are pure internet plays, and China’s internet industry is practically the most developed in the world. Therefore, these companies should have an advantage when expanding to countries and regions that have environments similar to China’s. However, he does not advise companies to go overseas blindly, since going overseas means that they need to understand local cultures. Considering this factor, Chinese start-up companies may lose their advantage. He believes that companies that have real core technologies can use better technology to replace outdated products in other countries. “Although not many companies have real core technologies, the number who do will keep increasing, which is an inevitable trend.”

From 2005 to 2008, the first batch of US funds landed in China, and they recruited local Chinese teams to make investments. Since 2013, we can see that a group of core teams from USD funds has started establishing their own businesses, building new brands, and creating new funds, which shows a trend of “localization of investment brands.” Finally, local teams can raise funds locally, make decisions locally, invest at home and abroad, and have exits at home and abroad. One view is that this is because the capital markets have gradually become mature in China, that exit channels exist where they didn’t before, and that the percentage of qualified or relatively qualified LPs has been increasing, that the development of mobile internet in China has changed from “copy to China” to “copy from China,” and that American GP partners and LPs cannot understand China anymore.

Regarding this phenomenon, Ron believes that the localization of the venture capital market is another inevitable trend. In terms of the industry itself, it needs to continuously understand the local industry ecosystems and entrepreneurship culture. On the other hand, when localization develops to a certain degree, it will need internationalization again. That is after local venture capital explores how to develop the powerful ability to take root locally, it also needs to explore how to get geared to international standards, broaden its investment horizon to the whole world, and discover Chinese enterprises that can succeed in overseas markets.