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PurpleCow Startup Fund and Innovations From China

October 28, 2015|CEO Talks

Over the last three years I’ve spent about the same amount of time in both Silicon Valley and Beijing and have invested in about 100 startups from the U.S. and 30 from China.

My PurpleCow Startup Fund was unveiled in September with hopes of building a Silicon Valley style innovation culture in China, because Silicon Valley is still leading the investment space in many ways.

Many U.S. angel investors work together, help fund very early-stage startups, build connections for innovators, and provide lots of respect to entrepreneurs. These are all aspects we need to learn in China.

China’s startup scene is catching up, however, and getting extremely hot right now. One reason, I think, is the huge market cap and population size, because Internet by all means is a human-centered business. More and more people, especially young kids, are joining the startup world in China and bringing in lots of new ideas.

People from Silicon Valley ask me, “You said radical competition cultivated innovations, then what innovations you see come out of the China market?

First, I do see Chinese leaders like Xiaomi and DJI. And second, compared to U.S. market, where competition slowed down after a winner in certain area had surged, rough competitions between similar service providers push startups to move forward at a fast pace.

Online to Offline service (O2O) in China, referred as on-demand service in U.S., is a great example too. In food delivery domain, China has Baidu Waimai, ele.me, Meituan.com, and so on. More than a billion dollars were poured in this area by companies like Baidu, Alibaba, and Tencent along with venture capital firms. Low costs and coupons help quickly ferment user behavioral addiction that is irresistible.

The Tencent-backed laundry app Edaixi offers door-to-door cloth washing service at a very low cost of 10 RMB (less than $2). The startup has already achieved 100,000 bags of laundry per day. The cheap price helps it build a big user base in very short time. Then imagine that the startup has such a big database all about dresses and clothes, it has a huge potential of doing monetization in other ways instead of charging user a high price.

Cheetah Mobile’s globalization took us 3 years. We started from 40 million monthly active users to an accumulation of about 500 million MAU today. I believe that China’s new batch of innovators is still at an early stage. Let’s wait another two to three years to see who will be the PurpleCow and shine.

Purple Cow Fund

PurpleCow Startup Fund offers seed money, advice and connections in exchange of startup equity. Quanling Zhang and I are co-managing the fund.

Partners:

Jinbo Yao, Founder and CEO at 58.com (NYSE: WUBA)

Xueling Li, co-founder and CEO at YY Inc.(NASDAQ: YY)

Ying Zhang (David), Founding Managing Partner and General Partner of Matrix Partners China

Xiaoping Xu (Bob), Founding Partner and Executive Director at ZhenFund

Quanling Zhang, formerly CCTV anchor

Zhenyu Luo, Founder of Logical Thinking, talk-show host.

Su Mang, President and CEO of Trends Media Group and Executive Publisher of Harper’s Bazaar in China

 

*For any inquiries, questions or proposals, please follow me on Twitter or LinkedIn.

 
 
 
 
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