Interview of a Chinese Investor

September 10, 2020|Interview, Investment and financing in China

Today Marketingtochina has interviewed M.Chen who works at an investment firm in China. He prefers to stay anonymous because he does not have the official approval to speak officially.

Could you please introduce yourself and your company, Mister Chen?

Hello, I am Chinese, and I work in the investment field since 2016. I have worked as a financial advisor for 2 years and now I work in an investment firm, that invests in 20-25 projects per year.

The total firm manages a fund of 8 Billion RMB (approximately 1.2 Billion USD) across its different RMB and USD fund. We are segmented by division, field, country. Our typical investment size ranges from $1Million to 5Million with a hard cap ceiling at $15M per company.

Can you explain to us what is your job?

I am an investment manager, so I am checking projects, PPT, and BP (business plan) and write reports before making decisions. I am also looking for projects to invest in. Sometimes I will meet and interview the project owners or founders to understand better their vision and to have a talk with them.

How many projects do you receive every year, and how many do you choose to invest in?

It is a difficult question, many for sure.
Our company receives around 5000 projects per year, and I analyze 50 -100 per year, and we will invest around 20 projects per year in total.

What is the selection process like? What kind of project are you looking for?

We have criteria, market, Profitability or growth rate, business model, risks, etc. And after writing the report we will see which company is safer, and better to invest.

Why do you analyze only 50-100 projects? How do you select them?

The projects selected by our boss are our priority.

We will check if these projects have a future and many opportunities.

We also look at the legitimacy of the company, its financial status. We do a background check of the founder, we wanna know if they have a history of investments for instance. We want to make sure they are not scammers and that we can trust them.

We make a simple check to see if media speak about the company, if they are doing good Marketing and if they already have customers or real users.

We prefer startups/projects with investors already because my company mainly invests in round B. We prefer to invest 1-5M$ in running companies.

We assess their business model (in-depth), study their competitor’s strategy, and see if they have a chance to succeed.

If we are satisfied with a company project after our researches, then, and only then, we ask for the first meeting with founders to understand better their project and see if they have the team, and the capacity to run their project.

What kind of projects/startups are you focusing on now? What type of project did you stop to invest in this year?

This year, health projects are the priority for the company, because we believe that they have a great future.

Education and Technology are two other fields we have our eyes on.
Integrated logistics, we have seen some really good projects.

We are looking into entering the Chinese Popular App market. Not the easiest, the competition is intense.

We’ve totally stopped investing in Shopping malls, in AI, and of course tourism projects. For now, we’ve also stopped investing in the US.

What advice can you give to western founders/companies if they want to get investment in China?

It is a really hard question.

Maybe learn Chinese, we prefer to hear a sentence from the boss than from a translator.

The foreigner has to show that he understands deeply the Chinese culture if he plans to develop his business in China.

Have a simple and clear PPT, with attractive figures. When we speak he can show that he understands deeply his subject.

Do not come with just an idea, need to have worked on it, and already start. In China, we like a business that is going fast.

Would you recommend them to do PR and contact journalists, do social media Marketing, care about their reputation?

Yes, of course, if media such as Douyin or Kuaishou are talking about you, then it is definitely positive.
China is a very connected country where using Wechat for business and professional communication is very normal. Foreign companies have to be on Wechat. Or as an agency such as yours would say: If you wanna succeed in China, you have to do Wechat Marketing, get followers, and be somewhat popular if you want peoples to take you seriously.

Any serious investor would research a company’s wechat, internet presence, and so on.

Since you speak English, do you check English pitches and Business plans?

Actually no. We like it when the company makes effort and introduces its project in Chinese.
And even if I speak relatively good English, my boss and colleague are not confident with English, so we prefer Chinese for communication.

In the past, have you invested in companies run by foreigners?

Yes, of course, we have invested in oversea projects.
And in China as well. It happened twice. The foreign managers on these projects were well versed in Chinese culture and could speak the language. They also had a team to helps them.

Do you believe a startup developed by a foreigner can succeed in China?

It is hard, but it is possible if he has special technology or knowledge. We have seen foreigners doing very well in China. Qunar, mei.com, Juwai these startups are all managed by foreigners.

Have you ever personally invested in a business?

Not yet. I have invested in real estate, and maybe in 1 or 2 years, I will make an investment in a company. I am open to it.

What would be the major difference between your personal investment and company investment?

Our company invests in growth, and with a ticket of 10M RMB.

For me, it will be smaller, maybe 1M RMB at the early-age of the company/project.

Would you recommend to early-age startups to pitch angel investors first?

Yes, of course, in China it is normal.
In the beginning, angel investors or private investors.
After PE or VC firms for round B or C.

Later on, the giant investment company will enter to D and E until IPO.

Can I send you an investor pitch from foreign companies?

Haha yes of course.

English PPT?

No. haha. You have to translate.

What is the best way to reach out to you? Email? WeChat?

Wechat better. Email is also ok for me, but most of my colleagues rarely open their mailbox.

Thank you mister Chen. 🙂

I hope that you have enjoyed reading this interview and if you have a question for M. Chen, please write it down below in the comment section. I will ask him to reply to smart questions when he has time.