China Herald: What happens when too much cash floats around

William Bao Bean

Hypes are a part of China's competitive climate, and with the hypes VC capital floods industries, like bike-sharing and food deliveries. And that might be nice for a while, warns Shanghai-based VC veteran William Bao Bean, it does not mean the best ideas get funded, he tells the Globe&Mail.

The Globe&Mail:

The resultant distortions go beyond good money-chasing bad ideas. A cash-rich environment can also lend power to those with the biggest war chests, rather than those with the best concepts.

“When you have too much money in the system, the good guys get funded – but also the idiots,” said William Bao Bean, a prominent venture capitalist in China. “And when everybody is funded, people start using money as a weapon.”

Take food-delivery services, which have transformed how Chinese urban dwellers consume food – by ordering in rather than eating out or cooking at home. But in the battle for market share, companies have offered deep discounts, competing on their ability to buy customers.

The result? “China’s entire population of students ate 50-per-cent off for a year and a half, courtesy of venture capitalists,” Mr. Bao Bean said.

China’s bike-sharing companies, too, have courted customers with massive subsidies, making it often possible to simply ride for free.

More at the Globe&Mail.

William Bao Bean is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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