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Showing posts with label William Bao Bean. Show all posts
Showing posts with label William Bao Bean. Show all posts
Despite the trade tensions between China and the US, many tech companies from China still turn to American stock markets for their need for capital. Shanghai-based VC William Bao Bean explains why China’s markets can still not match the capital requirements of domestic companies, he tells at Emerge 2020.
AP: SOSV invests in many verticals through its accelerators so there must be a lot of insights. Where do you see the next big trends? Are VCs transitioning to biotech or deep-tech?
WBB: Bio is deep-tech, hardware is deeptech, internet software is deep-tech. Deep-tech is leveraging cutting edge technology to drive a change. Technology can also be in a vat. Most of the cellular agriculture looks like brewing beer. You put culture and microbes in, you take something that’s like goo and turn it into something that changes the world. That’s what my partners are doing at IndieBio, our biotech platform. It’s extremely technical and I don’t understand most of it. One area where I’m very focused on is artificial intelligence. Almost every one of our companies is leveraging AI. They leverage data and algorithms to solve problems, improve services, personalize marketing and increase efficiency. Startups can do things now that 3-4 years ago would have required an army of people and months of time. How much does a candy bar phone cost right now? $5 USD. Android phones are like $50 USD. We’ve recently invested in a company that refurbishes Android phones. They’re selling them for $25 USD with a warranty and a certificate, bringing the cost down and the entry barrier down. We are also investing in blockchain to improve security, transparency and trust in areas like agriculture through our portfolio companies Scantrust and UNL. Coffee Exchange is helping the 20 million coffee farmers out there to make more money and enabling coffee drinkers to know who grew the beans. I think the next biggest trend is the next 4 billion people who don’t have the internet. That’s our tagline for the last five years at MOX. The amazing thing about the next 4 billion is that they’re now the next 3 billion people. Since we started MOX, almost 1 billion new people have connected to the internet and are using it regularly. That’s going to be one of the biggest revolutions — bringing technology, services, information and education to people who didn’t have it before. People think it’s strange when Google focuses on people who make about $1000-$1500 USD a month. When we first started, we focused on people who were making $250-$500 USD a month. Now, we focus on people who earn about $150 a month. Those are very different economic strategies. We’re helping people lease their own smartphones, change their lives through services like microloans even though their total monthly wage is only about $125-$150 USD. Is it going to get us superrich? Probably not. A lot of it is cliche but we are in a very lucky position to be improving lives day-to-day.
Privacy concerns, marketing and local regulations on data security are just a few of the barriers China’s tech companies face when they want to go global, says seasoned VC William Bao Bean at the China Technode Emerge 2020 conference in Shanghai last week. Geopolitical tension are way overrated as possible hurdles, he adds, according to Technode.
Technode:
2020 has been a tough year for Chinese tech companies selling to overseas markets. In India, local authorities banned a total of 177 Chinese apps in June and September following border clashes between the two countries. In the US, the Trump administration announced impending bans on short video app Tiktok and instant-messaging app Wechat, which are among the most successful Chinese apps in international markets. Chinese telecommunications equipment maker Huawei is facing increasing restrictions on supplying gear for Western countries’ next-generation 5G networks.
Beyond geopolitical tensions, Chinese tech companies expanding overseas also face obstacles in the form of privacy regulations, marketing, and localization, William Bao Bean, general partner at investment firm SOSV, said during the opening panel at the Shanghai event.
“The challenge for entrepreneurs going across the border is actually trying to understand what you can do and what you cannot do,” Bean said.
The lack of regard for privacy has led to some of the problems Chinese tech companies face in markets like Europe and the US because of stricter local regulations on data security, Bean explained.
“You have to adapt to the local market. You have to follow the local law. And half the time, people [startups] don’t even know that they’re breaking the law when they go across the border,” he said…
Chinese venture capital (VC) funds may find it difficult to raise money from US pension funds, said Bean. But he believes that the hurdles faced by VCs are not affecting Chinese startups. “That’s a money problem, not a startup problem,” he said.
“China has got the number-two largest VC industry in the world in terms of the amount of funds put in startups and it’s actually easier for Chinese companies to raise money from China,” he said.
Bean said that Chinese tech companies should see Southeast Asia as their next destination in their global expansion plans to avoid regulatory uncertainties in Europe and India.
“Southeast Asia has a lot of the same challenges, problems, or opportunities that China had 10 years ago. It’s a mobile-first market. So people’s first or only experience with the internet is on a smartphone, which is very similar to China,” he said.
Bean said he couldn’t be sure whether or not there will be more Chinese tech companies facing global regulatory backlash like Huawei and Tiktok, but he is optimistic that this would not stop Chinese startups from going overseas.
Shanghai-based VC William Bao Bean explains that entering a new market means leaving behind the experience to collected in the past, leave behind your cultural baggage, and learn from your mistakes. William Bao Bean is a General Partner at SOSV – The Accelerator VC – the #2 most active angel and seed-stage investors in the world 2019 with US$700m under management.
Chinese internet users have been voicing loud opposition against the possible deal by Bytedance to sell Tiktok to Microsoft, as the company might be hit by a ban by US President Donald Trump. But the verdict by startups and investors in China has been milder, says Shanghai-based VC William Bao Beanto Techcrunch.
Techcrunch:
Startups and investors in China are more sympathetic toward ByteDance. Many agree that if the Microsoft deal goes through, it could be the least bad outcome for TikTok.
“They are stuck between a rock and a hard place,” said William Bao Bean, general partner at Chinaccelerator, a cross-border accelerator backed by SOSV. “We are in a fast-changing regulatory environment. I think the consumers would probably want to continue using the service, and this is one potential way to make that happen. Obviously, I don’t think it’s what ByteDance really wants.”...
The tech community is well aware that TikTok is a rarity. Although the backlash will have a chilling effect on Chinese companies expanding to the US, and potentially other Western markets, there simply aren’t many internet companies going from China to the West in the first place.
“Most solutions that are built for China don’t solve problems that people have in the West,” observed Bao Bean.
“There are two things to take note of. First, that people need to understand we’re heading into an economic downturn. The second thing is that this type of shock is quite special because it’s driving an equally massive change in habits,” Bean says in an interview with e27. “Stay at home is driving the adoption of digital [platforms] extremely quickly. So on the one side, it’s an economic apocalypse, but on the other side, people are focussed on the change of habits,” he continues. While balancing these two directions can be tough, there is plenty of good news on the ground... Winners of the future will be very different from the winners of the past which, according to Bean, will mostly be driven by newly formed habits.
E-sports is expected to be “fricking huge,” he says. “With an audience larger than the NBA, tennis and American football, it’s over half a billion people who watch these sports. Plus, you know, some people [prefer to] watching it, instead of playing it. Right now, a lot of sports are not airing and who is the beneficiary of [having] no sports on TV?” the investor points out. Gaming has become one of the most common past times of entertainment and experts predict that the trend is here to stay. Twitch, a leading live streaming platform for gamers, noted a viewership increase of 56 per cent this quarter compared to Q1 2020 while growing 60 per cent year over year. Facebook Gaming also saw a boost from the lockdown growing 75 per cent throughout Q1 until now. Aside from gaming, Bean also expects online education and online media to have a longevity period of growth.
This is mostly driven by the needs of parents and students who were forced to study from home during the circuit breaker measures implemented in Singapore, and similar approaches taken in other countries. As with the case of e-sports, online media are also experiencing a surge in popularity as customers see their offline entertainment sources becoming limited.
Already before COVID-19, American and Chinese internet giants fought for dominance in the booming market for food and grocery delivery, and the coronavirus crisis has caused another boom in the market, says William Bao Bean, managing director of global venture capital firm SOSV in Shanghai in Marketplace. Having dominance in their home market helps the Chinese players.
Marketplace:
William Bao Bean
“Ordering groceries online is much more advanced in China than the U.S., and when I say ‘advanced,’ it’s market penetration. I’d say more than double the amount of groceries are ordered in China for delivery versus the U.S.,” said William Bao Bean, with the global venture capital firm SOSV in Shanghai.
According to iResearch, the customers it surveyed used grocery delivery services one to two times a week in 2019...
These differences matter, given that U.S. grocery and food apps are now competing against Chinese giants for customers in Latin America and India. This is a global food fight.
“When you look at India, they’re definitely going more towards the China model,” said Bao Bean, the venture capitalist in Shanghai. “Whereas the U.S., the big-box format, with large parking lots and everybody driving a car, you’re simply not going to see that in Southeast Asia and South Asia.”
He said Amazon is not doing as well in India compared to Chinese tech firms, and Chinese money is backing Indian startups. A report by the MacroPolo think tank found that Chinese apps overtook U.S. apps in 2019.
Many industries have to rethink the way their business and business models are organized when they resume action as the coronavirus crisis subsides. The travel industry is one of them, says Shanghai-based VC-veteran William Bao Bean, at WebInTravel. "Travel needed to solve a very big problem – high customer acquisition costs – and he said it needed a new model in which everyone wins, and not like now “where everyone loses but the platform”.
WebInTravel:
William Bao Bean, partner, General Partner, SOSV Capital said travel needed to solve a very big problem – high customer acquisition costs – and he said it needed a new model in which everyone wins, and not like now “where everyone loses but the platform”...
Bao Bean spoke of one of his investments, Travelflan, a new superapp-like model which worked on revenue share to offer distribution reach to travel suppliers to sell services. “It doesn’t make money on advertising, it works on revenue share. We have industry players who are under such pressure from Google, Facebook, Taobao, all the big giants that they are willing to trust each other and work together.”
Their secret sauce is zero customer acquisition cost, he said. “We should take advantage of this difficult time and come around a trust-based model, stay profitable and serve customers.”
Shanghai-based VC William Bao Bean used to spend 30-40 percent of his time at planes and airports, now found himself back in an office job in Shanghai after the corona lockdown had ended and explains to CNBC how that may work out.
While the rest of the world is firmly into a lockdown, China is slowly getting back to normal. That is only one of the reasons why the country is leading the way after the coronavirus crisis, says William Bao Bean, partner, SOSV Capital and Managing Director, Chinaccelerator from Shanghai to Webintravel in a podcast.
Webintravel:
“We’re in China. We’re talking to you from the future. Most of the world are just coming into quarantine. And we’re coming out of it after two months. So think about what happens. People still have to eat. So how do they get their food? People get very bored and they also get very angry and distracted by their children. So there’s actually quite a lot of opportunity here.”
Impact on big vs small
“Big, disruptive downturns have a big negative impact on larger companies, as opposed to small companies, because small companies don’t have that physical and human infrastructure. They’re also much more nimble and it’s easier to make cuts.”
Asia leapfrogging in mobile innovation in health tech
“Asia has a bit of an advantage in terms of speed because they’re more open to (tech) adoption than other markets. This is the leapfrog effect twe’ve seen in travel, fintech and banking. And now we’re seeing it in the health industry, where new solutions innovation is rolled out much more quickly.”
On China’s Health Code app, Singapore’s TraceTogether app
“Extraordinary times require extraordinary measures. I think globally, what you’re going to see is an increase in adoption in technology and the lead has really been taken by Asia. People are citing South Korea, China and Singapore.”
The coronavirus or Covid-19 had kept the world in its grip since the beginning of 2020, first as a China problem, but then fast expanding to the rest of the world.
At the China Speakers Bureau we organize China experts for a global audience, and our speakers have started to speak out on the impacts of that crisis, countries dealt with the crisis, and how China will deal with the major economic fallout of this global disruption.
Are you interesting in discussing more options of speakers to deal with the corona crisis? Do get in touch.
William Bao Bean, Shanghai-based managing director of startup accelerator Chinaaccelerator, discusses his investment strategy as the world is in disarray because of the coronavirus, at Focus Wire. “When things are bad, no one really does anything, and when things are hot, everybody's investing,” Bean says.
Focus Wire:
William Bao Bean, a general partner at SOSV and the managing director of startup accelerator Chinaaccelerator, says that venture capital investors “often have a herd mentality.”
“When things are bad, no one really does anything, and when things are hot, everybody's investing,” Bao Bean says.
“The best time to generally invest is when things are bad and the best time to exit is when things are hot.”
Although a global economic slowdown has an obvious impact on public equity investors, Bao Bean insists that earlier-stage investors are shielded due to a longer investment cycle over several years.
“The first thing that happens during any sort of a crisis or economic downturn is things just slow down measurably and significantly,” he says.
After years of growth and immense venture capital funding, China has experienced a funding slowdown - known as a “capital winter” - since late-2018.
Bao Bean attributes this slowdown to the closures of underperforming venture capital funds and a drop in funding from the Chinese government.
Despite a surge of global venture capital deals in 2019, Bao Bean says that funding has started to dip and attributes some of that to activity around the SoftBank Vision Fund.
“The SoftBank Vision Fund deployed a huge amount of capital very rapidly and that threw off the numbers in terms of total investment because they deployed $100 billion over a couple of years,” says Bao Bean.
“We also had some mega-rounds in 2018. That throws off the numbers.”
“The biggest thing to happen is the whole model of using money as a weapon and buying growth and mega-rounds and negative unit economics where you spend a dollar to make 50 cents - that is out the window.
“Now it's prove your model first, then raise money.”
Startups from India can profit from previous experiences in China, says startup guru William Bao Bean, managing director of the Shanghai-based Chinaccelator to Livemint. “I’m not saying China is the same as India, but the challenges people face in Tier-2+ cities in China were similar to those that people outside Indian metros face. So the approaches that worked in China are more likely to work in India than the approaches that worked in the US," he says.
Livemint:
William Bao Bean has been hands-on with the expansion as a general partner at SOSV and MD of Chinaccelerator and MOX (Mobile Only Accelerator)since 2014. One of his new focus areas is India, where SOSV stepped up activity last year. Six of the 10 startups in the eighth MOX batch demonstrating their innovations in Taipei on 25 February are Indian. Cheaper smartphones, lower cost of mobile data, and an expanding digital payments infrastructure are a trinity of factors sweetening the India story for Bao Bean. It also explains why he’s more interested in the Tier-2+ or Bharat demographic than the “top 30 million" well-off urban Indians. A monthly income of around ₹20,000 and growing use of Android phones in everyday life creates new possibilities. “This little thing that they carry around in their pockets, which is maybe among the three most valuable assets they own, has the potential to really change their lives," he says. “It’s like we’ve seen this movie before, right? We’ve seen how the internet and accessibility changed China." He was a partner at SoftBank China and India before SOSV, and an equity research analyst as VP of Deutsche Bank earlier. “I started covering China in 2004, when the total value of Chinese internet companies was $3 billion and now it’s $2.5 trillion. So we have a huge amount of experience." This was SOSV’s value proposition when it started investing across Asia in 2010. Initially, it was consumer internet in general, but then MOX focused on mobile internet. “We focus on people whose first experience or the only experience with the internet is on a smartphone. This sort of mobile revolution had a much bigger impact in China than it did in the US or Europe," he says. Comparisons with an earlier stage in China can be fraught with mismatches because the economy and per capita income grew so fast across the border. India is far from reaching that sort of accelerated growth. Lower capacity to pay, poor infrastructure and a patchy internet have kept VCs focused mostly on urban consumers in India. But Bao Bean can see the parallels between India and China more clearly than most. “I’m not saying China is the same as India, but the challenges people face in Tier-2+ cities in China were similar to those that people outside Indian metros face. So the approaches that worked in China are more likely to work in India than the approaches that worked in the US."
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The Indian startup TryNdBuy has been adopted by the Chinaccelerator, and Shanghai-based managing director William Bao Bean explains why the virtual fitting room has a good chance to succeed in China, he tells at Livemint. Up to now, every virtual fitting room including Amazon and Microsoft, makes the consumer look bad, he explains.
Livemint:
Chinaccelerator MD William Bao Bean explains why he took a chance on the Indian entrepreneur.
“Every virtual fitting room I’ve ever seen makes the consumer look bad. Amazon and Microsoft make the person look like a plastic dummy. The consumer is not going to buy something if she looks bad in it," he says.
He says TryNDBuy’s computer vision solution does a better job of making a 3D virtual avatar that won’t make a consumer cringe while getting a sense of how she will look in a dress. Chinaccelerator is helping the startup with the tough act of business development outside India.
“It’s a B2B (business-to-business) sale, step by step. There’s interest from brands in China and then we just have to navigate Alibaba, which is never an easy thing," he says.
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William Bao Bean, partner at SOSV managing director at the Shanghai-based Chinaccelerator, discusses the investment climate in the US, China and Europe at the F50 Global Capital Summit 2019 Fall. He does not fear the Trump administration, he says, "governments cannot stop businesses even if they want to," he adds.
Shanghai-based VC William Bao Bean, general partner at SOSV, who is also the managing director of two SOSV accelerator programs—MOX and Chinaccelerator, explains how India is becoming the next bet for his startup accelerator after China, in an interview with Kr-Asia.
Kr-Asia:
We came to India during pre-internet times and we realized it was a bit early. In the first three years we invested in seven companies and last year alone we did 15 investments.
From 2016 to 2019 we made bets on the change that has come to India. We’ve seen it happen in China and the US. In the 90s I was in the US doing tech investment when the internet boom happened.
We’re focused on mobile-first, mobile-only, and don’t go after the 30 million rich people in India. We’re focused on the populace living in smaller towns, people who don’t really make that much money, and where technology has the opportunity to change their lives.
The companies we are working with, many of them had almost no revenue when we invested. For example, Coutloot, the e-commerce site we invested in, were barely selling anything, and now they’ve grown by something like 20 times in a year. It’s all the entrepreneurs’ efforts, not ours, but we are trying to be helpful with a slightly different perspective.
We’ve had some experience in mobile-first and mobile-only models in China. So, we come in and help entrepreneurs with this experience. The early-stage entrepreneurs, they don’t have the benefits like the big guys have of Chinese money or parachuting 50 engineers in from Silicon Valley. We are helping these entrepreneurs with the tips, tricks, tools, and strategies that all the big guys have.
I think the combination of timing, expertise, and approach that we bring, allows us to make quick investment decisions. Our companies first get traction, then they raise money, and not vice-versa. That’s one of the things that we help them with.
Kr: How involved are you with your portfolio companies in India?
WBB: The problem with the internet in India and not just India, but in many countries is the high customer acquisition costs.
We are not just about investing money; we help our companies lower their acquisition costs as close as possible to zero. We help our companies make more money and increase their lifetime value. We are able to lower customer acquisition costs because our companies cooperate with each other and they cross-promote each other. Our companies don’t have to pay for users, but they do get revenue share on the back end. We have got 56 million monthly active smartphone users and a lot of these are cross-promoting each other. That’s our first strategy.
People love our portfolio companies’ apps and they’re super sticky, but the problem is they don’t have a business model. So, we help them get a business model and increase their lifetime value. One of the main ways to monetize in India is e-commerce affiliates and financial services. We make it possible for them to start monetizing from e-commerce affiliates and microloans.
On one side you have free acquisition, on the other side, you have monetization, making customer acquisition costs decrease, and the lifetime value goes up. All these happen without raising money and without an entrepreneur giving away half of his or her company to a VC only to turn around and spend all that money on advertising.
We try and help the companies to get the positive unit economics where the lifetime value is above customer acquisition costs. We help them try and get the scale and when we do that a good number of them can go out and actually raise money at a proper valuation from a proper VC.
Getting customers in the China market was already expensive and the 2019 capital winter makes live for startups even harder, says William Bao Bean, managing director of the Shanghai-based SOSV. That might be bad news initially, but makes them more competitive in the longer run, he says according to Pymnts, quoting the Financial Times.
Pymnts:
A foreign investment law passed in March by Beijing leveled the competitive turf, although roughly 50 percent of the 20 priciest “new economy” startup busts in the past 20 years happened in 2019.
Startups are expected to lose money initially, but competition and knock-offs in China often trigger aggressive spending to gain market share.
Customer acquisition expenses in the country are among the highest in the world. William Bao Bean, a partner at SOSV Investments in Shanghai, calculated that app downloads cost an estimated $10 to $100 each.
After China, VC's like William Bao Bean, now focus on India, in achieving its goal of getting to 4 billion mobile-only users, he tells in Techcircle. Many of the lessons learned in China, he can now apply in India, he says.
Techcircle:
What we look for are companies that solve a problem for people in more than one market. If you look at sectors such as fintech, media, ecommerce and social commerce, healthtech, and education, people across markets tend to have similar type problems, especially when they are on $50-$200 Android, getting access to digital for the first time and there is leapfrog effect.
I lived in China for 20 years, came to India in 2005 – we have seen this play out market by market. Every market is not the same, you have to change, localize, optimise for each market. But the challenges that consumers and businesses have and the problems that need to be solved are somewhat similar. So, we have the experience and we are looking for amazing talent.
Most of our founders are serial entrepreneurs. In our last batch, entrepreneurs had seven exits, one team was part of the founding team of a unicorn. Most of the entrepreneurs we work with are not kids. We have some that are young, but usually they have been around the block.
When you want to scale up, it is usually better to have a product market fit then scale, not scale and find product market fit. We are looking at companies that are at product market fit or almost there...
In India, it’s no longer a two-dimensional chess game where you can see all the different players. In 2020, everyone is going to have to learn 3D chess.
There are startups coming from below and then there’s big guys coming from the top. So if you switch the wrong way, they are going to crush you. We need to understand and be aware of the increasing complexity of the market.
From an investment perspective, the easiest thing to do is to look at what worked in China. There’s a decent chance it will work in India.
We are really focused on social commerce. Learning about buying something, not just from an ad or from search, but from a recommendation from a person. Social commerce can be a physical product or can also be a services. In education, we would like to see startups that tech-enable teachers, transforming them from being a YouTuber to a small and medium business person. From making $200 a month to making $3000 a month.
We are also pretty focussed on fintech.
One area that is kind of new in India is monetizing with games. I don’t think people have really cracked the code here in games. We are going to watch out the game space. We just have to open games up for audience in a way they can accept it at a price point they can accept and afford.
