Xu Xiaoping: "We are greedy when others are greedy; we are more greedy when others are afraid.&

This article is a speech by Xu Xiaoping, one of China's foremost angel investors and founder of ZhenFund. Prior to founding ZhenFund, Xu Xiaoping was a co-founder and the former Vice Chairman of New Oriental Education & Technology Group, the largest private education provider in China. In his speech, Xu provides his insights on 2016 and vision for future investments. Published by Mind Capital Venture

"In 2015, every moment was a very critical moment for ZhenFund. 2016 is no exception. In 2016, we invested 20% more projects than we did in 2015, so this may be our best year.

In the past two years, there has been an obvious trend in high-tech, large data, artificial intelligence, and virtual reality. We did not see this before. In 2016, we saw that a large number of top corporate scientists, chief technology officer, top university professors all started business. ZhenFund has invested a lot of companies founded by these talented minds. Now we are in the high-tech field; we invested at least four autopilots, six companies with big data, and there are all doing pretty good. What these companies are doing are exciting inventions to a level which people thought they were impossible, but that was the most exciting part for us. We invest on impossible things, on the impossibility of the future; we must grasp each moment to create the impossible moment.

"We invest on impossible things, on the impossibility of the future; we must grasp each moment to create the impossible moment."

In the past year, my biggest challenge was "how to keep up with our time." The first time I saw live media, I was shocked. In fact, for people of my age, it is easy to get caught up with other things and get behind in this era, so it’s crucial to keep up with the time, to maintain relevance, to continue diving into the field of entrepreneurship. What attracts people’s eyes are those the most impressive, the most controversial, things making most people confused, lost or even angry. Sometimes a small invention can transform the entire system. Another example is WeChat, you can now call with Wechat. Who still uses cell-phone call now? I do not use cell phone call anymore. So, I think that if you do not keep up with these trends, it would be like 100 billion US dollars investment loss. It is very scary.

Ten years ago, I listened to a MBA graduate from University of Chicago. From an academic point of view, what happened in China in one year is the same as what happened to a country in Africa in 30 years. I recall that as I grew up in Taixing, Jiangsu Province, from the time when I was born to when I left the village, the number of buildings in my village did not increase and the street did not change. There were a few more bicycles and light bulbs. But today, Taixing, Yangzhou, Nanjing, Beijing are changing rapidly; we are in a time of dramatic transformation. We must quickly adapt and keep up with this era. To keep up with the time is to not be afraid of change and to bravely control the wave of change.

"Maybe because other funds slowed down investment, we got projects with higher quality in 2016 than those in 2015."

Indeed, there are many funds slowing down the pace of investment, but ZhenFund, as always, continues investing bravely. Maybe because other funds slowed down investment, we got projects with higher quality in 2016 than those in 2015. We are greedy when others are greedy; we are more greedy when others are afraid.

In addition, the media business, content entrepreneurship, artificial intelligence and other high-tech companies became 2016’s brightest investment. In other words, entrepreneurship is moving toward and expanding in two different directions: high-tech and civilian entrepreneurships.

In 2016, we removed some of the frenziness and impetuousness of 2015, and further adhered to the nature of investment. Therefore, the essence of our investment are high-quality, profitable businesses.

"The most excellent business are founded by those who can cope with shifting trends while sticking to this fundamental principle."

We should cope with shifting trends by sticking to our fundamental principle, which is to constantly look for and encourage the best entrepreneurs. We have never stopped looking for the brightest entrepreneurs. We changed our investment philosophy because of the change in entrepreneurial hotspot, that is, investment in human. The most excellent business are founded by those who can cope with shifting trends while sticking to this fundamental principle.

I never see myself as an investor. My goal is to endorse outstanding entrepreneurs. In 2016, I have a more profound sentiment and a firm affirmation on my goals. I voted for good projects because the people are extremely talented; sometimes I voted for projects that did poorly because the entrepreneur's only dream was to get rich, entangled in the industry, model, market and other factors outside of these talents. 2016 was a year for me to strengthen and perfect the philosophy of investment, laying a solid foundation for more extraordinary results in the next five years.

In 2016, at a think tank conference, I shared with many students Starbucks founder Howard Schultz's autobiography "Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time" and "Onward: How Starbucks Fought for Its Life without Losing Its Soul." In his books, he talks about how Starbucks became a giant today from an unattractive business during the setbacks and failures in 2008. But I do not want to stress the pain of the entrepreneurial process, hardships, difficulties and obstacles, these are too conventional. On the contrary, I want everyone to experience a sweet, beautiful, pleasant process. When a person is fighting for his or her dream obsessively, the pain is part of the ongoing happiness.

"The nature of entrepreneurship is not the feeling of power, instead, is knowing how much money we have and how many things can be done."

Venture Capital’s winter is the angel of the spring, so I do not think winter is coming. If it is really the winter of the Venture Capital, then it is actually a good thing for us. When the valuation is low, the entrepreneur will get closer to the nature of entrepreneurship. The nature of entrepreneurship is not the feeling of power, instead, is knowing how much money we have and how many things can be done. ZhenFund’s investment rate in the first half of 2016 was significantly faster than in 2015. We see that many great companies are growing rapidly and becoming profitable.

In 2017, we will continue investing more than 100 companies which are likely to become a unicorn of the enterprise. Although we will see that ultimately there will be single-digit enterprises who will have the opportunity to become a true unicorn in 2018.

Entrepreneurs and investors around the world are so busy that sometimes they may forget the existence of the world while creating their own world. I experienced the 2008 economic crisis, but if you look at China, there is a lot of great companies that grew up at that time. This is not a philosophical point of view, but a historical fact. When people are most afraid, our fund will embrace promising enterprises to the greatest extent in the next five to ten years."

Editor’s Notes: As China's largest equity investment and trading platform, Mind Capital Venture is committed in looking for China's most cutting-edge potential investment figures, providing investment horizons, investment community network, investment decision-making reference, investment quality project services. General Partners (GP) provides “one-stop” style investment service platform which manages fundraising, brand-building, and networking.

Source: Investment community website

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