WeiZhou, the founder and managing partner of venture capital firm CCV, said in a recent GoldmanSachs panel that his firm would intensify its focus on deep tech in China and Chinese startups with global potential.
Formerly a managing partner at Kleiner Perkins Caufield & Byers China, Wei is one of China’s most successful tech investors with a 15-year record of investing in at least one unicorn company per year. His portfolio includes China’s largest B2C e-commerce, JD.com, and CreditEase (NYSE: YRD), the first Chinese fintech company to go public overseas.
China is to develop its domestic high-end manufacturing supply chain further, leading to the natural growth of local hard tech companies, said Wei, speaking at the Goldman Sachs TechNet Conference Asia Pacific 2022.
Wei’s prediction echoes the Chinese government’s 14th Five-Year Plan (2021-2025), which made advanced manufacturing upgrades a top priority.
The latest data from the China Association of Automobile Manufacturers showed that China’s automobile exports surged 73% month-on-month in May, hitting a record high for 2022.
When asked about the trend of government regulation on tech industries, Wei said that regulations had impacted platform companies because the government is trying to combat monopolistic behavior.
However, according to Wei, entrepreneurs and investors are not moving into deep tech because of policies or tightened regulations. “The supply chain for high-end manufacturing is mature.”
He said that the changing market conditions would guide CCV’s investment strategy to focus heavily on startups in advanced AI, fintech, autonomous vehicles, and robotics. He said that the firm would invest more in “3A companies,” ie, affordable, accurate, and advanced companies. Currently, the market is transitioning from “3D companies,” ie, dull, dirty, and dangerous, to “3A companies.”
CCV has a good record of investing in the zero-labor economy. It has invested in various robotics companies in different application areas, including logistics, sanitation, and agriculture. It has invested in AI Force, an agricultural autonomous-driving company, Multiway, China’s No.1 manufacturer of multi-directional forklifts, and Cowa Robots, one of the first L4-autonomous driving vehicles companies to commercialize in China.
Another important focus is on Chinese entrepreneurs with global potential.
“The overspill of talented Chinese entrepreneurs establishing footholds overseas is a key area I’m focused on,” said Wei. “Chinese companies have performed well overseas, but as automation and artificial intelligence become more important in China’s domestic economy, there will be plenty of room for new business ventures to grow globally. Therefore, we will expand our portfolio of Chinese startups with international potential.”
Internationalization has been one of the key investment themes for the CCV team. Wei was one of the earliest investors to partner with CreditEase (NYSE: YRD), which became the first Chinese fintech company to go public overseas, and Rong 360 (NYSE: JT), a provider of customized financing and loan services. In addition, CCV also partnered with Perfect Corp, a leading SaaS beauty tech company focused on AR and AI e-commerce business solutions, in its early stage.
Palmpay, expected to be the next Nubank in Africa, is a spin-off from Transnet with a deep understanding of the African market and has fintech expertise from Alipay. It is another example of Chinese firms developing businesses globally, says Zhou.