Michael Zhu, Founder & Managing Partner @ Accathon Capital
Startup Grad School Stage
Ascent Conference 2020
[00:00:00] OK, cool. Hey, guys, thank you very much for joining me with my session. And today I’m going to take about twenty five minutes to go over something that a lot of founders in my in my portfolio or some other people in my network that are looking to expand our business, that we’re launching their business in Asian market. So I’m going to talk a little bit more in detail, but because of a time limitation. So some of the things that I may skip or I’ll stay very high level, I’m very happy to connect you guys over LinkedIn or some other way so that we can talk more in details. All right. So another thing that hopefully you guys enjoy the last night debate, which is a very interesting and I know some of souvenirs coming out of the debate, which is very interesting as well.
[00:01:00] But anyway, let me let me share my screen now and then.
[00:01:07] OK. So today the topic is us going as target startup and expanding the launching Asia market, honestly speaking, Asian market as large as huge.
[00:01:20] So today I’m not going to focus on every single market in Asia, but particularly in China. So I’m going to dove into it. So who I am and who we are. We call it ourself entrepreneur behind, entrepreneur into then twenty eight. Twenty eighteen. We establish excellent capital, which is the office style direct investment firm, as coming from my family business and directing all the investments globally. And we invest into venture capital funds, other assets, alternatives and other fixed assets. But the same time will also back emerging game changers in the tech industry. So this is something that we are proud of and we’re Fashanu and just being around for two years. But we have accomplished a lot, hopefully, that I can share with you guys in a few seconds. So it’s just a high level of of us. We pretty much focus on cross-border market and we take approach of venture investing and venture building in terms of a track record of our investments. We have deploy capital in three first quartile venture capital funds both in New York City as well as the Shanghai with the five billion plus combined again. And this is just a couple of top table type of investment we did. And the Venture Capital Fund and some of the venture capital funds portfolio. These are pretty much diverse in investing to Sasfin, Tagore, some others. And the one that we invested into Shanghai was purely focused on consumer space. So that’s one and a second. Things we invest directly or indirectly through either as PV or some other ways into the early stage of startups. So when I say early stage, we pretty much cover CE rounds all the way to C or C or D, and so we have deployed capital in forty five plus direct investments into the startups in the US market. Only out of this forty five we have about a unicorn’s which we’re so proud of and three axes. So one of Z was dot com which acquired by Walmart three point three billion dollars deal. The other several potential accesses as coming on the on the way and there are already followed IPO and sort of waiting for the final IPO and our focus on investments pretty much in the SAS FinTech health care of consumer entertainment in mediatheque our family business, particularly in media and entertainment tech. We invest a lot of OTT platform or some of a consumer space that directly related to consumers and their entertainment media. Some of the VR are in a hologram programs and that’s all our focus. And so this is a type of industry sectors where we focus on in terms of other things that we do besides investments, because we believe that making the investments into the start of a world where ecosystem is just not enough. So because of where the firm focus on cross-border market and a lot of companies that if we want to go cross-border capital is just not enough. So you have to know understand what the market looks like and what the market needs you to do and what the what are your products and services can serve the market better. So so that’s exactly why and the reason that we’re we’re here today. So that’s another reason that we have a venture building component in our firm and into the twenty eighteen, we launch a signature program called a cross-border. You know, it related to cross-border accelerator programs, which are called Innovation Journey China. So up to now, we have successfully launched three course. And with seventeen B2B startups from early stage to the growth stage, there are relatively ambitious to looking for another market growth, particularly in China, because that’s one of the best or our largest consumption market in the world. And I think their business or their products or services will be better to position early in the market. So they join our program and we have about seven verticals. They’re all B2B. So we focus on a machine learning some block chain. And, you know, big data and lots of things like that, and we have about 17 companies coming from all over the world and Verver with a very diverse background and indico where we’re not focused on one particular or two particular sectors or industries. We have sector where region agnostic group or people are join us. Typically we design about forty five days hyper programs for them to get in touch with, you know, the potential buyers, potential market in China, potential investors in China.
[00:06:46] And and we at the end of the day, we design a 15 days to 12 or 15 days actually demo tour for them to really physically immerse themselves into the region. And then we arrange one on one meetings according to what they’re looking for, as well as the large conference that they can pitch in front of thousands of people with a combination of investors and academics and and government officials. So through the initiatives, we have accomplished a lot for our cohorts. And I’d just give you some examples from the last programs that we had. One of the mobility tech companies be able to secure a sort of exclusive agreement with one of the largest automotive company called Geely, you know, providing a ride, sharing services for the clients travel overseas, although now covid-19 has a lot of, you know, ban on the travel. But that’s a this is something that we achieved for the nerds, a tech company from our second cohort, the being able to lock in a deal with Alibaba and India, working with Alibaba Swingle School, which is a middle school on launching the curriculum designs and everything there. And then this tech company from from New York City, even just seeing corporate and launching a soft landing in China. So which is amazing. So this is just a very high level of what we do at act on capital. And so just want to give you a high level of of our track record and what we do. All right. So for next two minutes, you know, without further ado, I think we do Telcel So I’d love to share a two minute video that actually tell you as we condense all of the things that we did in the programs that brought them to China. And so hopefully that give you a sense of what it looks like when they when they are having a demo toy in China, enhancing all the collaborations and building connections and understand American and get in touch with their clients and sort of consumers and be in touch with their investors. So that’s all we did for them while they are traveling with us in China. So enjoy the two minutes and I’ll pick up later.
[00:11:15] All right, so hopefully that’ll give you a rough idea what it looks like, and so without further ado, I think expanding and launching in different markets, you have to understand what it looks like. And so I’m going to take about five to 10 minutes to give you a rough idea of what it looks like. And some of you guys may heard of the China market is huge or gigantic. And so what does it mean? So what it really means to talk to you in terms of a large market besides the larger market, what do you know? So I just want to give you a comparison between the US and the China Internet. I mean, the market. So as you may know that China has a one point four billion people and versus us as of three three hundred thirty one million and Internet users in China is about nine hundred million users. So it’s about sixty three percent of China’s population. That number is huge. And compared to the US market, we have two hundred, almost three hundred million users in the Internet and out of that nine hundred four million users in China and then there are eight hundred ninety seven million users are Internet mobile users.
[00:12:35] So they use mobile every single day. So that’s that’s quite a lot of mobile Internet users. And they’re also using mobile to do the payments and live streaming, all the things that I’m going to cover that later. So it’s quite, quite a lot. But keep in mind, if you compare the the Internet user, the remainder of the people that have not been on the Internet, so China still have about five million, five hundred million users not on the Internet, which is underserved and underrepresented if. And so that’s really a huge number that actually creates a tremendous of opportunities for people to to consider to tackle in the market later on in, you know, compared to the US. And it’s just a 10 percent of a population that are not on the Internet. So the growth there was not strong. So this is just to give you a life, the idea of what it looks like for the China and the US into a landscape, for the top Chinese, a community and a cities. And as you can tell from here that Beijing, Honjo, Shanghai changes as most of probably cities that you’re familiar with. Beijing is the most active hybrid, sort of a city in China with very live and active eco system and in the community with the majority of venture capital aligned with in Beijing. In a way, we’re actually they have about six to one unicorn’s in Beijing. And so this is definitely one of the largest market in China. And a number of Shenzhen is definitely a, I would say, hometown for a manufacturer and OEM ODM, when you’re looking for parts or you are in the hardware or manufacturing business, you know, Shinji’s definitely the one that you don’t want to miss. So you basically can’t find anything there. So, you know, besides talking about the large market and I will say a couple of different things that actually you can really create opportunity, Tranz opportunities for you. If you’re really thinking about going to Asia market and particularly in China, you don’t have to go to China. But there are tons of different opportunities that either after Korea or post-Soviet that we see a tremendous offer, a chance for international players to be taking in part of a market. So I’m going to talk about just three points that I want to highlight in the market right now. So, first of all, it’s not a CEO, it’s not a CFO, it’s not a CTO, actually drive your internal digital transformation of your large corporations, but actually covid-19 data. So covid-19 accelerate that the digital transformation across various sectors. So in India, before I personally involved with a lot of a corporate innovation programs, designing the program for corporates to be more innovative by tagging and interacting with Starbucks globally. So Services has a lot of different innovative ideas and technology that can help companies to be more innovative and stay competitive. And where a lot of traditional business there still over left behind and sort of think about, oh, whether this digital transformation can help us or some. Some. Can help us to grow or stay competitive, but should be covid-19 accelerate the whole process and talk about that later in a second. Second thing is a mass adoption for 5G, as we know that 5G coming approaching. And so there are tons of initiatives and infrastructure being built in Asia, particularly in China, for mass adoption, for 5G. And it’s not just about the speed. So it’s not just about one hundred times more speedy than 4G, but actually create a infrastructure for a lot of industries like the fully autonomous vehicles, where remote surgeries, where those kind of things not be able to adopt it in a market. And a third thing, which is a very unique and really top down and which is live streaming business in China, where we see live streaming continue to evolve and expand, not just about gaming and not just about some of the traditional ways that people think about live streaming. But but now they’re bringing tremendous values and fortune to a lot of people, ranging from traditional business, all the way to startups or foreign companies that actually are selling products and services in China that are utilizing live streaming to to do that. So we’re going to give you a sort of an example for that. OK, so there’s a little bit of detail of the first steam and the covid-19. So as you can see, the nineteen eighteen you know, the the the actually the number spiked from five hours per day that people spend on the Internet to seven point two hours per day in this march and during the event, which means a lot because you only have twenty hours per day and most of the companies are competing for people to spend more time on the phone on on the Internet to utilize their or their apps so that the more time they spend on on on the phone Internet, that means a lot. Now, however, a word that jump or spike goes. So part of that goes to work productivities. And so they’re using zoom or tensen, the video cost to do activities and to complete the works and some of them to do video, short videos and a video editing and a Web browser and education, if you can if you take a look at the education and then there are seventy nine million people that actually increased from the past to to jump on the line to to accept the education, which is absolutely greater than the combined students in the United States. So that’s a huge and this is just the one second thing as covid-19 absolutely accelerated the digital infrastructure plan. So in the past, China probably don’t have that ambitious plan to to to really accelerate the whole infrastructure building.
[00:19:31] But now they’re rolling out a lot of a stronger infrastructure network, including 5G, where even they’re now exploring the 60 and applied to digital tagging to all sectors and all the traditional manufacturing business or health care business or education, because applying new technology to become more digitalize and enhancing the data security, strength and technology innovation and a lot of embracing innovation then and put a little bit more fund into R&D to build to enhance their innovation from that technology wise and also optimize the broader industry development. That’s all the things the disastrous rollout after the covid-19 inspired by that. So just a little bit, you know, the industry is not being transformed from the covid-19 typically education. We see the same similar things to here in the states that our students are staying at home and accept that online education. There is just one platform classing in China used to host about two hundred thousand students daily before the pandemic. But now this year average over two million students a day on their platform. They’re accepting their education, which could be seen. And other industries like health care and manufacturing improvement there all see a a transformation from offline and to digital online and adapting or or utilizing a lot of technology to become more smarter. So second thing is mass adoption for 5G, if you look at this chart, it just by end of this year, China will be aiming for having about one hundred sixty million users or subscriber for the 5G. And the tremendous market size for 5G in China is huge. And that means that a lot of a fundamental infrastructure for for Internet companies and not only in China, but also other countries to go to business in there, have a very strong, secure infrastructure. And based on, according to a survey, that China Chinese consumer has highest intention to upgrade to 5G compared to South Korea and the US and the UK and China has about 70 percent of it. People are intention having intention to upgrade to 5G. And also the same time, seven to eight percent of people are willing to pay more to up to 5G. So you probably hear hear that a lot of phone makers and including Xiaomi, including Huawei or or Vevo or some others and roll out a lot of affordable 5G phones are in the market already. So that’s that’s going to be having mass adoption for 5G in Internet users. Of course, that I said before, it’s not just about the speed, the transform entirely for other other industries. So if you’re working in a smart city, if we working autonomous vehicle, we’re doing some sensors were were lighter or some others. Or if you were working on some of a smart manufacturing to help manufacturers to transform into newly innovative way for them to be able to save costs and be more productive. Or if you working in a health care to improve the the speed of a surgery or so help other people to cure their their cancer or some other diseases from the rural space, then adoption of 5G can absolutely add a value to to what you are doing. So the one I’m saying is if you are the founder and trainer in those different industries, do definitely think about those areas. You can add value or you can bring your unique products or services to Asia market to that into the helping consumers. All right. Number three, so as I mentioned, that live streaming continues to evolve and expand. So live streaming business and industry in China gone through three phases. So from the phase one starting from 2012, all the way to now is already evolved from just a gaming sports within culture. And a people share some sort of what they were playing, the games where where some of the sports, where some of the culture they actually doing online all the way to. Now, that becomes a platform for people to do the e-commerce or to do the e-commerce for selling stuff or selling the fast moving consumer goods or even the last last sort of here is one of the famous Keywell kind of viva, which is selling the rocket in China. So so which is tremendous of amazing. And unbelievably, the people are selling something and achieving something goes. So what’s the scale of the e-commerce the live streaming can bring into the game where I have three examples here, one from celebrities, one from tech entrepreneur, one from a chairman of a large corporations in China. They all represent all different kind of industries where identities from a different market, from different perspective, they all embrace the life streaming e commerce. So for the small celebrity, the he she felt she she sold us thirty five million B, which is roughly around five million USD during her first live streaming show. Just selling some of, let’s say, coffee or, you know, a fast moving consumer goods or something other the things that they sell this much.