It’s Frothy But Defensible: VCs Assess High Valuations Across China
Silicon Dragon held its Beijing event last night and a panel of Chinese VCs weighed in on the current white-hot environment for startups and their predictions going forward.
Host and moderator Robecca Fannin cut right to the chase and inquired how sustainable are the current conditions and how has it been affecting dealmaking. Managing Director of Northern Light Venture Capital Lei Yang responded that the high valuations of startups was only one of the conditions making this particular time unique. “We’re seeing stock market reform get introduced (at a time when the Shanghai index has been growing very quickly); there are huge economic initiatives underway with the revival of the Silk Road in the “One Road, One Belt” plan; and a corruption campaign is still going forward. Everywhere you look there are big change right around the corner…People are testing the limits of the time and we’re trying to find big opportunities where others aren’t looking.”
When pressed if the number of deals was being affected, panelists responded the change was not drastic, as making bets in the early stages would not hurt their overall performance too drastically. With regards to whether, or to what extent, we are currently in a bubble, Co-Founder and Managing Director of Lightspeed China Partners James Mi commented:
“Many of the startups in China are directly connected to a revenue model by bringing technology to services that traditionally are very weak. On-demand services are [sweeping through] and providing many with an opportunity to improve large industries.”
Renren CEO Joe Chen provided some insight as to why so many of these industries are ripe for disruption. “Chinese companies were latecomers to many of these fields and haven’t had nearly as much time as their American counterparts. Macy’s is what? 150 years old? Disney’s almost 100 years old, right? These companies have seen many changes and were able to adapt. Chinese companies haven’t had this luxury. They’re an easy target.”
Read more at Pingwest: frothy but defensible.
