What do these people know about investing?
Three entertainment celebrities – Li Bingbing, Huang Xiaoming and Ren Quan – raised not a few eyebrows when they announced on Weibo last Friday that they are setting up a venture capital fund called Star VC.
Aside from investing in start-ups, the stars will also help promote the business of their target companies by testing and endorsing their products and services.
The three movie idols have listed down several criteria in choosing the firms they will support. They say the target company should have healthy image and must be popular in the market where it operates. It must treat its employees well. It is in need of brand building, and engaged in a business that is outside the television and film industry.
But can celebrities, whose forte is entertaining people, be good as well in protecting and building other people’s hard-earned money? Will they have the talent to nurture companies that are just starting to take root?
Analysts want to give the show business trio the benefit of the doubt. For one thing, the involvement of celebrities will have a positive impact on the start-ups.
Money and fame are what start-ups need most, and movie stars have plenty of both.
Apart from capital, fans are assets that celebs can bring to the party. Their followers will surely be among the first to follow their latest investments, and most probably will become avid customers of the products and services they offer.
This ability to tap the considerable purchasing power of their legions of fans is something that traditional VC funds can’t readily summon.
However, some skeptics assert that the venture capital industry is far too complicated for non-professionals.
“We need to do extremely detailed research and analysis in the VC industry,” Tony Xu, a member of Matrix Partners, told IT Times Magazine. “This kind of investment needs an experienced investment team. Relying on celebrities to attract eyeballs won’t be enough to compete in the field of start-up investing.”
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