Date
20 November 2017
Ironfire Ventures managing partner Richard Chan (inset, left) said people are what he seriously consider and evaluate in venture capital investment. Photos: GovHK/HKEJ
Ironfire Ventures managing partner Richard Chan (inset, left) said people are what he seriously consider and evaluate in venture capital investment. Photos: GovHK/HKEJ

It’s people that matter when investing in startups

Chief Executive Carrie Lam Cheng Yuet-ngor announced in her maiden policy address on Oct. 11 that she would chair a Steering Committee on Innovation and Technology to handle directly Hong Kong’s innovation and technology development projects.

Ironfire Ventures managing partner Richard Chan shares with StartUpBeat of the Hong Kong Economic Journal his experience in venture capital and his views on future developments in innovation and technology. This is Part 1 of a two-part interview.

HKEJ: You began venture capital (VC) investments in startups in 2006. Your investment portfolio has been versatile. Could you share with us some tips on how to go about it?

Chan: Silicon Valley is where we started. I’ve lived there for more than 20 years. I started my business there three times but all failed.

I graduated from University of California, Berkeley, where a lot of professors, instructors and students started their businesses. In the beginning, I tried to look for targets among my friends because investing in startups run by people I know is relatively easier.

I once worked in Microsoft, where many of employees started their own businesses too. These people thus became our major targets. Fishing alone is sometimes tedious. We have partners in China, Hong Kong and the United States.

Out of 1,000 projects, maybe only 50 are interesting, and in the end one may only invest in 10 of them. The success rate is not very high. Checking out such a large number of projects is actually rather demanding physically.

HKEJ: In recent years, have you been more concerned about VC projects in relation to machine learning and artificial intelligence (AI)?

Chan: Since five years ago, I’ve been engaged with AI. Back then I didn’t dare to talk to others about it, as it was not that popular. Today, the AI algorithm has advanced quite a lot, and the accuracy of AI graphical recognition reaches over 95 percent, compared to five years ago.

Thanks to the surging number of big data, AI has made significant strides.

According to our study, there are about 1,000 AI companies in the US, and about 500 to 600 in China. If one needs to check and inspect each of these companies, it is physical fitness that matters.

People are what I seriously consider and evaluate. For example, if I have invested in one project, I tell those involved to partner with me again when they have another project. We focus on relationships with people, which is a typical Asian way of doing business.

HKEJ: PredictionIO, the AI startup you invested in, has been acquired by customer relationship management platform Salesforce. Was it your best exit?

Chan: Having got a chance for an exit is great enough. Sometimes it’s easy to make investments but it’s a long process to obtain rewards.

Of course, some people might prefer to wait until an IPO opportunity comes along. But some are happy with a reward that is several times the original capital after one to two years of investment, instead of aiming for 100 times return.

Our scope of investment is very broad, ranging from initial stage to series A and B. Of course, we sometimes aim for IPO, too.

We try to prepare ourselves for opportunities, though you can never tell when they would come.

Note: The views expressed in this interview are personal opinions of the industry professional and do not necessarily reflect those of the HKEJ.

The full article appeared in the Hong Kong Economic Journal on Oct. 20

Translation by Jonathan Chong

[Chinese version 中文版]

For the complete video interview, please visit http://startupbeat.hkej.com

– Contact us at [email protected]

JC/RT/CG

EJI Weekly Newsletter

Please click here to unsubscribe