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Why investors are betting on next-generation ventures in China

6 things to know if you’re investing in China, straight from entrepreneurs and VCs.

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In a year filled with uncertainty, we take a look at what lies ahead for entrepreneurship and venture investing in one of the most exciting and competitive markets today. Antler had the pleasure of hosting a fireside chat featuring Yu Wang, angel investor and the founder of Tantan, China’s leading dating app with over 15 billion matches to date. The conversation was moderated by Robyn Tan, managing director of KrASIA.

Also part of the chat were Antler China partner Guan Wang, founder of language learning apps Amanda and Seed, which are backed by Dr Lee Kai-fu’s Sinovation Ventures, and SayABC, one of the largest business units of the more than USD 4 billion-valued edtech company VIPKid, and Andrea Hajdu-Howe, head of capital for Antler Global and former executive director at Goldman Sachs.

Here are some key takeaways from the session. Quotes have been edited for flow, length, and clarity. 

China’s VC culture is becoming more professional and global

Guan: Venture capital in China is as competitive as in Silicon Valley, but the Valley had many years of experience from the early days of semiconductors. In China it started around 2010, and the first big wave of VCs investing in startups was around 2014. It was a “wild wild west” situation, with money thrown left and right.

China right now is more sane and rational. People are talking about the second generation of VCs in China. The market has more reference points, and we’re looking at original innovations that are genuinely born in China, not the equivalent of another company.

Yu: When we started our first company in 2007, it was before the wild wild west. There were no investors. There wasn’t really a VC scene.

Robyn: From my perspective, it looks like the tech investors in China—the BATs, TMDs*, and also the leading VCs—are offering stiff competition when looking for investments overseas as well. Is this something you see from your point of view?

Andrea: Absolutely. They have a specific mandate to expand and deploy overseas, and they are able to work very quickly. This is not just in VC but across asset allocators, and it makes sense for Southeast Asia as we’re literally on their doorstep. It’s the same time zone, cultural commonalities, with lots of white space that has not been innovated upon, and we see a similar growth trajectory. Colleagues from Europe and the US are also seeing this.

*TMD refers to Toutiao (which evolved into Bytedance, Tiktok’s parent company), Meituan Dianpin, a super-app serving on-demand needs from food to groceries to services, and Didi, the Uber of China. TMD are commonly regarded as the next wave of BAT (Baidu, Alibaba, and Tencent). 

New Chinese technology giants will harness 5G, AI, and data to transform industries beyond offline-to-online enablement

Yu: I don’t believe that any space is too saturated for opportunity. When we started Tantan, there were over a hundred companies with more or less the same product, and they all died because they weren’t offering a good product. It wasn’t because we were out-competing them. If you don’t have a good product, it will die by itself.

Guan: We’re in a very fascinating time. I think about it more around enabling technologies that can impact a lot of verticals and industries.

First, with AI, all things will be more data-driven, and we’re expecting new use cases and ways of solving problems, whether it’s in healthcare, education, or back-end processes in manufacturing and supply chain.

The second piece is the development of 5G. I was fortunate to witness when 3G came [while I was at Ericsson over ten years ago], and that enabled services to run on mobile infrastructure. 5G will change how we do things, especially in enterprises. We will be able to make decisions in a distributed fashion, rather than just bringing existing services and processes from offline to online. 

Yu: If there is a huge need and you’re offering a good enough solution, you will be able to build a good company on top of that. There are still plenty of problems to solve in China. If you look at new companies like Pinduoduo**, it’s not even in TMD and it’s already about to catch up. New internet companies are more aggressive than I’ve seen in companies anywhere. They’re hungry and scaling very quickly, in ways that previous generations of entrepreneurs wouldn’t have dared to do. 

Guan: Whether companies can grow to the size of BAT, we have to look at multiple verticals. It’s a power law. If the multiple is big—and tech tends to be scalable—it almost ends up as a winner-takes-all game. Chinese companies in tech will grow to be big because the market is so big.

So, in short, yes. There will be more companies at the scale we’ve seen from the likes of BAT.

**Pinduoduo is a social group-buying app founded in 2015 and listed on NASDAQ in July 2018.

Photo courtesy of Franck V./Unsplash.

Localization is the key to success

Yu: When I first came over [from Sweden, in the mid 2000s], it took me 7 to 8 years to realize that I didn’t understand the market. We were living in our own sphere. Our funding came from Scandinavia and we didn’t really talk with Chinese investors. But once we understood this, we started to look for Chinese investors and board members, and through them [we] met other entrepreneurs.

If you grow up in Scandinavia and live in Beijing’s CBD, you assume everyone has the same kind of living environment as people you see, which can’t be further from the truth. Most of the Chinese internet population are in the lower tier cities, with very different environments, consumption patterns, and income.

Culture is different. Almost all the young people in China are not in their home cities. People tend to be quite pragmatic and young people rarely maintain relationships if they move to different cities. There is no flirting culture in China. It’s highly frowned upon and seen as indecent for both parties if a guy just starts flirting with a girl. So there’s a lack of channels, you don’t really see parties or clubs much outside first tier cities. But you want to make sure nobody “loses face,” so that people have more confidence to continue using the product. Guys tend to like 60% of the girls, and girls usually only like 6% of the guys.

Then, the ecosystem is also different. On the surface it seems you have a counterpart for everything in the West, and you could take their approach to building infra, offering services, marketing, etc. But it doesn’t work, and it’s down to how companies think. In the Bay Area it’s a more open environment. They offer a lot of data, for instance. In China, companies are pretty closed up, and data is very restricted for self-protection.

Technology travels with people  

Robyn: I was asking around my group of friends about Tantan, and interestingly, it seems that Tantan is really popular in London right now. How did you guys get out of China into London?

Yu: We haven’t done anything outside Asia actually, so I guess it’s the Chinese audiences in London who want to find other Chinese people, which is a pretty big user need. For markets that we have expanded to, we mostly focus on the native population. It’s just a bigger market.

Andrea: I downloaded WeChat in July 2016 in New York, because I was working at Goldman, based in New York for three weeks, and had three colleagues with me from China. I asked them about Whatsapp, and it was like talking about pen and paper. They just thought it was crazy I didn’t have WeChat.

And there are loads of stories about this. CEOs of large global organizations were not aware of WeChat and its significance until around 2017, 2018. But it was so clear even then that not just in China, but for anyone who was plugged into China, you had to get WeChat to stay connected.

Guan: I was really fascinated by how internet service products had developed in China. Even in Sweden where I grew up, I was using Chinese apps and software like QQ (like ICQ), Xiaonei, Kaixin (both later folded into Renren), and other early social networks to keep in touch with friends in China. I was fascinated by how vibrant and fast-paced the development was.

Photo courtesy of Glenn Carsens-Peters/Unsplash.

Entrepreneurs need a fighting spirit, strong commitment, and pragmatism to succeed in China

Yu: What makes an entrepreneur is a general thing. But there is a difference: The Chinese market is turning aggressive, even more than in the West, so an aggressive streak is a bigger plus.

Guan: I appreciate entrepreneurs and founders who have really fought in the field. I changed a lot during my time with VIPKID, where my team went from scratch to USD 30 million turnover and 500 to 600 people within 2.5 years. My biggest learning [experience] from working in this very Chinese, very domestic tech company is that, in a battle, you rule out nothing, and use whatever is useful. 

There are some other differences. Companies in China tend to be built around one founder, one very strong person, and that’s reflected in the cap table. This isn’t really a red flag; the most important thing is commitment in terms of having skin in the game. A real red flag is that the person does two things at the same time, or has limited exposure to the real world, the real battle. If you don’t have that then it’s tough. I want to bet on people who have fought in the field.

Andrea: I agree. At least show that you’ve actually demonstrated grit and perseverance, because everyone is going to be a first-time founder once. But things that really show you have kept on going—that’s universal.

I don’t know if I’d call the Chinese founders I’ve met aggressive. They’re definitely super gritty and just keep on going. We value that. We have a lot of founders who come in, for instance, by trying multiple channels. I actually have a lot of respect for that. They’ve really wanted something and tried five different ways. To me, that’s a positive.

Investing in China is a deliberate decision with a trusted partner who understands the market and culture

Yu: If you’re going to invest in China, you need to go through someone, like a fund who knows the market and knows what to do. I don’t think valuations in China are that much higher than in the West; within the same verticals, it’s similar.

Andrea: Aggregation and diversification are very important. You should have a thesis on China. How does that fit into your asset allocation, through public or private markets, etc? Find a provider you trust. Then the questions become: At what stage, do you want it to be thematic, etc. If you’re sitting outside China, it’s relatively difficult to go to private markets. If you have a little capital, find a provider you trust and do it through conviction in the country.

Guan: Invest in a fund with a local presence, with a local team that understands the local ecosystem. I’ve seen people try to invest without really understanding China, and it doesn’t really work. Especially in the early stage, it’s about the people and the talent. And in terms of how to learn about China—get in touch with entrepreneurs, investors who are active in China. You can probably find someone who’s active. If not, drop me a line and I’m happy to talk.  

Robyn: Yes, I echo that point about learning about China. Even when reading about it, different media publications have different slants, so talking to people on the ground and in the game would give you a clearer perspective.


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Tantan is the leading dating app in China. To date, TanTan has 360 million users globally and has created more than 15 billion matches.

Antler was established in Singapore in 2017 by Magnus Grimeland and a team of experienced entrepreneurs and investors. As a global early-stage VC, Antler enables and invests in the world’s most exceptional people. With the vision to fundamentally improve the world, Antler aims to create thousands of companies globally that solve real problems.