What do your best investments have in common?
A special entrepreneur who has a long-term focus. With this kind of market, there are entrepreneurs who want to chase after a hot business model and make a quick return. We're looking for people with the drive to build a great business.
How do you find people like that?
It's not easy. We look at trends and try to understand who the players are. A lot of times we'll approach them proactively. Seven or eight years ago, e-commerce was starting to ramp up very quickly in China. We invested in a few companies in the sector, including JD.com and Vipshop Holdings.
How does the Chinese private equity space compare to Silicon Valley?
When I was an entrepreneur 15 years ago, there was much less money chasing after good companies. Today, I would say it's almost the same as Silicon Valley. The competition is pretty fierce. But similar to Silicon Valley, there's a handful of strong players who have good market insight and are able to convince entrepreneurs to work with them. They have started to appreciate not just the money itself, but also the value added by the investor. We can help them.
It's been more than 10 years since you launched Sequoia's Chinese affiliate. How has the game changed over that time?
It's more critical to have deep insight into individual sectors. Back when the Chinese economy was growing at 10% or more annually, many sectors were growing rapidly. Today, GDP growth has come down. You have to be picky. You want sectors where there's still a secular growth story there.
Outside of tech, what interests you?
We invested in a company called Noah, which is the largest independent wealth and asset management company in China. That sector is going through very rapid change. It's grown into a multibillion-dollar company. To build a great business in a traditional sector in the U.S. can be a challenge. But in China, those sectors are still new.
Are you seeing more Chinese companies with global ambitions?
We're seeing many Chinese companies looking to expand overseas. One investment we made in the last couple of years is DJI, a global player in consumer drone production. It's based in Shenzhen, but more than 70% of sales come from outside China. In the other direction, international companies are going to China, and they want local partners to help them navigate regulations, market strategy and, most importantly, finding the right managers.
