The mysterious concept of angel investor is getting ever closer to the business world of China. In recent years, angel investors have frequented the domestic venture investment market.
They may be your ex-boss, mentor, or a stranger whom you sat next to and with whom you had a great conversation at a meeting.
When we met with Jason Xu, President of Jovan Venture, at an investing and financing conference, we did not initially realize that he is a representative of a group of pioneering Chinese angel investors.
Living in the United States for many years, Xu has entrepreneurial experience in both traditional industries and the Internet, and has a unique perspective on investment.
He told us the full story of one of his investments.
In the care of 'angels'
In 2003, when startup enterprises promoting the concept of Web 2.0 were sprouting like bamboo shoots after rain, Ma Yun, CEO and partner of Yeeyoo.com, mentioned his idea of establishing an online friend-finding community to Xu, who became immediately interested.
Ma had a number of years of experience in Internet and wireless network operations. As a graduate of the Electrical Engineering Department of Tsinghua University, Ma became an entrepreneur while he was still an undergraduate, as the founder and Vice President of fanso.com. In 1999, this website, which is an innovative site for college students, won the College Student Entrepreneur-ship Competition. Ma acted as the vice general manager for the wireless division of 163.com before he moved to seek financing from Jovan Ventures. Revenue from the wireless business that Ma managed accounted for a high percentage of the total revenue of 163.com. Xu mentioned that back then, Ma still had no idea about a name for his new company, which made it sound a little too risky an investment for VCs. Xu, a bold visionary, had confidence in Ma and decided to help him out.
In Xu's mind, Ma had a great background, especially his industry experience and business contacts accumulated in the wireless value-added business while working as vice general manager of the wireless division of 163.com.
Xu was also happy with the background of Liu Yong, Chief Operating Officer of Yeeyoo.com and the other partner of Ma's new company. Liu had a master's degree in computing from the University of Illinois and an MBA degree from Northwestern University, and had worked as project manager for wireless network application and development (including GPRS and CDMA) at Motorola headquarters, developing a number of prototypes for Motorola customers.
Jovan Ventures agreed to finance Ma's team as an angel investor and also introduced Zhao Guangdou, Chairman of Dragon Venture Inc. of the United States, who became co-founder and Chairman of Yeeyoo.com. The next step was to discuss the establishment of a business model.
Team and capability creates fortune
Online friend-finding communities are the most mature business model in the SNS (Social Networking Service space, a P2P network environment that is highly efficient in creating connections through the Internet and 3G network devices including mobile phones and mobile network backstage devices) to communicate. Due to their simple model, friend-finding websites are easy to imitate and there is a low barrier to entry on such things as operational costs. At the time, there were numerous friend-finding websites that provided similar services and had low customer loyalty. Some of these had unique characteristics, but failed to provide differentiated services due to their vague business models.