42 Questions with Jenny Lee of GGV Capital - SOSV - The Accelerator VC

Welcome to our GGV office here in the US. Thank you.

We have six general partners, three based here in the US and three based in China.

Sure. GGV offices are always meant for meetings with entrepreneurs. The focus of the office layout, whether in the US or China, is geared for meetings. All meetings are equipped with video conference, so this allows our US partners and staff to connect with our China team.

Well, I'm trained as an electrical engineer. Cornell grad. My first job after undergrad was at Singapore Technologies Aerospace Group. I was upgrading fighter jets. My first aircraft was a drone. Twenty years ago, I was a systems engineer for drone design. I got to design it, build it, test it. That's how I started, not as an investor, but as an engineer. And it's taken off quite a bit since.

We actually do have quite a couple. About autonomous cars, so why not autonomous planes? Absolutely.

We have four main areas. The first area is consumer commerce transactions, or e-commerce. GGV had our first start in our first fund as a Series B investor in Alibaba at a sub-200 million valuation. Now it's over 400 billion. Commerce has always been very important. Over the last 17 years, we've invested in many different e-commerce format companies, whether in the US or China, including vending machines for hot lunches. The second vertical is enterprise. This is a big area in both the US and China, especially with labor cost increases. The urgency for SMEs in China to adopt outsourced services and software has gone up. We spend more effort on cybersecurity because everything is online. It's become more important at the infrastructure and security layers to find the right startups with new products. The third area is social and internet. Whether in transportation, education, or finance, these are being changed by mobile internet and connectivity. It's about matching services between consumers and providers. The fourth area, which I lead, is frontier tech. Within frontier tech, I have three sub-verticals. The first is transportation disruption, like autonomous driving, drones, and sensors for smart cars. The second is factory automation. 90% of China's SMEs are not automated. There's a push from the Chinese government to semi-automate processes, and new startups are coming up with workstation processes to automate or half-automate tasks, often combining computer vision and robotics. The third sub-vertical is AI in finance, where portfolio companies use machine learning to detect credit card fraud.

At GGV, we are multi-stage. We have an early stage fund called Discovery Fund, which allows us to get in at ground zero with entrepreneurs who have ideas. We'll put a small check of a few hundred thousand, or if they are doing a proper institutional round, around three to five million.

We have a main fund that allows us to come in at later rounds, Series B and beyond. It could be a 10, 20, 30, up to $50 million check. We typically like to lead the deal, 80% of the time. We like to be on the board, especially in the sectors I mentioned. Investments are more concentrated, maybe 10 to 15 deals a year.

On average, we have about 160 portfolio companies. We have insights from both markets to help us make investment decisions locally and help our companies think about global expansion. We're not geographic or regional based. It's about what sectors we're looking at and where the talent is. If there's a great deal in Ithaca, where I went to undergrad at Cornell, or Rensselaer, where we used to play hockey and won the national championship my graduation year, I'll be there.

The entire office is open concept. There's no special room for partners. All rooms are for entrepreneurs for meetings. It's a startup and entrepreneurial feel. Our founders love the open, warm, and sharing environment.

We like for them to figure out what problem they are trying to solve. Understanding the vision is very important because once you know what you want to be, you can align the organization. It could be finding the right team members. If you say you want to be the next WeChat in China, that's a huge task. Understand what needs you are fulfilling that the current app cannot. If you're a product-centric company, you need to hit customer revenues.

For frontier tech, it's a little different. There are two types of disruption. The first is evolutionary disruption, like e-commerce or internet. You can think about how big the market is today and how to monetize. We look at three to five years for current markets. For frontier tech, we look beyond five years. What will change five years from now? For example, if we think current compressor-based cooling is inefficient, we consider if solid state technology can replace it. We have a portfolio company doing exactly that. Revenue is less important. If the product is ready, the next stage is finding the right partners to go to market.

Our partners are focused by different sectors. We've been focused on these key sectors for a long time, 10 or 15 years. We have a reputation that helps entrepreneurs know which partners to talk to. We've also funded many unicorns. When we funded them, they were young, seed stage or Series A, and they grew to be unicorns or bigger. We have a strong GGV family ecosystem. Our entrepreneurs are repeat entrepreneurs, some with personal wealth over a billion, and they're off doing the next electric car. We get the first call. A lot of deal flow comes from our vertical expertise, our brand, and referrals from existing portfolio companies. Success helps find the next big thing.

It doesn't change my life. My team is happy to get some recognition, but the love of my life is working with entrepreneurs. I love spending time with them and seeing their vision become real. When entrepreneurs go to NYSE or Nasdaq and IPO, that's when dreams come true. That's what gets me going. It's extremely satisfying to see the happiness within the team. That's more important in the life of a VC. It's less about what others think and more about the synergistic relationship with entrepreneurs. We are a small piece of that population, constantly in touch with entrepreneurs trying to change the world. Whether they succeed or not, you have to support their courage to dream.

That happens too. This business has its ups and downs. I have portfolio companies where I sat next to entrepreneurs as they laid off young workers. In that situation, we provide psychological support to show we are there. Those are the downtimes. But if it's a great CEO, they'll be back within a couple of months with new ideas. Usually we get the first call. It forms a longer-term relationship. There are ups and downs, but if we do a good investment job, the ups outweigh the downs. Like the Midas list, it happens over and over again.

GGV partners are very open. We are in the US. Our partners are on Twitter, Facebook, and our own website. I tend to have more inbound. People can apply through the website or write emails. In China, we have WeChat. I get a lot of business plan introductions through WeChat. In this day of information, it's not difficult. If you're an entrepreneur and can't figure out how to get access to an investor, something is wrong. We are not hiding in the corner. We are out there. Information is on the internet. If you search, you can find my email address and phone number. It's not hard. We like that. But we also reach out to entrepreneurs. We are very thematic and sector focused. When I'm looking at startups in autonomous driving, we reach out to companies in the US, China, or Southeast Asia, call them, introduce ourselves, and have a meeting. As much as it's inbound, we do a lot of outreach. Our partners all love entrepreneurship. That's a common trait among our six partners. We enjoy the time we spend with entrepreneurs. If we can make just one of them the next Jack Ma, that would be a good life for any of us.