Chinese start-ups with global ambitions poised for success, head of VC fund says

Chinese start-ups with global ambitions still make attractive investment targets, according to the founder of Shanghai-based venture capital firm 01VC, which is gearing up to invest between US$2 million and US$3 million in each of up to 10 companies in the next two years.

Despite challenges ranging from an economic slowdown to a protracted property slump, China’s economy still grew 5.2 per cent last year, while accounting for 30 per cent of global manufacturing, making its companies well-positioned for global expansion, Ian Goh, founding partner at 01VC, said in an interview.

“The trend of Chinese companies going abroad is becoming more and more apparent in recent years,” he said. “Onshoring, where Chinese companies build their factories in places like Vietnam or Mexico, bringing their automation technology and selling their products in those countries, is creating a great opportunity for investors like us.”

Focusing on robotics, consumer electronics, and business-to-business products and platforms, the VC firm is looking to invest in around 10 companies over the next two years out of a US$65 million fund that it closed at the end of 2023, he said, adding that 01VC’s average ticket size is US$2 million to US$3 million.

The low valuations of Chinese companies, coupled with a shift towards caution among global investors, are creating a “buyer’s market” for fund managers, Goh said.

“Globally, venture capital has raised too much money over the last few years,” he said. “But now, there is no more capital investing for the sake of growth, ignoring fundamentals, and this creates a great opportunity for us to buy and invest.”