Funding is the lifeblood of startups. While many startups can grow sustainably on their own, to scale up and reach anything like unicorn proportions, they require investment and lots of it. That is especially true in many B2B and engineering fields where the cost barriers to entry are so high.
4YFN’s Investors Club is a network of over 1000 investors from around the world covering the full spectrum of technologies and verticals. A stellar addition to the club is Shenzhen Valley Ventures, a VC business that is a unique blend of a fund paired with an engineering arm which gives it both engineering expertise and accelerated production capabilities.
We are honoured to be joined at 4YFN Shanghai this year by Chadwick Xu, the fund’s founder and CEO who will deliver a keynote speech. We got some fascinating insight from Chadwick about the fund, where it sees future growth and the startups it’s hoping to invest in.
Tell me about you and what made you become an investor?
Most investors have a financial background, while our background in the industry gives us unique strength in deep-tech, hardware, software, and B2B products combined. Our business model is capable of disrupting this industry, and allows us better judgement when investing.
Tell me about your company and/or fund?
Through our non-conventional way of investing, we complement our engineering arm. We utilize our engineering services as a way of ‘screening’ companies to allow us better insight into who we should invest in.
Our primary service (engineering) acts as our due diligence. We specialize in every aspect of product design and development, ensuring startups and corporates can get to market. We then invest into selected companies within our portfolio, before manufacturing their products.
Please share with us some startup success story from your portfolio. For example, your most recent exit.
We are only 3 years old and it is too early for an exit, but we do see a great potential for good exits for several B2B projects, for example, ArrAIY, a 3D computer vision project, that provides 3D solutions to professional 3D image content builders. This is one of our most promising companies.
What is your investment philosophy and what sets it apart from others?
By utilizing the expertise of a startup’s engineering process, we allow ourselves and our VC partners to get better insight into a startup’s potential success, and in turn a more promising ROI. And the most interesting part is that the combination of our engineering platform and investment arm could be a mutually supporting mechanism. So far, it looks quite promising and we hope in 5 years later it is proven to be an innovative model.
What market trends are driving your investment decisions?
B2B technology. We are seeing a sharp rise in the B2B industry that is setting the trend for today’s markets. That includes how to use AI to improve efficiency in traditional industries like manufacturing, agriculture, logistics and medicine, either to relieve human beings from tedious simple repetitive operations, or protect them against hazardous working environments.
What technologies and cutting edge fields of research are you really excited about? Where do you see growth?
We are very excited about the AI/software side of development. We are seeing an escalation of new ways in which big data is feeding today’s startup companies to innovate more viable products. By integrating this new trend of AI with hardware, there is a vast amount of innovation.
What types of investments are you interested in at the moment?
We are looking for angel investments – seed stage startups looking for pre A-round funding.
What are you looking for in a startup to invest in? What characteristics appeal to you?
People are always the key. for investors. It’s always a matter of how to find a way to tell who is the real entrepreneurial-type founder and our methodology is to use our co-development process as the way to understand the founders better.
Why are you coming to 4YFN Shanghai?
We are joining 4YFN to expand our network and unlock our unique business model to other VCs, and see how we can better collaborate for a better investment practice.
Are there particular advantages that you are looking for in Shanghai this June?
Shanghai is the most global city in China, and is the hub of global resources that build different links between China and the global market, since we are also targeting a global platform. This is what we would like to explore, not only for this trip, but also as a long-term plan.
What’s new at your company?
We have just inaugurated 55,000 SQF engineering facility, dedicated to development and small-scale manufacturing for innovation for corporates and startups. This relieves a huge strain from the partners, as, once our engineering services are used, we can transition companies smoothly, efficiently, and quickly onto the manufacturing lines.
This site will serve as the bridge between SVV’s services and a contract manufacturer. Meaning IP and quality is protected, as well as the decreased lead time to market.
What will your presence at 4YFN look like?
We are looking forward to delivering a keynote on stage and judging the 4YFN Shanghai Awards.
As a fund based in one of China’s leading innovation hubs, what is it about Shenzhen that makes it special?
Shenzhen is special because of its supply-chain, expertise, acceleration, innovation, manufacturing, and so much more. Shenzhen has fast become an ecosystem that utilizes every aspect of product design, business development and in-depth manufacturing knowledge. Shenzhen acts as the entry point for global companies to enter the markets of the future.
If you want to get in contact with Shenzen Valley Ventures, go to https://svv.io/