Prospective

China is setting new standards to evaluate VCs’ performance

  • 24 Aug
    2017
  • 2 min

CBNweekly, a Chinese magazine, created a Unicorn Rank to identify the best Venture Companies in China based on the number of successful startups funded and their great influence. GSR Ventures ranked first in 2016. Here’s why.

GSR ventures at the top of CBNweekly’s Unicorn Rank is a surprise. Indeed people are more used to see the name of Sequoia Capital, an american company well-known for its portfolio comprising Alibaba, JD or Jumei that “made it” in China when other firms from the US have mixed record.

But GSR Ventures won the race! Not because it manages a $1 billion fund (Sequoia’s is about $2.5 billion). Neither because of its strategy focused on the funding of e-commerce startups. Nor because of its partnership with Mayfield Fund, the "oldest" venture capital fund in Silicon Valley. According to CBNweekly, the real reason behind the rank is GSR Ventures’s ability to find and identify unicorn startups at their earlier stage (before round A). Indeed GSR venture invested in early stage in OFO, DIDI and Red Book - some of the most successful innovation companies in China right now. As a matter of fact, Zhu Xiaohu, Managing Director at GSR Ventures, is often labelled as a “unicorn hunter” in China.

But most-of-all we believed GSR Ventures was brought to light because of the way it chooses its investments. Unlike other VC, the company puts most of resources and funds on a few key projects that are bound to affect people’s daily life. This is the case with the investment made on bike-sharing company OFO that really benefitted the daily life of its users. Indeed, just like CBNWeekly, we believe that only ‘smart’ money can create true value and instead of the profit and revenue VCs earned, the value created for the society is - at last seen - as more important. 

Written by Mu Cui, Senior Strategy Analyst at L'Atelier BNP Paribas