The startup games in Sil­i­con Val­ley

Sil­i­con Val­ley in Cal­i­for­nia is where dreams can be­come a re­al­ity or go nowhere, and a grow­ing num­ber of Chi­nese and Chi­nese Amer­i­cans are over­see­ing an­gel funds, in­cu­ba­tors and ac­cel­er­a­tors to help make those dreams come ture, re­ports Qi­dong Zhang from

China Daily (Canada) - - IN DEPTH -

EIn­nospring

Eugene Zhang’s In­noSpring is try­ing to do just that. With $10 mil­lion in seed money from VC firm Kleiner Perkins Cau­field and By­ers, North­ern Light, GSR Ven­tures, China Broad­band Cap­i­tal and TEEC An­gel Fund, In­nospring aims to uti­lize its US-China re­sources to con­nect both coun­tries and help star­tups nav­i­gate the lo­cal mar­ket.

“What we want to do is to bridge the gap in sci­ence and tech­nol­ogy in­no­va­tion be­tween the US and China, and help star­tups to go global early,” said Zhang.

In­noSpring, a part­ner­ship be­tween Ts­inghua Univer­sity Sci­ence Park (TusPark), Shui On Group, North­ern Light Ven­ture Cap­i­tal and Sil­i­con Val­ley Bank, has in­cu­bated more than 100 star­tups at its 13,500 square-foot center in Santa Clara, and is now known as a “must-visit” stop for Chi­nese del­e­ga­tions com­ing to Sil­i­con Val­ley.

An elec­tri­cal engineering ma­jor from Ts­inghua Univer­sity, Zhang, 50, held lead­er­ship po­si­tions at Sun Mi­crosys­tems Inc and Ju­niper Net­works Inc in the 1990s. He made what he calls his “first bar­rel of gold” co-writ­ing a semi­con­duc­tor soft­ware tool called VERA about 20 years ago

Zhang said star­tups in en­ter­prise soft­ware and sys­tems and big data-driven ap­pli­ca­tions in many ar­eas in­clud­ing biotech will be In­nospring’s pri­mary fo­cus in startup se­lec­tion.

“I an­tic­i­pate a lot of rev­o­lu­tion­ary changes in some ar­eas of tech­nol­ogy like hu­man to ma­chine and ma­chine to ma­chine, as well as busi­ness model changes such as in en­ter­prise soft­ware,” he said. “Cor­po­rate man­age­ment will be fun­da­men­tally changed with Cloud and mo­bile tech­nol­ogy com­ing into the pic­ture. En­vi­ron­ment re­lated tech­nolo­gies will also have a heavy im­pact on in­no­va­tion in the near fu­ture.” ugene Zhang launched Sil­i­con Val­ley’s first US-China tech in­cu­ba­tor, In­nospring, in April 2012. Larry Li came to the US from China in 1990. Now he’s an an­gel in­vestor who co-founded zPark Ven­ture.

David Hu is pres­i­dent of TIPark Sil­i­con Val­ley, an in­cu­ba­tor. CFO and Vice-Pres­i­dent Jun Huang works at an in­cu­ba­tor and has es­tab­lished part­ner­ships be­tween Sil­i­con Val­ley com­pa­nies and Chi­nese com­pa­nies.

Can­ice Wu is pres­i­dent of Plug and Play, a start up ac­cel­er­a­tor that has in­vested in more than 1,200 star­tups since 2006. And Garry Tan is one of the co-founders and eight part­ners of Y Com­bi­na­tor, one of the most suc­cess­ful tech ac­cel­er­a­tors.

They are among the Chi­nese and Chi­nese Amer­i­cans whose com­pa­nies are in the world of star­tups in Sil­i­con Val­ley as an­gels, in­cu­ba­tors and ac­cel­er­a­tors.

Jun­ming Wang, sci­ence and tech­nol­ogy coun­selor of the Con­sulate Gen­eral of China in San Fran­cisco, said in a re­cent speech to the lo­cal busi­ness com­mu­nity, that US-China in­no­va­tion is truly re­flected on in­cu­ba­tion and ac­cel­er­a­tion ac­tiv­i­ties in Sil­i­con Val­ley. “It not only drives the lo­cal and US econ­omy, but also bridges the en­trepreneur­ship be­tween the two coun­tries,” he said. zPark Ven­ture

In July, Li, a 1982 grad­u­ate of Ts­inghua Univer­sity’s au­to­ma­tion depart­ment, a pro­fes­sional engi­neer for For­tune 500 com­pa­nies, and a vet­eran of work­ing with star­tups, teamed up with a cou­ple of in­vestors and started zPark Ven­ture. The mul­ti­mil­lion­dol­lar an­gel fund aims to help startup teams build ven­tures for in­cu­ba­tion and even­tu­ally ven­ture-cap­i­tal in­vest­ment.

Li has since or­ga­nized a group of an­gel in­vestors who are in­dus­try ex­ec­u­tives and in­no­va­tion lead­ers in so­cial me­dia, semi­con­duc­tor, IT and bio-tech.

“Now we have more than 10 part­ners, 20 ad­vis­ers. Since last July we have in­vested in 17 star­tups, prob­a­bly the num­ber will hit over 20 by end of this year,” he said.

Li said zPark Ven­ture’s an­gel fund co­or­di­nates with other in­cu­ba­tors to work to­gether in ar­eas in­clud­ing mo­bile, games, In­ter­net, se­cu­rity, big data, IT and health­care. Key prospects, said Li, are soft­ware star­tups, or hard­ware plus soft­ware star­tups. “If they have users, that’s def­i­nitely a plus.’’

Li be­lieves hav­ing of­fices in Sil­i­con Val­ley and Bei­jing gives zPark a strong ad­van­tage in help­ing early-stage star­tups suc­ceed.

“Our team of cross bor­der in­vestors and ad­vis­ers brings in­vest­ment cred­i­bil­ity and global vi­sion to the plat­form, which helps to­day’s in­no­va­tive en­trepreneurs,’’ he said.

Still at an early stage, Li said the an­gel fund aims to bring more value to start-ups some­times be­fore they are in­cu­bated, and takes 1 per­cent to 5 per­cent of the com­pany’s eq­uity.

“We build up a track record and help star­tups wrap up quickly be­fore they are in­cu­bated. Many of them dou­bled their value in six months,” said Li. TIPark Sil­i­con

One of the largest high-tech in­cu­ba­tion cen­ters in Sil­i­con Val­ley is TIPark Sil­i­con Val­ley. Its nearly 50,000 square-foot of­fice lo­ca­tion was pur­chased early this year. TIPark Sil­i­con Val­ley, a joint in­vest­ment of THTI Hold­ings Co Ltd, and Haid­ian dis­trict, fo­cuses on US-China star­tups. David Hu, pres­i­dent of TIPark Sil­i­con Val­ley, is an IT pro­fes­sional in his mid-30s.

“Since we have a strong China back­ground, we fo­cus on both start-ups in the Sil­i­con Val­ley and Chi­nese en­ter­prises com­ing to Amer­ica and en­hance their needs,” he said . “Our ad­van­tage over oth­ers is that we are well con­nected to both Sil­i­con Val­ley and Haid­ian Dis­trict, which are the most dy­namic in­no­va­tion cra­dles in the US and China.”

Hu and his team have eval­u­ated ap­prox­i­mately 30 star­tups since Oc­to­ber; many of them in clean en­ergy, mo­bile app, gam­ing and cloud tech­nol­ogy.

Co­or­di­nat­ing with an­gel fund in­vestors, Hu aims to cus­tom­ize his pro­gram and find what is the best way to in­cu­bate star­tups. For an eq­uity re­turn of 5 per­cent to 6 per­cent, Hu also plans to co­or­di­nate with an­gel-fund in­vestors.

“Some star­tups want to go to China di­rectly, some want to be in­cu­bated here and see what hap­pens lo­cally. It all de­pends on what kind of strat­egy and fund­ing they re­ceive when they come out of our pro­gram,” he said.

With four peo­ple on his team and a $10 mil­lion fund, Hu is also cau­tious.

“We are in the learn­ing process of in­cu­ba­tion, and it is also an evolv­ing process for us,” he said. Hanqi

In June, Hanqi In­vest­ment Inc pur­chased a 105,000 square-foot build­ing in Burlingame, Cal­i­for­nia, ad­ja­cent to the San Fran­cisco Bay and San Fran­cisco In­ter­na­tional Air­port. The $24 mil­lion pur­chase was mainly made by Zibo Na­tional New and High Tech In­dus­trial De­vel­op­ment Zone, along with six com­pa­nies at Zibo New and High Tech In­dus­trial De­vel­op­ment Zone and Han­hai In­vest­ment Man­age­ment Group.

While ap­prox­i­mately 8,000 square-feet of co-work­ing space is un­der­go­ing re­mod­el­ing, CFO and Vice-Pres­i­dent Jun Huang has launched pro­grams to fill that space for the in­cu­ba­tor, in­clud­ing ser­vices for res­i­dent com­pa­nies.

Hanqi has es­tab­lished part­ner­ships be­tween Sil­i­con Val­ley com­pa­nies and Chi­nese com­pa­nies and re­cruited nine startup com­pa­nies for ser­vice pro­grams.

“Our ad­van­tage is to be able to pro­vide a di­rect chan­nel for Sil­i­con Val­ley star­tups that are in­ter­ested in launch­ing in Zibo, Shan­dong prov­ince, where the en­trepreneur­ship en­vi­ron­ment is su­perb,” Huang said. “Through this over­seas tech­nol­ogy in­cu­ba­tor, we are also able to bring back over­seas tal­ents, li­cens­ing ad­vanced tech­nol­ogy and projects, fa­cil­i­tat­ing Chi­nese com­pa­nies to en­ter over­seas mar­kets, and achiev­ing our goals of in­no­vat­ing over­seas, ac­cel­er­at­ing in China,’’ said Huang.

She said the in­cu­ba­tor ad­min­is­tra­tive com­mit­tee of Zibo Na­tional New and High Tech In­dus­trial De­vel­op­ment Zone pro­vides ap­prox­i­mately $200,000 in fund­ing for in­no­va­tion and en­trepreneur­ship, a rent sub­sidy for 1,000 square-feet re­search and de­vel­op­ment for five years and tech­ni­cal-ser­vice plat­forms (labs).

“The life-sci­ence park is es­tab­lished be­cause we be­lieve there is sub­stan­tial need for the two coun­tries in life-sci­ence in­no­va­tion. The plat­form here will pro­vide lo­cal star­tups a most ef­fec­tive in­cu­ba­tion from US to Shan­dong prov­ince di­rectly,” Huang said. Plug and Play

To dis­tin­guish an ac­cel­er­a­tor from an in­cu­ba­tor, Can­ice Wu, pres­i­dent of Plug and Play — a startup ac­cel­er­a­tor based in Sun­ny­vale, Cal­i­for­nia — says his com­pany “en­hances grad­u­ates from in­cu­ba­tors’’ and brings them to the com­mer­cial mar­ket.

Since its es­tab­lish­ment in 2006, the com­pany has in­vested in more than 1,200 star­tups, with an av­er­age in­vest­ment of $25,000 to $100,000. With more than 300 res­i­dent star­tups, a net­work of 180 ven­ture cap­i­tal­ists and ex­ten­sive re­la­tion­ships with For­tune 500 cor­po­ra­tions, Plug and Play is one of the most sought af­ter ecosys­tems in Sil­i­con Val­ley.

“We work with engineering and busi­ness schools in var­i­ous col­leges to iden­tify en­trepreneurs and star­tups from col­lege stu­dents. The sum­mer and win­ter camps run 10 weeks each,’’ Wu said. “We also run an in­ter­na­tional ac­cel­er­a­tion pro­gram, a three-month pro­gram four times a year. Peo­ple call it Sil­i­con Val­ley boot camp be­cause this is where global en­trepreneurs meet up with CEOs, men­tors and in­vestors who lit­er­ally trans­form their ideas into op­por­tu­nity.’’

Ex­pe­ri­enced in de­vel­op­ing a busi­ness from con­cept to be­com­ing a mar­ket leader, Wu founded In­sights On­De­mand and de­vel­oped Siebel’s ver­ti­cal-in­dus­try busi­ness unit for fi­nan­cial ser­vices from scratch to more than $300 mil­lion in rev­enue in five years.

Wu said that Chi­nese For­tune 500 com­pa­nies are in­ter­ested in his com­pany’s B2B (busi­ness to busi­ness) ac­cel­er­a­tor-in­vest­ment pro­gram that con­cen­trates on en­ter­prise, big data and cloud star­tups.

“Baidu, Huawei, TCL, Len­ovo are our cor­po­rate part­ners who would ac­quire or in­vest in star­tups in those ar­eas based on needs of their busi­ness port­fo­lio,” he said.

“We are very much a global ac­cel­er­a­tor; we have very strong con­nec­tions in not only the VC (ven­ture cap­i­tal) com­mu­nity in Sil­i­con Val­ley, but also global cor­po­rate com­mu­nity,’’ he said. Y Com­bi­na­tor

With more than 560 star­tups launched since 2005, Y Com­bi­na­tor (YC) stands out as a seed ac­cel­er­a­tor. It pro­vides seed money, ad­vice and con­nects qual­i­fied star­tups at two of its three-month pro­grams per year, tak­ing an av­er­age of about 7 per­cent of the startup’s eq­uity.

Co-founder and part­ner Garry Tan said YC in­vests about $2 mil­lion a year, an av­er­age of $20,000 per startup.

“We re­ceive about 5,000 to 6,000 ap­pli­ca­tions ev­ery year, alumni mem­bers who grad­u­ated from the YC in­cu­ba­tion pro­gram are the first tier to re­view the ap­pli­ca­tions,” said Tan.

Two batches of ap­pli­ca­tion are re­ceived ev­ery year for the Jan­uary to March and the June to Au­gust pro­grams. “We look at a busi­ness, and value its ar­tic­u­late­ness. We see how the founders ex­plain a com­plex con­cept, and ob­serve the team’s in­ter­ac­tion. Peo­ple mostly don’t change their per­son­al­i­ties, it’s im­por­tant to spec­u­late how the team re­acts when they con­front chal­lenges,” said Tan.

“We pick win­ners based on how big the idea is, and how good the idea is. The team is most im­por­tant when you pick a com­pany. BS in com­puter-sys­tems engineering, Stan­ford Univer­sity (2003) Cofounder, Posthaven.com (2013–present) Part­ner, Y Com­bi­na­tor (2011–present) Cofounder, Pos­ter­ous.com (2008-2011) In­ter­ac­tion De­signer, Rear­den Com­merce (2007-2008) Lead Engi­neer, De­signer, Palan­tir Tech­nolo­gies (2005-2007) Pro­gram Man­ager, Mi­crosoft (2003-2005) Sun Mi­crosys­tems (2002-2003) Pres­i­dent, TIPark Sil­i­con Val­ley MS in elec­tri­cal engineering, Univer­sity of Colorado BS and MS in elec­tri­cal engineering, Ts­inghua Univer­sity Pres­i­dent, TIPark Sil­i­con Val­ley (2013) As­so­ci­ate Mem­ber, TEEC NA (2012) Pres­i­dent, Sil­i­con Val­ley Ts­inghua Net­work (SVTN) (2011) BE, au­to­ma­tion depart­ment, Ts­inghua Univer­sity (1987) ME, elec­tric engineering, Univer­sity of Florida (1993) Co-founder and Man­ag­ing Part­ner, z-Park Ven­ture (2012-present) Di­rec­tor, Board of UCAHP(2011-present) Found­ing Part­ner, TEEC An­gel Fund (20102012) For­mer Vice-Chair­man, TEEC North Amer­ica (2011-2013) Di­rec­tor of Op­er­a­tion, Lockz­erz (2009-2011) We look for scrap­pi­ness, too, and see if the team will still be pas­sion­ate if they face a chal­lenge or trou­ble.”

Drop­box was one of the star seed-star­tups in­vested in by YC in 2008. It now has 200 mil­lion users, 4 mil­lion busi­ness users, and, ac­cord­ing to an an­nounce­ment made by its co-founder Drew Houston in Novem­ber, 97 per­cent of the For­tune 500 com­pa­nies are us­ing Drop­box. “What we do is to fo­cus on star­tups which make soft­ware and have a mar­ket to sell to, and Drop­box fits ex­actly into that model,” said Tan.

The YC “grad­u­ate’’, ac­cord­ing to Tan, re­ceives an av­er­age of $1 mil­lion dol­lars af­ter its ac­cel­er­a­tion pro­gram, which makes the com­pany the king of ac­cel­er­a­tors in the US and a dream pitch for startup founders.

A first gen­er­a­tion im­mi­grant him­self with his fa­ther from Sin­ga­pore and mother from Burma, Tan, a Stan­ford com­puter-sci­ence grad­u­ate, has been a suc­cess­ful en­tre­pre­neur. A co-founder of Pos­ter­ous, he co­founded fi­nan­cial anal­y­sis plat­form Palan­tir Tech­nol­ogy and was pre­vi­ously a pro­gram man­ager at Mi­crosoft Win­dows Mo­bile. Tan has big dreams for YC: “We fund 100 com­pa­nies ev­ery year. How much bet­ter a world would be if we could fund 1,000 a year? We are not sure how to scale YC yet, but we are think­ing ev­ery day about how to make it great and bet­ter.” Con­tact the writer at kel­lyzhang@chi­nadai­lyusa.com Vice-Pres­i­dent, CFO Hanqi In­vest­ment Inc BS in man­age­ment sci­ence, Shan­dong Univer­sity (1990) Vice-Pres­i­dent and CFO, Hanqi In­vest­ment Inc (2013) Di­rec­tor, over­seas projects of Zibo New&HiTech De­vel­op­ment Zone (2011) Di­rec­tor As­sis­tant and Vice-Di­rec­tor, In­vest­ment and Busi­ness Pro­mo­tion Bureau of Zibo New & Hi-Tech In­dus­trial De­vel­op­ment Zone (1999-2011)

Tech Center

Pres­i­dent, Plug and Play Mas­ter’s and Bach­e­lor’s de­grees in com­puter sci­ence, MIT (1987) MBA in Busi­ness Ad­min­is­tra­tion, Univer­sity of Cal­i­for­nia at Berke­ley (1992) Pres­i­dent, Plug and Play Tech Center (2010-present) Ex­ec­u­tive in Res­i­dence, Plug and Play Tech Center (2009-2010) CEO, In­sights On­De­mand, Inc. (2005-2009) Vice-Pres­i­dent, Gen­eral Man­ager and COO,

QI­DONG ZHANG / CHINA DAILY

A Chi­nese del­e­ga­tion from SIAS In­ter­na­tional Univer­sity vis­ited Plug and Play Inc to study its Sil­i­con Val­ley in­cu­ba­tion model on Dec 13.

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