China’s Startup Era Is Sparked by Equity Incentives, Famous Angel Investor Says

TANG SHIHUA

(Yicai Global) Sept. 7 — Stock options provided to employees have driven the unforeseen era of Chinese entrepreneurial success, a Chinese angel investor said.

“There are many kinds of explanations for the emergence of so many entrepreneurial miracles in China, but they are essentially from equity incentives,” state-backed news outlet The Paper reported Bob Xu, co-founder of ZhenFund and education firm New Oriental Education & Technology Group, as saying. The angel investor, known in China as Xu Xiaoping, was speaking at the 2018 Global Venture Capital Summit held in central China’s city of Xi’an from Sept. 5 to 6.

“The creativity of people, as well as the impetus and imagination of entrepreneurs are unimaginable. This is also the reason for the underlying system of China’s amazing venture capital landscape today,” he added. Xu gave examples of these incredible shows of startup spirit, such as smartphone maker Xiaomi, which has grown into a USD60 billion company in eight years, while bulk-buy platform Pinduoduo has reached a valuation of USD30 billion in just three years.

The founder of the Beijing-based seed fund is optimistic about China’s future in the field of venture capital. In fact, he started investing during the global financial crisis in 2008. “Looking back now, we have encountered the bottom, and we also experienced the peaks of 2015, 2016 and 2017, especially the golden harvesting period of this year for investors,” he added.

Xu started ZhenFund with Victor Qiang Wang in 2011 in collaboration with Sequoia Capital China, and the former firm holds positions in startups such as online teaching platform VipKid, bike-sharer Ofo, and co-working company Urwork.

Editor: Emmi Laine

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