The right VC for the right company.

The right VC for the right company.

Charles Zhang Chaoyang, CEO of pop¬ular web hub Sohu.com returned to the mainland in 1995 with around US$500,000 ($746,000) in venture capital, and built his company from scratch. This marked the first venture capital Funding of a Chinese Internet company - Chinese innovators have since found that the right venture capitalist can be a catalyst to entrepreneurial success, much like the petrol to fan the flames of a fire.

On what a venture capitalist looks for in a Chinese venture, Neil Shen, Managing Director of Sequoia Capital, feels that there is no hard and fast rule to follow. It depends on multiple factors including (i) which business model is the most suitable for the current economic climate (ii) the companies’ abilities to reach out to the global market (iii) the companies’ financial performance. There is no golden rule to follow as each successful VC has its own unique characteristics. Neil believes that conflict between investors definitely differs from case to case. Conflict could be borne out of a lack of understanding between both parties or if could be a result of different management styles. “For me, I believe the best method to resolve these differences lies in constant interactions to improve the understanding and relations.”

On the relationship between entrepreneurs and investors, Neil believes that VCs share a mutually supportive relationship with our entrepreneurs. For an entrepreneur, the roles of the team should be been clear divided to avoid any overlap of roles or misunderstandings. “As an investor, it begins with the mentality of wanting to facilitate or aid the expansion of a start up. Although conflicts may be inevitable but it really varies very much from case to case. I believe that strategic decisions should be developed from a management point of view rather than a singular opinion from the CEO.”

Winning Move: Securing venture capital is not a silver bullet. Finding a VC is like finding a good marriage partner, except that it is harder to get a divorce. A good communication channel between VC and entrepreneur is key to reduce friction.