DAVOS, Switzerland (Reuters) - Chinese start-ups in deep technology, including augmented and virtual reality, and artificial intelligence, will attract the most interest from venture capitalists, the founder of a Chinese venture capital firm said.
Ron Cao, founder of Sky9 Capital, answered questions in the Reuters Global Markets Forum in Davos.
Following are edited excepts from the conversation:
Q: How many investment projects do you usually review, and how many do you typically invest in?
A: We look at over 1,000 opportunities a year, of which we typically do something like five to six projects. I am pretty sure that China will have the world's biggest companies in fintech, robotics, and areas like cloud computing and software.
Q: According to KPMG, venture capital investment in China rose 19 percent to a record $31 billion last year, compared to a fall of 9.4 percent globally. Why were venture capitalists more active in China?
A: China is a special place. The whole innovation economy is just getting started. Over time, the world will witness Chinese companies becoming the largest e-commerce company, Alibaba (BABA.N), the biggest direct broadcasting company, YY Inc (YY.O), and the largest drone company, the privately held DJI. There's no reason this trend will stop here.
Q: What type of start-up companies in China's TMT sector are attracting most attention from venture capitalists?
A: We focus on early-stage opportunities in consumer internet, enterprise IT and deep technology. Consumer internet will continue to attract the most amount of capital given the size of the market, but some areas within deep technology – augmented reality, virtual reality, artificial intelligence, deep learning, blockchain – will also be very interesting going forward.
Q: If you have to pick one, which start-up in China looks the most promising to you?
A: Hard to pick a winner, but in my portfolio, I am very excited about the prospects of Tujia, the Airbnb of China; FangDD, the largest online/offline real estate transaction platform; and PPDai, the largest pure-play peer-to-peer lending platform. These all have the opportunities to become decacorns.
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(This version of the story was corrected to remove references to Meituan Dianping, paragraphs 1-2)
Reporting by Billy Chan; Editing by Alexander Smith