Shanghai-based venture capitalist JP Gan has picked enough winning companies over the years to appear on the Forbes Midas list again, most recently in 2022. Previous investments come from Chinese online company TripArraycom and the video-sharing platform Bilibili.
After taking his first roles at Carlyle and Qiming Venture Partners, Gan left Qiming in 2019 to start his own boutique, INCE Capital. INCE has supported more than 30 corporations to date, adding the unicorns KK Group, Yuanxin Technology, and EEO Group. Gan and INCE Capital raised $700 million in new capital for investments in China in the second part of 2021 from foreign investors. Since then, the country’s expansion has lagged behind the last decade.
How does Gan assess investment opportunities in China today?Lower prices related to slowing economic growth, market weight in the world’s second-largest economy and the global competitiveness of brands still open avenues for investment, he said in a recent interview.
“At the end of the day, China is still a country of 1. 4 billion people with a GDP per capita of $10,000. It is the second largest economy in the world and other people still have a lot of money,” Gan said. “Savings have increased in recent years. With some encouragement and a boost of confidence, people will consume and consume. I look forward to seeing the next set of major client corporations in the coming years.
One industry with a future is the puppy industry, Gan said. “The puppy industry is developing very rapidly in China, and many other young people are choosing to have puppies instead of children,” she said. One of the corporations INCE has invested in is Petkit, a manufacturer of smart puppy machines such as automatic feeders. “It’s doing well in China, in the overseas market and on Amazon,” said Gan, who has an MBA from the University of Chicago Business School. thriving pet market,” UBS predicted last year that rising numbers of puppy owners would contribute to sales expansion of about 28% annually between 2023 and 2025, a rate “more than triple that of global peers. ” Qin Hua, chairman and CEO of puppy food company Gambol Pet Group, has become a billionaire after the company was listed on the Shenzhen Stock Exchange in August 2023.
Like most investors, INCE also spends a lot of time on AI. Among Chinese corporations with giant language models, it has invested in Baichuan, founded by the former CEO of Chinese search engine Sogo, Wang Xiaochuan. “In the next five to ten years, every corporation will want to adopt AI technology. If they don’t, they will lose their position in the market and become obsolete,” Gan said.
Although INCE’s mandate is to invest in China and Chinese marketers, it sees more and more marketers in the country looking to expand abroad. Among his biggest successes, Gan said, is Temu, who announced this year’s Super Bowl. “We see a lot of opportunity in this area,” he said.
In addition to Petkit, INCE is part of this organization of companies investing in iMile, a last-mile e-commerce delivery company in the Middle East. “They are entering markets in South and Central America such as Mexico and Brazil. We could become one of the world’s leading last-mile delivery corporations,” he said. INCE has also invested in moodytiger, a luluemon-like sportswear for young people that is opening outlets in Singapore, Thailand and elsewhere in Southeast Asia.
It is worth noting its absence from the list of countries about which Gan was positive: Japan. For venture capitalists, he said via WeChat from Japan, the country has “too small a market, no expansion and a declining population. “
Looking back on his career, Gan, 53, recalls, “I got into the business about 23 years ago, when the first dot-com bubble burst. I don’t forget an interview with the Carlyle Group in March 2000, when the Nasdaq was at an all-time high. Then it collapsed, but that gave us a lot of opportunities and it has grown tremendously since then. In this early period, many giant Chinese corporations were established, including Ctrip, Baidu, and Tencent.
“Since the arrival of the Covid pandemic,” he continues, “the market has definitely replaced many things. The overall economy has slowed, geopolitics has also had a significant impact on the venture capital industry, and entrepreneurship has declined. Right now, this is probably the worst time I’ve ever been through in my 23-year career in the venture capital industry.
“But that being said, opportunities will present themselves. Costs have decreased: human resources prices, visitor acquisition prices and marketing prices. Today, corporations have a wonderful opportunity to sell their products and hire competent people. I hope we get through this phase of the (economic) cycle.
JP Gan on the cover of Forbes China in 2019.
—with Julie Lu
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