Venture Capital Firms, Though Cautious, Are Still Fond Of AI, Cultural And Entertainment Projects, Said Kaifu Lee

(Chinese Version)

Kaifu Lee at 2016 TechCrunch Conference

Editor’s Note:

During the 2016 TechCrunch Conference held on November, 7th, Kaifu Lee, founder of Innovation Works, delivered an opening speech, in which he shared with the audience Innovation Works’ following investment strategy and explained why Innovation Works adopted such strategy.

In the middle of September, Kaifu Lee announced that Innovation Works had already raised a Phase Two fund of over 2.5 billion yuan (around $365 million) and a Phase Three fund of $300 million. That is to say, Innovation Works raised over 4.5 billion yuan (over $657 million) in total.

The public is concerned why Innovation Works raised so much money ay this point, but even more concerned how Kaifu Lee is going to spend these money, as well as what kind of projects he will invest in?

In the speech, Kaifu Lee admiited that major venture capital firms were becoming increasingly cautious in 2016, revealing that the total investment volume in 2016 is expected to reach only half of the year before. However, he also pointed out that venture capital firms were still very much interested in areas such as artificial intelligence, culture and entertainment, etc.

As a technology-driven investment firm, we believe our judgment over the future trend is comparatively accurate. As a matter of fact, we have always been the trend-setter in many fields. For example, before cultural & entertainment industry and artificial intelligence became popular, we’ve already invested in many startups and projects.

At the same time, Kaifu Lee pointed out that to be a good venture capital firm, one will have to own both RMB fund and USD fund, and that entrepreneurs must decide which kind of fund their startups will turn to at an early stage. He suggested that high-tech companies who are competing mainly with American counterparts might as well turn to USD fund, while startups focused mainly on short-term revenue and IPO might as well turn to RMB fund.

To be specific, we (Innovation Works) will focus our attention on the following six major areas: artificial intelligence, culture&entertainment, online education, B2B, upgraded consumption and new sales models.

Among them, artificial intelligence will be the area of the greatest interest. For him, artificial intelligence technology will be adopted to facilitate people’s life and even replace human beings to do lots of work, especially assistants and intermediaries.

When artificial intelligence-based system can better recognize people’s faces than human beings, security guards can be replaced; When artificial intelligence-based system can understand what people are saying, customer service and telemarketing personnel can be replaced; When artificial intelligence-based system can trade stocks better than human beings, stock brokers can be replaced.

In addition, Kaifu Lee revealed that Innovation Works had launched its own AI Engineering Academy recently. For them, AI scientists are at the core of artificial intelligence research. Therefore, they wish to gather some of the best AI scientists and engineers together, adapt to the business trend and make some really profitable products.

Speaking of cultural and entertainment industry, Lee revealed that Innovation Works would focus much attention on finding the TV series that would appeal to the public when put on the internet, as well as promising MAG contents that would appeal to Post-90s and Post-95s. For him, to decide if it is worth investing in a cultural and entertainment project, he has to tell if content of its kind has already been accepted by the public, if it could be put on the internet, and if profit can be made through selling virtual goods or other ways.

He also pointed out that there was a trend for a popular IP to become a platform first and then begin to make profit. A typical example is live video broadcasting, he mentioned. Today, live video broadcasting platforms are thriving in China, and their business potential can already be compared to Sina Weibo.

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[The article is published and edited with authorization from the author @Li Chengcheng please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.