After the first series of The Halo Effect, many people reached out with names of angel investors–who may otherwise go under the radar–that we should speak to. One of those recommendations came from Andy Hamilton:
We asked Andy for an intro as we were curious to learn more about Xinyu; his background, and what he brings to the angel ecosystem in NZ:
“Xinyu has had a great impact on the NZ ecosystem through Eden Ventures and also through his angel investments. His personal knowledge and experience of one of the most competitive venture markets in the world–China–coupled with his domain expertise, gives him the opportunity to deeply add value to the founding teams that he invests in. I also like Xinyu personally, due to his desire to contribute to New Zealand in a way for future generations,” says Andy.
Without further ado, here’s Xinyu’s story.
Tell us a bit about your career journey and why you came to New Zealand.
I started my career at Procter & Gamble in China and spent 9 years there before I changed careers and went to work at Google. From there, I joined a later-stage startup called 5173.com as President.
Going from Procter & Gamble to Google, I was astonished by Google’s growth rate and the power of innovation. At Procter & Gamble, the growth rate was around 20-30% yearly. But during the early days of Google in China, the growth rate was 20-30% every week!
I moved to New Zealand in 2017 because I wanted to live in a foreign country. I graduated from Peking University, which people call the last fortress of democracy in China, and I picked up the American way of thinking at Procter & Gamble–but I didn’t want to live in the US–so I chose New Zealand.
When I started Eden Ventures here in New Zealand, I was intentionally building my network, looking for people with power and influence in the VC industry with whom I could set up a partnership. I approached Icehouse Ventures, and we started working together. How the partnership with Icehouse Ventures works is I’m responsible for fundraising, investment and management post-investment, and Icehouse is responsible for due diligence, legal and accounting.
Eden Ventures is now the largest Chinese-led angel fund in New Zealand, investing in the leading startups and helping them make the most of opportunities in China.
How did your angel investing journey start?
I think my first deal was in 2010. I was inspired by innovation working at Google, and it also gave me a great network–there were so many young, talented people there at the time. I also met my mentor, who is a famous venture capitalist in China. I learnt a lot from him and was inspired to make my first angel investment in a company founded by one of my schoolmates from college.
Three years after I invested, the company went to IPO and I got a 20x return!
I got my first few deals out of luck, not know-how. I had a big learning curve when I started investing in more startups.
Wow, that’s an incredible result! What was the reasoning behind why you invested in that company?
I developed my investment thesis based on my mentor’s advice. I knew the founder–she was already successful–and the company was mature, not early-stage. I thought the deal would be a safe first investment for me.
What did your mentor teach you about investing?
He taught me a few key investment principles:
- Never invest in the secondary market.
- When you get the opportunity to exit, you should exit.
- People are the key to success, so always invest in the brightest people.
- Always chase the best deals, even if they’re expensive.
Those points on secondary markets and exiting differ from what we hear from many other investors–what’s the reasoning behind those principles?
If there’s an opportunity to exit, I take it, even if it’s not the greatest amount, because you never know when the next window to exit will be.
We need the whole ecosystem to be healthy, so you can’t take all the money. You need to let other people make money too.
What kind of investments make up your portfolio now?
In the early days, I invested in digital marketing companies; an area I’m familiar with.
Through the Google ecosystem, I got to know a lot of founders personally. So my first 3 deals, besides the one I just mentioned, were with founders I already knew because they had been reseller partners or technology providers.
Nowadays, most of my deals are early-stage in fintech or proptech. I actively approach them because I’ve seen their progress and they’re doing well, so I want to be part of the company.
What are some of the qualities you look for in founders? And is there any notable difference between Kiwi and Chinese founders?
I look for founders with a greater vision for their industry, who will go on to lead the industry. They are excellent leaders, constantly learning and know how to engage people.
I do reference checks with their friends and colleagues. I also interview their family, like their partner or spouse. If the founder can get along with their partner, they can get along with their investor. Otherwise, it can be a sign that they’ll be hard to work with.
Kiwi founders have more industry experience and better corporate governance. In China, companies barely have any governance because of the legal system and general mentality.
More broadly, what are some of the notable differences between angel investing in China and New Zealand?
The bar to investing in China is really high as investments need to be around USD$1 million. But here in New Zealand, you can put any amount of money in.
There isn’t as much of an angel investor community in China–there are just many speculators! And the timeframe from investing to exit is usually only 3-5 years.
What does your involvement look like post-investment?
I don’t do passive involvement, I want to be involved. I bring not only money but also experience and knowledge because I invest in industries I know.
A lot of founders ask me questions about how to commercialise their business and product, as well as certain areas of company governance.
Part of my role working with Icehouse Ventures is to help companies in New Zealand find opportunities in China. I’ve helped companies expand their business into China and get funding from Chinese investors.
It can be complicated for businesses to expand into the Chinese market. It’s resource and capital-intensive, and you need people on the ground.
What advice do you have for people who are new to angel investing?
From my experience, only invest in the people you know. When I have invested in a stranger, it hasn’t worked. Likewise, for founders, for your first raise, go to the people you know and trust.