The China Startup Pulse

Managing a $1 billion pre-IPO fund, with Sophie Yao, China General Manager of Pegasus Tech Ventures

Episode Summary

China is one of the world’s biggest and leading stock markets. As a result, China’s capital markets are gaining more interest from both domestic and international investors. But today, we are not talking a step back from investing in public companies and instead, talking about pre-IPO deals. What are pre-IPO deals? What are the risks and opportunities associated to pre-IPO deals? We also look at the typical range of investment in such deals and how similar or different are pre-IPO investors from investment bankers? We have the perfect guest to talk about the pre-IPO market today. Our guest today is Sophie Yao, the China General Manager of Pegasus Tech Ventures, which some people may know for their notable investments like SpaceX and Airbnb. Sophie currently manages a $1 billion fund that predominantly focuses on pre-IPO deals. She shares with us what goes on in the background when sourcing and investing in pre-IPO deals. We also touch upon the current economic tensions between the US and China and how that can impact companies looking to go public.

Episode Notes

Our guest today is Sophie Yao, the China General Manager of Pegasus Tech Ventures, which some people may know for their notable investments like SpaceX and Airbnb. Sophie currently manages a $1 billion fund that predominantly focuses on pre-IPO deals. 

Show Notes:

1:48 Introduction to Sophie Yao

2:59 The CVC 4.0 Model

4:33 Rationale behind corporate partnering with single LP funds

6:58 The $1 billion pre-IPO  fund, what it is and why Pegasus invests in pre-IPO deals

8:04 Risks associated with pre-IPO deals

9:46 Pre-requisites in a pre-IPO deal. How do you measure returns?

12:28 Role of the pre-IPO investor in supporting companies

13:40  Evaluating potential investments

16.14 Next wave of IPOs from China

20:58 Revenue vs Technology: What matters more in deep tech investment

23:12 Does investor behavior shape the type of companies in China?

24:36 China’s STAR market and how it has performed so far

26:15 Companies doing well in the STAR market

26:45 Alibaba Ant dual IPO: Inflection point in Chinese companies' perspective on IPOs

28:41 Foreign companies listing in STAR market 

29:23 US-China deteriorating relations and impact on internationalization of Chinese tech startups

31:29 Luckin’s impact on the perception of listed Chinese companies

34:36 Lessons for Series A or B founders

36:54 Pegasus’ area of investment and how to contact Sophie

37:53 Pegasus’ Incubation program

 

Many thanks to our guest  Sophie Yao; host Oscar Ramos; producers Eva Shi and Sagar Chaudhary; editor David; organizer Chinaccelerator; and sponsor People Squared. Be sure to check out our website www.chinaccelerator.com

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