Many people ask me the difference between Chinese investors and Western investors. Honestly, I have no idea. I only deal / have dealt with Chinese investors. I have personally raised a few million RMB from local investors and few hundred million RMB for the startups via our work here at niHUB. What I write here is based purely on my experience dealing with more than two hundred angel investors, venture capital funds, and key players in the investment industry here in China.
For investors and niHUB, when we are preparing to invest in a new project or startup one of the most important considerations is the team behind a startup.
Investors prioritize people first, and projects second.
Due to this priority, a large part of raising the funding you need requires an ability to not only show the value of your project, but also your own value, your trustworthiness, and your determination to succeed.
Of course your CV, your degree, your previous working experiences, etc. will all be taken into consideration, but at the end of the day investors will still need to prioritize the trust and connection they have established with you. That is the reason why empathy, credibility, and honesty will be incredibly important during your relation with potential investors.
In addition to this, an ability to speak Mandarin (of course) will be a great help. However, it is not impossible! Through niHUB we have seen many startups without language ability work with us and succeed in raising funding by establishing connections with their new investors, despite the language barrier.
Personally, I think experience is less important than motivation and honesty. If you have a good project and are a reliable entrepreneur, investors will always put their trust (& money) on you, regardless of your “official” experience.
In regards to human relation, it’s also incredibly important to know who you are talking to. Before meeting an investor you should research about the background of the investors, which industry are they investing, which companies they’ve funded, which stage of investment they typically fund, what kind of successful case studies do they have, etc.
Finding an investor is a lot of rejection before finalizing the deal, as both sides need to match expectations. It is important to know that it is the job of an investor in China is essentially drinking tea or coffee every day. They share information in the investment circle, talk about projects, and think about opportunities.
Maybe the investor you meet is not the best match for you, but they may have a friend who is, or a company that they funded that can become your partner and help you to grow your company. Never close a door with investors after only the first meeting. The investment circle in China is still small and exclusive. If you treat others well or have a good project, everyone will know. If you treat others poorly or have a shit project, everyone will know.
The next point is a bit similar. Make your project known to everyone. Investors invest in less than 1% of the projects they read or meet day by day. Give them pressure to move forward with your project by demonstrating it’s worth.
The best way for this sort of pressure is that someone else in their circle talks about your project. If someone they know and trust mentions your project, their interest will increase exponentially. They will follow-up and will try to get the deal before others swoop in and steal the project away from them. When a few investors are looking at the same deal, the valuation tends to go up, therefore for them to get a better deal, they will move faster.
In few words: When trying to secure funding you should meet as many investors as you can and market / popularize your project as much as you can. No one will invest in something that no one else knows about.
Another reason to meet as many investors as you can is to get as much feedback as possible. Most investors when meeting with you will ask you or push you to try to find the problems of your project. They do this to evaluate your skill to be and think critically and assess the risk to invest in your startup. They do that to try to spot the current problems or future problems of your company.
You need to be ready and you need to have answers to their doubts. Therefore feedback is ESSENTIAL. Feedback will help you to review your business model and to prepare you in front of a next investor. Take note of the feedback, discuss about it with your team and do what you need to do to resolve this issue.
Last, but not least, you need to prepare for the next step. Once you have interest from investors and start to arrange a follow-up meeting, the investors will like to go deep into the details. At this point, to push them on timing, and to show your professionalism, it will be good to have a Due Diligence package ready.
Due Diligence should include approximately everything about your company. With this ready to send them on a moments notice, their risk assessment will go much faster and you may have the chance to get the money when you need it (as opposed to after you need it!). Preparing a good due diligence package will also make your life easier. At the end of the day we are all human, if investors can trust you, if they get enough information about you and your project, it will make their job easy and get you the funding your deserve!
There is much more to talk about investors, but for that I would suggest you just contact with us here at niHUB. If you have a project contact us to find investors that matches with your needs, your industry, and your expectation.