Shi Xiang, venture capital watchman for first-class projects

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Venture capital is destined to be a game for the few, especially in this year’s downturn. Many investment institutions have begun to adjust their direction and even contemplate quitting, but Oak Grove Ventures, a new fund, is bucking the trend.

Recently, Oak Grove Ventures announced the launch of a US$60 million venture capital fund, which will focus on early-stage project investments in cutting-edge technology fields such as Web 3.0, AI and biotechnology.

Similar to how many entrepreneurs start investing from angel investments, Oak Grove Ventures’ current focus is on investing and incubating start-up companies, but the investment mechanism is different from that of many venture capital institutions: there is no investment committee and a project review system is used instead; successful investment is Issue rewards to investment managers to encourage investment managers to follow investment projects; instead of simply linking resources, they teach startups how to build their own projects more professionally.

The exploration of these models seems to indicate that Oak Grove Ventures is using a brand-new way to enter the venture capital industry, regardless of the investment decision-making mechanism, investment incentive mechanism, or even post-investment management. This way of not following the traditional path of venture capital, but following the path of entrepreneurs designing products to find the optimal solution, seems a bit deviant, but if you understand the unique growth path of Shawn SHI, managing partner of Oak Grove Ventures , doesn’t seem so strange anymore.

When most children are still in junior high school, Shawn SHI has become a blogger and famous at a young age. At an age when everyone was competing for the college entrance examination, he ran away from home and started his entrepreneurial journey at the age of 18. In the next ten years, he tried content entrepreneurship opportunities such as Weibo and new media, and finally entered financial technology and established the payment company Alchemy Pay.

A frustrating detail is that he once encountered an unreliable partner and started a business, but was defrauded of all his money. When he invested his money in longer-term funds, he found that the performance of fund managers was unbearable, so he started investing. So he founded Oak Grove Ventures, which, like Hillhouse Capital, is also based on Named after a road in the United States (the street where its office is located).

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Without careful understanding, it would be difficult to associate Shawn SHI of the new media era with Shawn SHI of Oak Grove Ventures as the same person. It is hard to imagine that the founder wrote a book ten years ago to teach users the secrets of “Fission Growth” and ten years later discussed “Opportunities for Business Application Empowerment in the AIGC Era”.

From 2011 to 2023, in the past twelve years, his life and work have made many transitions:

In 2011, he started his own business at the age of 17. He made his first pot of gold by running a Weibo KOL organization (similar to the later MCN). Later, he entered the marketing center of 360 Company, one of the world’s largest Internet security companies, as the head of Internet marketing. Later, when he was an “intern”, he became the youngest department manager of 360; he left a big factory and started his own business again, becoming the co-founder of a start-up company. After various equity changes and office incidents, he decided to quit and travel around the world to relax; he began to travel around Europe, and finally arrived in Prague, Czech Republic. He rented the place where Kafka lived before his death, thinking about whether he could travel while traveling. Make money while writing works and become a writer. Soon, I discovered that I didn’t like this kind of life – it was the life I fantasized about when I was a child, but it wasn’t suitable for me now.

“There are no friends around me anymore, and my ability to work is also declining. I feel like I have lost my connection with the world.” Anxiety followed, so he decided to return to China and find a job again. At this time, ByteDance extended an olive branch to him. Seven ByteDance executives including Zhang Yiming, the founder of ByteDance, Chen Lin, who later became CEO of Toutiao, and Zhang Nan, who later became CEO of Douyin, chatted with him for more than 20 hours, hoping that he would work in Toutiao. He agreed at first, but ultimately did not go. “At that time, I had a vague feeling that there would be a new life.” He didn’t want to continue making content. The core reason was that content relied more on platforms, and he wanted to find areas with more long-term value.

He decided to pursue a career in the financial technology field. He went to ZhongAn Technology and served as the vice president of ZhongAn Technology. Later, its parent company ZhongAn Online was listed in Hong Kong, with a market value of more than HK$100 billion.

A year later, the desire to start a business sprouted again. This time, he once again embarked on the road of entrepreneurship with funds in hand. Unexpectedly, all his assets were defrauded and taken away by unreliable partners.

At this time, it is already 2018. Wandering on the edge of collapse, he met someone who was in a similar situation to him, and the two started a business together while comforting each other. Five years later, today Alchemy Pay has become a leading company in the payment field.

Shi Xiang recalled that 2018 was a watershed year. “Before 2018, I was pushed by fate. After 2018, it was my own active choice.”

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Alchemy Pay has achieved initial success in the global market. Shawn SHI invests money in long-term funds, hoping to obtain more long-term value.

He first became the LP of many institutions. According to the information currently disclosed by Oak Grove Ventures, it has invested in 8 funds including Nomad Capital, MetaWeb Ventures, and UpHonest Capital, with a total investment of more than US$15 million.

There are also troubles in being a LP only. “Many investment institutions are grassroots teams with varying levels of investment managers. Most of them lack industrial experience, or were once very powerful, but cannot keep up with the changes of the times, and do not even have a scientific project screening process.”

Shawn SHI found that his return rate as an individual angel was far better than that of many funds. “I know the industry well and can provide more help to entrepreneurs. I can also negotiate better prices, and I can also use more scientific systems and methods to find projects. Why don’t I do it myself?” He said Start trying to make institutional venture capital. Venture capital mainly consists of four key links: fundraising, investment, management and exit. Oak Grove Ventures was born out of a family office and currently invests with its own funds and does not require external fundraising. Eliminating the fundraising step, Shawn SHI and his partners now have to define the investment direction and explore the post-investment management mechanism.

Oak Grove Ventures first anchors early-stage investments in start-up companies, investing US$500,000-1 million per project, mainly in angel rounds, mainly in the three fields of Web 3.0, artificial intelligence and biotechnology.

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Oak Grove Ventures does not pursue the careful layout of the portfolio, but focuses more on the winning rate of the project. Of course, it also cares about the price.

“It’s better to invest in less than indiscriminately, and invest one by one to ensure the success rate of each project. Just invest in the right ones.” Shawn SHI emphasized that we should find the earliest, best-priced team, and the best project. How to find these projects and try to get rid of the many limitations that venture capital institutions are accustomed to, Oak Grove Ventures has designed different investment processes and mechanisms.

The important characteristic that distinguishes investment institutions from commercial companies is that they rely more on the decision-making of a certain soul person or core partner. The lone wolf culture also has outstanding performance. But the flip side of this trait is that when the partners are unstable, the investment institution is prone to collapse. Shawn SHI tries to use the system, rather than the ability of the partners, to ensure that the fund has sustained returns. In terms of investment decision-making, Oak Grove Ventures does not adopt an investment committee model, but a project review system.

In addition to Shawn SHI, Oak Grove Ventures partners include Libra’s former technical head Ethan W, Harmony’s former CTO RJ Lan, former Coinbase vice president Michael Li, former Lightspeed China associate partner Zac Pan and Sino Global’s former VP Sally W wait. These people are also important members of the IC. Three partners with technical backgrounds and the company’s CTO make up the technical IC. Shawn SHI and two partners formed a non-technical IC. Each project review is first scored by four IC members. If these four ICs disagree, look to the opinions of the last three ICs. A project will only have investment opportunities if it receives four votes in favor, and at least one of the votes must come from a technical IC.

Another level of effort is to use systems such as investment incentives and investment managers to follow investment to stimulate enthusiasm, and also try to avoid possible corruption such as investment managers enriching their own pockets. Oak Grove Ventures allocates 5% of the investment amount as bonus when investing in a single project. After the investment is confirmed, the bonus can be given to the investment manager in the form of cash, or you can choose to invest in the project, and there will be returns after the project exits. The project is subject to strict review and high incentives. As a result, investment managers are under greater pressure and need to be more cautious. If projects are rejected one after another, “he will also be very frightened. If the continuity is rejected, he may be fired.”

From the source side of the project, Oak Grove Ventures is also willing to reward friends who recommend the project and successfully invest. Relatively speaking, the projects introduced by friends also have some advantages: “I know his background and basic level, so I can make a very clear judgment; he also has a basic understanding of me, and the valuation is relatively flexible.”

Shawn SHI believes that investment institutions can establish an incubation system to systematically help startups from scratch. As an entrepreneur, if you have previous successful entrepreneurial experience, you can help in terms of overall strategy sorting, product design, marketing, brand building and financing. There are even some projects that have good directions but do not do well in the market. Oak Grove Ventures will help them get started and make a set of SOPs to give them a ride.

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To some extent, these efforts by Shawn Shi and his Oak Grove Ventures partners to improve investment success rates are all about easing the pain of investing.

In the self-awareness of Shawn SHI, how much pain does an investor have: It is very difficult not to suffer so much when suffering investment losses; during the investment process, you will feel pain when you find that the entrepreneur is not as good as you, and you find that person is far behind. Even if you are taller than you, it will be painful if you ignore you; after the project is invested, there is a limit to what you can do, and it is also painful to have to wait for growth.

“Investing is not a very happy thing.” He felt more pain than pleasure.

Before he experienced the pain of investing, his distress came from not being able to stick to something for a long time (even if it was not his intention). This frustration of not being able to stick to the end also ran through his many entrepreneurial leaps.

By 2018, “persistence” has become Shawn SHI’s most important goal.

Although he has made many achievements in the past that are very shining in the eyes of outsiders, Shawn SHI defines himself as “accomplishing nothing” because in the past, things he wanted to persist in would always fail due to various reasons. Forced to terminate. “Maybe this can only be said to be fate,” Shawn SHI occasionally laughs at himself.

“Whether this is a good or bad start-up, we must stick to it.” “If you can’t stick to it after joining this time, then you might as well just die.” Shawn SHI recalled that he was working at Alchemy Pay. At that time, the three years from 2018 to 2021 were very difficult. “No one recognized me, I didn’t raise a penny, and in the most difficult time, I had to borrow money from friends. It was a test of human nature.”

There is a famous saying in “Total War” that inspired him, “A war ends when one party loses the will to fight.”

Later, whenever he felt that he couldn’t hold on, he told himself not to give up the will to fight. This also led to Alchemy Pay’s subsequent success in the global market. “After five years of persistence, Alchemy Pay’s success in the international market is not only in a secular sense, but also in a psychological sense, which finally makes me a person who can persist to the end.” Shawn SHI said.

“Web3 brings people closer to each other. When we go to unfamiliar countries such as Argentina and Turkey and wear Alchemy Pay cultural shirts to participate in related activities, people often say hello to our team members, which makes people feel very happy. hapiness.”

In investing, such happy moments occasionally shine through. “For example, if an entrepreneur does better than you thought, or you may not be very optimistic about it at first, but then you will be very happy to witness the other person’s growth.”

Oak Grove Ventures invested in SpaceX and Neurallink, two companies owned by Tesla CEO Musk. The logic of investing in these two companies is more like paying for a dream. “Buying shares in Musk’s company feels like supporting a human cause.”

Shawn SHI feels that it is difficult for him to be like Musk, but he can help some people in need.

In the past few years, he has helped more than 50 outstanding poor students, funded laboratories studying human health, and helped college students who could not go home to overcome difficulties during the epidemic. He also plans to donate to a project called “Dream Youth” to provide gap year funding for young people who have just graduated, so that young people with ideas can try to realize their dreams first instead of looking for a job as soon as they graduate. “Essentially, I hope I can do something that comforts me.”

Now, Shawn SHI’s way of relieving pain is to “find the next person worth waiting for, and keep looking.”

To a certain extent, investing is a moment of gathering strength for Shawn SHI. He hopes that through investment, he will find something worth sticking to for a long time in the future. He’s more like a watchman waiting for a top program. In other words, waiting for the entrepreneurial direction of a first-class project that suits you. “I really want to find a bigger opportunity.”

Shawn SHI hopes to be a super angel, capture some projects earlier, or find a group of people with entrepreneurial ability and willingness to start a business in advance. Just like what many investment institutions have done before, they lock in executives of some well-known projects in advance. Once these people leave to start a business, they can be found and invested.

“Our goal is to become the first investor and entrepreneurial partner of entrepreneurs. If one day I can find an entrepreneur and I find that his project is very good and worthy of my investment in the next ten years, then I would buy it without hesitation, just like Musk bought Tesla.”

“I’m not old now, but I still have dreams, and I believe that I can do better, and there must be someone worth waiting for.” Shawn SHI still retains the idealistic romance of a teenager: “Maybe a 40-year-old At that time, if I experience a bigger entrepreneurship in the future and become a more powerful person, I may pursue a sense of altruism at that time.”

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