Shanghai-based venture capitalist JP Gan has chosen enough winning companies over the years to reappear on the Forbes Midas list, at most recently in 2022. Previous investments come from Chinese online company TripArraycom and video-sharing platform Bilibili.
After his early positions at Carlyle and Qiming Venture Partners, Gan left Qiming in 2019 to start his own boutique, INCE Capital. INCE has supported more than 30 corporations to date, adding the unicorns KK Group, Yuanxin Technology, and EEO Group. Gan and INCE Capital raised $700 million in new capital for investments in China in the second part of 2021 from foreign investors. Since then, the country’s expansion has lagged behind the last decade.
How does Gan assess investment opportunities in China today?Falling prices related to slowing economic growth, the market’s weight in the world’s second-largest economy and the global competitiveness of brands are still opening avenues for investment, he said in a recent interview.
“After all, China is still a country of 1. 4 billion people with a GDP per capita of $10,000. It’s the second largest economy in the world and people still have a lot of money,” Gan said. in fact, higher in recent years. With some encouragement and an increase in confidence, other people will consume and consume. I look forward to seeing the next group of large corporate clients in the coming years.
One industry with a future is the puppy industry, Gan said. “The puppy industry is developing very rapidly in China, and many other young people are choosing to keep puppies instead of boys,” he said. One of the corporations that INCE has invested in is Petkit, a manufacturer of smart puppy machines, such as automatic feeders. “It’s doing well in China, in the overseas market and on Amazon,” said Gan, who has an MBA from the University of Chicago Business School. thriving pet market,” UBS predicted last year that the increase in the number of puppy owners would contribute to sales expansion of about 28% annually between 2023 and 2025, a rate “more than triple that of its global peers. “Qin Hua, chairman and CEO of puppy food company Gambol Pet Group, has become a billionaire after the company was listed on the Shenzhen Stock Exchange in August 2023.
Like most investors, INCE also spends a lot of time on AI. Among the Chinese companies with excellent language models, he invested in Baichuan, founded by the former CEO of the Chinese search engine Sogo, Wang Xiaochuan. “In the next five to ten years, every company will want to adopt AI technology. If they don’t, they will lose their position in the market and become obsolete,” Gan said.
Although INCE’s mandate is to invest in China and Chinese marketers, it sees more and more of the country’s marketers looking to expand overseas. Among his biggest hits, Gan said, is Temu, who announced this year’s Super Bowl. “We see a lot of opportunities in this area,” he said.
In addition to Petkit, INCE is part of this organization of companies investing in iMile, a last-mile e-commerce delivery company in the Middle East. “They are entering South and Central American markets such as Mexico and Brazil. “We could become one of the world’s leading last-mile delivery corporations,” he said. INCE has also invested in moodytiger, a luluemon-like sportswear for youth that is opening outlets in Singapore, Thailand and elsewhere in Southeast Asia.
Japan is notably absent from the list of countries for which Gan has a positive result. For venture capitalists, he said via WeChat from Japan, the country has “too small a market, no expansion and a declining population. “
Looking back on his career, Gan, 53, recalls: “I got into the business about 23 years ago, when the first dot-com bubble burst. I don’t forget a meeting with the Carlyle Group in March 2000, when Nasdaq was at an all-time high. Then it collapsed, but that gave us a lot of opportunities and it’s gone up tremendously since then. Many primary Chinese corporations were established in this early period, in addition to Ctrip, Baidu, and Tencent.
“Since the arrival of the Covid pandemic,” he continues, “the market has definitely changed a lot. The overall economy has slowed, geopolitics has also had a big impact on the venture capital industry, and entrepreneurship has declined. “Now, this is probably the worst era I’ve been through in my 23-year career in the venture capital industry.
“But having said that, opportunities will arise. Costs have decreased: human resource costs, visitor acquisition costs, and marketing costs. Right now, companies have a wonderful opportunity to improve their products and hire competent people. I hope we get through this phase of the (economic) cycle.
JP Gan on the cover of Forbes China in 2019.
—with Julie Lu
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