Stanford graduate and serial entrepreneur Lu Zhang is the founding partner of Fusion Fund (a.k.a NewGen Capital), which specializes in early stage healthcare and technology investments. On Forbes’ 30 Under 30 list, she is one of the top young tech investors in venture capital.
Leaders League. Among all the possibilities AI gives rise to, which one do you think has the most potential to be commercialized in the near future?
Lu Zhang. In terms of AI assistance, for example the software that can help people streamline their working lives, I would contend that the technology is not there at the moment. It’s likely that in the near future AI will be sufficiently advanced for our needs, but for now I still prefer to have a human assistance.
We invested in a couple of voice-recognition software companies and we observed that the technology is more advanced than before when it could only recognize the meaning of words. Now, background noise, accent, different types of grammar, and Speech patterns of native and non-native language speakers are taken into account. In terms of application, there’s a huge potential market for VRS after the keyboard and the tactile screen, I believe that voice recognition will be the next interface for users to interact with machines.
Our company is more focused on areas that apply new technology into the industry, enterprise and healthcare application, areas where the commercialization and market validation of the technology is done, and have the potential to make a big impact in the industry in the near future.
“We are only interested in emerging technologies with promising market data”
Fusion Fund does things its own way. What are the specific approaches taken in evaluating people and trends ahead of making investments?
When it comes to companies, we are only interested in emerging technologies with promising market data. We value market results and never go for technology that not ready to go to market and succeed. Among our portfolio companies one is Chat Sports. The founder came to pitch us in a t-shirt and jeans. A charming man in his thirties, he used to be an athlete in college and Chat Sport is his first startup. Now it has a 10-million MAU (month active user) and $6 million in revenue. This company matches our portfolio perfectly for its tech-driven features, huge market potential, fast growth rate and solid market result data.
Regarding founders, serial entrepreneurs are always the focus of attention in Silicon Valley. They successfully set up and then sell on their company. They know how to take steps and move forward patiently to eventually accomplish something big. Our fund even set up our own Serial Entrepreneurs Network to help evaluate companies.
For trends, capital is prone to chase a company with a stronger technology barrier and more mature market application data. Because companies like these are equipped with more competitive core products, they are better equipped to deal with and recover from setbacks.
What is the ideal relationship between VC and entrepreneurs? How to build it up?
At Fusion Fund, we aim to be the go-to person for founders. We neither babysit nor micro-manage companies because we believe founders themselves should be the captains of their ships, should be the ones in charge making decisions. We prefer founders who have clear clues or solutions to their problems and then come to us for resources, which we are more than happy to provide.
I have written a 200-page guide based on my own entrepreneurship experience. This guide is full of practical advice like how to register a company without consulting a lawyer, how to do your own accounting, how to set the shareholding, apply for patents, and avoid pitfalls in investment agreements, etc. We hope it can help founders save time on the admin stuff so they can focus on product development and market strategy.
Our team is very honest with entrepreneurs. We don’t make too many promises and we value our credit. Therefore, our action matches our words and that has earned us tremendous respect, in fact, even those we reject refer their friends to us.
What in particularly needs to happen to improve gender diversity in the VC industry？
These days, VC has witnessed a growing number of women enrolling in this industry, so has tech industry and entrepreneurship in general. This is a process of awakening. It is by showing the industry what they can do that the prejudice will be removed. Innovation needs diversity, it is important to keep the ecosystem diversified with all different background to motivate the innovation to happen.
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