China VC ready to make big moves in Southeast Asia

A Chinese venture capital firm that has invested in some of China’s hottest startups in the past few years is now looking to place big bets across Southeast Asia.

Terrance Lok has been tasked with leading ZWC Partners’ expansion into the new region, where he says the investment team hopes to “take more of a helpful approach” by assisting with Southeast Asian startups’ business development alongside the cash invested.

Lok, who’s a Co-founder and Partner of the VC in Southeast Asia, sees ZWC’s Southeast Asia strategy as a lot like the one employed in its native China – focusing on disruptive consumer and enterprise tech businesses that “can be a market leaders with high growth and clear competitive moats,” Lok tells Tech in Asia.

Patrick Cheung (left) and Terrance Lok / Photo credit: ZWC Partners

With US$1 billion in assets under management, ZWC has not set a spending limit on its fledgling Southeast Asia portfolio, but the plan is to invest at least US$300 million in the region over the next three years. Around US$100 million has already been splashed out.

Diving in

Tending toward early-to-mid stage investments, its China portfolio includes big local names such as Mobike, online classroom VIPKid, the Tinder-esque TanTan, and Tesla-challenger Xpeng.

“One of our main approaches is to adopt what we learned from China and from the US,” says Lok of the VC’s Southeast Asia vision. ” We favor business model and technological innovations that have been proven in other markets but with localization adjustments.”

And there’s one other factor: “The speed to adoption – is the timing proper? Ample macro and micro studies on relevance and timing are important in localizing certain businesses.” says Lok, as some Southeast Asian markets might not yet be ready for something that has proven popular in China or the West.

On top of that, Lok says the “quality” of the founding team is a big consideration.

A relative lack of technical talent for Southeast Asia’s booming tech industry is one stumbling block that Lok sees. That’s why the VC is so keen to “connect the dots, connect the teams” where portfolio companies could collaborate between Southeast Asia and China.

That’s part of a venture builder program, dubbed Zynergy, that ZWC has built. It’s a modified version of YC that takes more of a concentrated and hands-on approach, says Lok, in order to be helpful in practical ways other than cold, hard cash.

Getting niche

The VC won’t shy away from niche areas that don’t fit the consumer mold, Lok points out. That’s shown by its investment in Indonesia’s Target Media, which specializes in the kind of advertising screens you watch absent-mindedly as you wait for the elevator.

The Target Media funding also shows how ZWC – short for Zhongwei Capital – aims to tap into the skills of its VC partners, who were entrepreneurs and businesspeople across a wide variety of industries before making the VC leap. In this case, the Indonesian advertising startup can benefit from the expertise of ZWC head honcho and managing and founding partner Patrick Cheung, who made his fortune with an outdoor ads business that he merged with China’s giant Focus Media in 2007.

Cheung tells Tech in Asia that eventually led to him forming ZWC with a group of friends he describes as successful entrepreneurs. ZWC Partners adopts a diversified LP structure, with investors from well-known fund of funds, family offices, leading corporations across sectors and established business leaders such as Jason Jiang of Focus Media.

New horizons