What mistakes would you make with $2 million? 20/20 with Anna Fang

Four years time. What will the world look like in 20/20? We’re asking people in our network just that, for our new interview series 20/20.

Anna Fang sits at the nexus of arguably one of the most important areas of growth on the planet. She’s CEO of ZhenFund. Founded in 2006, the firm is an early-stage seed fund that invests primarily in startups based in mainland China.  

Since joining ZhenFund in 2011, Anna has managed over 100 seed stage investments in the TMT and education sectors.

So when Anna looks into her crystal ball, it is probably worth paying attention. But first she is looking to the past and the mistakes that she has made along the way. In an effort avoid future mistakes, ZhenFund would like to pay. Big.

“Just this morning one of our founding partners said I want to give each of you $2 million just to lose because that’s the only way you are going to learn. It’s really when you make a mistake investing that you really learn,” says Anna.

Forget aspirations – go with passion

Having come to the ZhenFund after spells with J.P. Morgan in New York and GE China, Anna says that she initially made the mistake of not thinking hard enough about what she really wanted to do.

“If I went back now to the early 2000s, I think I would try to discover my passion and what I’m good at doing. I would look deeper into myself in terms of building a career rather than going for something that seems aspirational,” she says.

She says that the best investors are former entrepreneurs and carries a slight regret of not getting involved in business earlier herself. As an early-stage investor, she has come to understand that it has to be about the founder and not the product.

“There have been times when we thought the business model was excellent, but the founder really wasn’t there. If the founder is not great you really shouldn’t invest. In the past, I think we have made mistakes by investing because we have liked the product. Now we focus on the capabilities of the founder,” she says.

The Chinese app showing Facebook the way

Anna’s current focus is on the world of opportunity in China. It’s time for the rest of the world to take notice. CNBC reckons that Chinese entrepreneurs are set to dominate; Forbes says that Chinese tech has finally arrived.

“There is so much going on here and it’s going to get more global, we are really entering the global economy,” says Anna.

Messaging app WeChat is taking over the country and its growth looks set to continue. WeChat now has 549 million monthly active users (MAUs) – Facebook Messenger, by comparison, has 600 million MAUs around the world, but isn’t available in China.

WeChat is fast catching up with Facebook’s number of monthly users

WeChat now shows where competitors such as Facebook Messenger may head. It also shows how to successfully execute a service that’s both a platform and mobile portal.

“We are watching the next generation of media innovation on the WeChat platform as a potential new disrupter in that space,” says Anna.

ZhenFund currently manages a portfolio of 50 companies. Of all the companies in this portfolio, Anna’s one to watch is Miyabaobei.

It’s considered the leading baby products, e-commerce vertical in China. Anna is trusting her natural instincts with this one.

“As a mother, I know how many products I have to buy for babies and toddlers, from nappies to toys. In China we have the problem of trust and access to the best global products. Miyabaobei is a platform of all the best brands, with trusted global sourcing. It’s the only place I buy for my baby,” she says.

The issue of access to foreign brands also influences her excitement for Xiaohongshu, an overseas shopping tip app that has raised $17.5 million. She says that the Chinese’s continuing exposure to overseas brands will only see the site grow.

“These are the brands that people want to buy: foreign cosmetics brands,” she says.

She recognises however the ZhenFund investment that has the potential to be the most transformative by 2020, is an easy choice. Hyperloop.

Elon Musk calls the Hyperloop “the fifth mode of transportation after road, rail, water and air. It will be as fast as a plane, cheaper than a train and continuously available in any weather while emitting no carbon from the tailpipe.

Imagine a world where people could make it from Los Angeles to Las Vegas in 20 minutes. Where cities would become metro stops and borders would evaporate.

“I think by 2020 we’ll see a version of Hyperloop taking place. I don’t think it will be everywhere but we will start to see the early resemblance of it. It will totally transform transportation in an almost science-fiction way,” says Anna.

She just might have spent that $2 million ZhenFund ‘mistake money’ by then.

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