Venture capital is inevitably a game for a few, especially in this year’s downward trend. As many investment institutions began to adjust their directions or even consider withdrawing, Oak Grove Ventures, a new fund, is forging ahead against the trend.
Recently, Oak Grove Ventures announced the launch of a $60 million venture capital fund, focusing on early-stage investments in cutting-edge technological areas such as Web 3.0, AI, and biotechnology.
Like many entrepreneurs who started with angel investments, Oak Grove Ventures’ current focus is on investing and incubating startups. However, its investment mechanism differs from many venture capital institutions: there’s no investment committee, but a project review system. Successful investments reward investment managers, encouraging them to co-invest in projects. They don’t merely connect resources; they guide startups on how to professionally develop their projects.
This innovative approach, whether in terms of investment decision-making mechanisms, incentive mechanisms, or post-investment management, showcases Oak Grove Ventures’ fresh entry into the venture capital industry. This non-traditional approach, akin to how entrepreneurs design products, might seem unconventional. However, if one understands the unique growth trajectory of Shawn SHI, managing partner of Oak Grove Ventures, it’s not surprising.
When most kids were still in junior high, Shawn SHI had already become a famous blogger. While his peers were busy preparing for college entrance exams, he embarked on an entrepreneurial journey at 18. Over the next decade, he explored opportunities in microblogs, new media, and eventually ventured into fintech, founding the cryptocurrency payment company, Alchemy Pay.
A disheartening detail is that he once partnered with unreliable associates who scammed him out of all his money. When he redirected his funds into long-term investment funds, he was dismayed by the fund managers’ performances. So, he ventured into investing on his own, leading to the inception of Oak Grove Ventures, named after a street in the U.S., just like Hillhouse Capital.
Without close examination, it’s challenging to associate the Shawn SHI of the new media era with the Shawn SHI of Oak Grove Ventures. It’s hard to believe that this founder, who a decade ago wrote books teaching users the secrets of “Fission Growth”, would a decade later discuss “Opportunities Empowered by AIGC Era Business Applications”.
From 2011 to 2023, over these twelve years, his life and career underwent several transitions:
In 2011, at 17, he started his entrepreneurial journey, earning his first fortune from a KOL agency for Weibo (a Chinese social media platform similar to Twitter) – a concept akin to today’s MCN, which was non-existent back then.
He later joined 360 Company (one of the world’s largest internet security companies) as the head of internet marketing and soon became the youngest department manager at a time when he was merely an “intern” in age.
Leaving the corporate world, he co-founded a startup. After experiencing equity changes and office politics, he decided to leave and travel the world.
He began his travels in Europe, eventually settling in Prague, where he rented the place once lived in by Kafka. Hoping to earn money by writing while traveling, he soon realized this life was not for him.
“I lost connection with my friends and felt disconnected from the world,” he recalls. This led to his return to China to seek employment.
ByteDance then extended an offer. Zhang Yiming, founder of ByteDance, along with the CEOs of Toutiao (ByteDance’s flagship product before TikTok) and Douyin (TikTok China), spoke with him for over 20 hours over two days, hoping he would join Toutiao.
He initially agreed but eventually declined.
“I had a vague feeling that a new chapter in life awaited,” he said, expressing his desire to seek areas with long-term value rather than content that heavily relies on platforms.
He ventured into fintech by joining ZhongAn Tech as vice-president. Later, its parent company, ZhongAn Online, went public in Hong Kong, with its market value exceeding HKD 100 billion at one point.
A year later, the entrepreneurial itch resurfaced. He set off once more with funding, only to be swindled by unreliable partners.
By 2018, on the brink of despair, he met another individual with a similar tragic backstory. The two consoled each other and embarked on a new entrepreneurial journey. Five years later, Alchemy Pay has become a leading name in the cryptocurrency payment sector.
Reflecting on 2018, Shawn recalls it as a watershed moment. “Before 2018, I felt I was being pushed by fate. After 2018, every step was a conscious choice.”
With Alchemy Pay achieving preliminary success globally, Shawn SHI invested in long-term funds hoping to derive more lasting value.
He became an LP (Limited Partner) for many institutions. As per the information disclosed by Oak Grove Ventures, investments have been made in Nomad Capital, MetaWeb Ventures, UpHonest Capital, and five other funds, with a total investment exceeding $15 million.
Being just an LP had its frustrations. “Many investment institutions are makeshift. The quality of investment managers is inconsistent, most lack industry experience, or they may have been great once but can’t keep up with the times. Some even lack a scientific project selection process,” Shawn observed.
He found that his personal angel investment returns far exceeded many funds. “I understand the industry and can offer startups more support. I can negotiate better prices and have a more systematic approach to project selection. Why shouldn’t I do it myself?”
This prompted his foray into institutional venture capital.
Venture capital revolves around four key phases: fundraising, investing, managing, and exiting. Originating from a family office, Oak Grove Ventures invests its capital, eliminating the need for external fundraising. This leaves Shawn SHI and his partners with the tasks of defining investment directions and exploring post-investment management mechanisms.
Oak Grove Ventures primarily targets early-stage startups, investing $500,000 to $1 million per project, mainly in angel rounds and focusing on Web 3.0, AI, and biotechnology.
Oak Grove Ventures doesn’t prioritize a meticulously curated portfolio. Instead, they focus on the success rate of projects, always mindful of the price.
“We’d rather miss out than settle. We aim for a high success rate for each project. Investing in just a few right ones is sufficient,” Shawn emphasizes. They seek the earliest opportunities with the best teams and the most promising projects.
To identify these projects and break free from the typical constraints of venture capital institutions, Oak Grove Ventures has designed unique investment processes and mechanisms.
One distinguishing feature of investment institutions compared to commercial companies is their reliance on a central figure or core partner for decision-making. Such “lone wolf” successes are apparent, but the downside is that if a partner becomes unstable, the institution can collapse.
Shawn SHI aims to ensure consistent returns for the fund through systematic processes, rather than relying solely on the capabilities of a partner.
In its investment decisions, Oak Grove Ventures has eschewed the traditional investment committee model in favor of a project review system.
Besides Shawn SHI, Oak Grove Ventures’ partners include Libra’s former tech lead, Ethan W, Harmony’s former CTO, RJ Lan, Coinbase’s former vice president, Michael Li, Lightspeed China’s former assistant partner, Zac Pan, and Sino Global’s former VP, Sally W. These individuals also play crucial roles in the IC (Investment Committee). Three partners with tech backgrounds, along with the company’s CTO, form the tech IC. Shawn SHI and two partners comprise the non-tech IC.
Every project review starts with scoring by four IC members. If these four disagree, the opinions of the remaining three IC members are considered. A project needs four approval votes to proceed, with at least one vote coming from the tech IC.
Another initiative involves motivating investment managers through incentives and co-investments to prevent possible corruption.
Oak Grove Ventures allocates 5% of the investment amount in a particular project as a bonus. Once the investment is confirmed, the bonus can be given to the investment manager either in cash or as an investment in the project, providing returns once the project exits.
With strict project reviews and high incentives, the pressure on investment managers increases, requiring caution. Continuous rejections can lead to anxiety and, if persistent, can result in termination.
Regarding project sources, Oak Grove Ventures also rewards friends who recommend and successfully invest in projects. Referrals have certain advantages: “You know their background, have a clear judgment of their basic capabilities, and they have a basic understanding of you, allowing for flexible valuations.”
Shawn believes that investment institutions can establish an incubation system to systematically assist startups from the get-go. As an entrepreneur with previous successes, he can provide assistance in strategy planning, product design, marketing, branding, fundraising, and more. For projects with potential but struggling in the market, Oak Grove Ventures offers hands-on support, crafting SOPs to guide them.
To some extent, Shawn SHI and his Oak Grove Ventures partners’ efforts to enhance the investment success rate are fundamentally geared towards alleviating the pain that comes with investing.
In Shawn’s introspection, the pain of investors is multifaceted: dealing with investment losses can be excruciating; realizing that a founder is underperforming or outperforming you can be tough; and the limited actions post-investment, waiting for growth, can also be agonizing.
“Investing isn’t a very joyful endeavor,” he reflects, feeling more pain than pleasure.
Before grappling with the pains of investing, his anguish stemmed from his inability to persistently commit to something (even if unintentionally). This frustration is evident in his multiple entrepreneurial ventures.
By 2018, “perseverance” became Shawn’s ultimate goal.
Although he achieved impressive feats in the past, Shawn’s self-assessment is that he’s “accomplished nothing” since the ventures he wished to persist with were always prematurely terminated for various reasons. Occasionally, he’d humorously attribute this to “fate’s design”.
“This time around, regardless of the outcome, I must persist,” he declared. Recalling his time at Alchemy Pay from 2018 to 2021, Shawn describes it as a challenging period, “No one acknowledged us, we didn’t raise a penny, and during the toughest times, I had to borrow from friends. It was a true test of character.”
A quote from “Total War” inspired him: “War ends when one side loses the will to fight.”
Later, whenever he felt like giving up, he reminded himself not to lose the fighting spirit. This mentality contributed to Alchemy Pay’s global success. “After persisting for five years, Alchemy Pay’s international success, in my eyes, is more than just a worldly achievement. Psychologically, it made me someone who can truly persevere,” Shawn explains.
“Web3 brings people closer. When we go to unfamiliar countries like Argentina and Turkey, wearing Alchemy Pay shirts at related events, people often greet our team. It’s a joyful feeling.”
In investments, such moments of joy occasionally shine through, like witnessing an entrepreneur surpass expectations or observing their growth.
Oak Grove Ventures invested in two of Tesla CEO Elon Musk’s companies, SpaceX and Neuralink. The logic behind these investments was more about supporting dreams than expecting returns. “Owning shares in Musk’s companies feels like supporting a greater human endeavor,” Shawn muses.
He may not be able to emulate Musk, but he can still assist those in need.
Over the past few years, he has supported over 50 financially disadvantaged outstanding students, funded labs researching human health, assisted college students stranded during the pandemic, and plans to donate to a project named “Dreamer Boys.” This initiative offers funding for recent graduates during their Gap Year, enabling them to chase their dreams before jumping into jobs. “Essentially, I wish to do things that bring me solace.”
Currently, Shawn’s method of alleviating pain is “to find the next person worth waiting for and to keep searching.”
To some extent, for Shawn, investing serves as a moment to accumulate strength. Through investments, he hopes to discover something worth dedicating himself to in the long run. He’s more of a guardian waiting for top-tier projects or entrepreneurial directions suitable for him. “I’m keen on finding a bigger opportunity.”
Shawn aspires to be a super angel, capturing projects earlier or identifying groups of talented individuals with entrepreneurial ambitions. Like many investment institutions before, he hopes to lock in top executives of renowned projects so that when they leave to start their ventures, he can readily invest in them.
“Our goal is to become the first investor and entrepreneurial partner for founders. If one day I discover a startup with an outstanding project worth dedicating the next decade to, I wouldn’t hesitate to buy it, much like Musk buying Tesla.”
Though still young with dreams intact, Shawn believes he can do better and that there’s someone worth waiting for out there. Retaining his youthful idealism, he says, “Perhaps at 40, after experiencing an even grander entrepreneurial journey, I might emerge as a more formidable individual, then maybe I’ll pursue altruism.”
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