Gary Rieschel: I’m Confident Qiming Will Be A Top Quartile Performer In China

In this episode of China Money Network, founder of Qiming Venture Partners, Gary Rieschel, shares his thoughts on the Chinese economy, the technological evolutions of the Chinese Internet sector and why he is confident that Qiming will be well within the top quartile performers among China's venture capital firms, if he is not being too conservative. Founded in 2006, Qiming Venture is one of the most successful venture capital firms in China, having invested in and successfully listed companies including Jiayuan, ChinaCache and Touchmedia. Qiming recently closed its second RMB fund, raising RMB700 million in merely four months. Gary Rieschel talked to China Money Network in Shanghai. Listen to the full-interview in the audio podcast, watch the shortened video version, or read a transcript summary. INTERVIEW EXCERPT: Q: Let's start with the macro economy. It looks certain that the Chinese economy will grow at the slowest pace in more than ten years. How has your businesses been impacted? A: The Chinese economy this year will grow slower than in the past, but I don't think that's a great surprise. I think it's a natural evolution as China starts to go to (an economic model) more of a consumption driven, more higher valued-added products in the economy. There is some hesitancy by foreign investors, so you have seen a slight drop in foreign direct investment this year. But I think this is all relatively healthy as China starts to go through a transition. I think what's happening in our business is that you have to be more selective. You are not going to be bailed out of your mistakes by the fact that the market is growing very quickly. In the past for Qiming, we've made approximately 70 investments during the last six and half years. We had less than 10% of the companies fail, which is extraordinarily low for the kind of investing that we do compared to what would have been in the U.S. or other markets. So as our (venture capital) market matures, we expect more failures among early stage companies. In the U.S., somewhere from a third or half of the start-ups fail, but we have been nowhere close to that. This means we have to pick better CEOs, look for more complete management teams, and have a better idea of how technology will evolve. So for example, in healthcare and clean tech, we align ourselves more with government policy initiatives, such as the twelfth five-year plan as the leadership decides how they want the sector to develop. Gary Rieschel is founder of Qiming Venture Partners, a $1 billion-under-management venture capital firm started in 2006. Previously, Rieschel was the founder or lead investor in SOFTBANK Venture Capital, Mobius Venture Capital, SAIF Partners (China) and Ignition Partners. Earlier in his career, Rieschel held senior executive positions in Cisco Systems, Sequent Computer Systems and Intel.