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Their main differentiator is that they are China-first. China doesn't want to miss the boat on any new innovation, and their investment approach is to invest i

by gizmo 9y ago

Their main differentiator is that they are China-first. China doesn't want to miss the boat on any new innovation, and their investment approach is to invest in literally everything, to maximize the likelihood of backing a winner. Tencent bought 5% of Tesla just months ago.

Waterluvian 9y ago
Hypothetically say they have unlimited investment dollars. Can it do harm to invest in everyone?
- jazzkingrt 9y ago
  These are private market investments, so nobody is crunching any numbers for them and producing a valuation, they pay for this out of pocket. A small VC would lose with an "invest everywhere" strategy, each new investment grows sunken cost of valuating and negotiating an investment. But there is a force in the other direction: each investment can only bear so much new capital without losing marginal value. So after a while you have to start to look for new investments to spread your capital around. There is probably a ton of money behind these chinese investments, and a relatively small total market for venture capital, so they end up making a lot of investments.
- nostrademons 9y ago
  If you pump unlimited investment dollars into unlimited investments, what tends to happen is that your investees and their employees/suppliers walk off with a lot of money and don't produce any goods or services that result in a sustainable competitive advantage. This is basically the definition of a bubble, and has happened over and over again, from Bitcoin to mobile to subprime mortgages to Web 2.0 to .com to AI to savings & loans. You need some sort of financial constraint - usually the threat of bankruptcy - to create an incentive to invest efficiently, where you make choices about where to allocate resources such that your firm is more competitive than everyone else. Spreading a small amount of money across a large number of investments within a sector usually works out pretty well, though. This is a diversified portfolio, and basically it means you're betting that someone in the sector will succeed without taking a position on who that will be. If you know that the market exists and the technology is attainable, it makes a lot of sense.
jaclaz 9y ago
>Their main differentiator is that they are China-first. And maybe, just maybe, this is connected to: https://jalopnik.com/china-forces-all-cars-in-restive-region-to-have-gps-tra-1792678809 https://jalopnik.com/china-forces-all-cars-in-restive-region... and to the concept that an autonomous vehicle can be used as a weapon and as such it needs to eb controlled/controllable by a "local" trusted company: https://www.ft.com/content/a8dbd4e0-f807-11e7-88f7-5465a6ce1a00 https://www.ft.com/content/a8dbd4e0-f807-11e7-88f7-5465a6ce1...

by gizmo 9y ago

Waterluvian 9y ago

Hypothetically say they have unlimited investment dollars. Can it do harm to invest in everyone?

jazzkingrt 9y ago
These are private market investments, so nobody is crunching any numbers for them and producing a valuation, they pay for this out of pocket. A small VC would lose with an "invest everywhere" strategy, each new investment grows sunken cost of valuating and negotiating an investment. But there is a force in the other direction: each investment can only bear so much new capital without losing marginal value. So after a while you have to start to look for new investments to spread your capital around. There is probably a ton of money behind these chinese investments, and a relatively small total market for venture capital, so they end up making a lot of investments.
nostrademons 9y ago
If you pump unlimited investment dollars into unlimited investments, what tends to happen is that your investees and their employees/suppliers walk off with a lot of money and don't produce any goods or services that result in a sustainable competitive advantage. This is basically the definition of a bubble, and has happened over and over again, from Bitcoin to mobile to subprime mortgages to Web 2.0 to .com to AI to savings & loans. You need some sort of financial constraint - usually the threat of bankruptcy - to create an incentive to invest efficiently, where you make choices about where to allocate resources such that your firm is more competitive than everyone else. Spreading a small amount of money across a large number of investments within a sector usually works out pretty well, though. This is a diversified portfolio, and basically it means you're betting that someone in the sector will succeed without taking a position on who that will be. If you know that the market exists and the technology is attainable, it makes a lot of sense.

jaclaz 9y ago

>Their main differentiator is that they are China-first. And maybe, just maybe, this is connected to: https://jalopnik.com/china-forces-all-cars-in-restive-region-to-have-gps-tra-1792678809 https://jalopnik.com/china-forces-all-cars-in-restive-region... and to the concept that an autonomous vehicle can be used as a weapon and as such it needs to eb controlled/controllable by a "local" trusted company: https://www.ft.com/content/a8dbd4e0-f807-11e7-88f7-5465a6ce1a00 https://www.ft.com/content/a8dbd4e0-f807-11e7-88f7-5465a6ce1...