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Cracking The Boys Club: Jenny Lee On What It Means To Be The Top Woman In Venture Capital

This article is more than 9 years old.

Of the 100 members on this year's Midas List, you can count all the women on one hand. Though it's a slight improvement from 2014 when only four female partners made FORBES' ranking of the world's top venture capitalists, a male-dominated industry should not thump its chest at only having five female members crack 2015's club.

As a certain trial involving one of Silicon Valley's most storied venture firms exposes just how backward the technology industry can be, there's at least some hope. That comes in the form of GGV Capital's Jenny Lee, who, at No. 10 on the 2015 Midas List, has attained the highest place ever for a female VC in the 14 years that we have tracked venture investment performance.

Based in Shanghai, the 42-year-old Cornell and Kellogg School of Management grad has carved out a sizable part of the Chinese venture landscape for herself. Since establishing GGV's Shanghai office in 2005, she's gone on to lead some of the firm's most notable deals including investments in smartphone manufacturer Xiaomi and social platform YY , which went public on the Nasdaq in 2012.

In discussing her recent success, Lee, a former jet engineer, argues that the Chinese tech community is much more open to female venture capitalists than its U.S. equivalent. While she still sees some barriers, she feels that much of her success hasn't come in spite of her gender, but rather because of it. Being a woman gives her unique perspective into technology trends and sometimes provides her with an inside track into some of the hottest Chinese tech companies. For Lee, who has spent about 15 years investing in Asian startups, venture capital has always been about the hustle. In an in-depth conversation with FORBES, she shares how she ended up investing in one of the world's largest smartphone companies, whether Uber has hit a dead end in China and what future prospects women have in the world of venture capital.

The following conversation has been edited and condensed for clarity and structure.

Forbes: How long have you been at GGV Capital?

Jenny Lee: I’ve been here for 10 years. It’s been a good tenure, two-thirds of GGV’s history. It’s a time where we saw the convergence of technology in the market between U.S. in China.

I was the first partner who started the China operations. This was in 2005, when China was just going into its J-curve--the PC internet era. Baidu had just gone public and I took a suitcase full of cash to China. I remember the number of credit cards in China was less than 10 or 20 million and you literally needed to have cash. I went to Shanghai and hired my first employee with just cash. In China, you had to set up a business before you could have employment contracts and that takes six months. It was very scrappy.

F: How have technology companies evolved during your time in China?

JL: In the last 10 years, I’ve been really fortunate. Together with Hans [Tung] and Jixun [Foo], I saw China grow on the PC internet front and then in 2008 with smartphone growth causing a mobile disruption. Those second generation of companies are those that are between $10 billion and $50 billion in valuation, like Xiaomi.

The third generation is bringing offline services to the consumer. We see a similar trend in the U.S. and it’s going to be a very interesting size. Things like food delivery, for example. It’s a decentralization trend. Uber is a great example of this in transportation, but in China we now have Kuaidi-Didi.

F: Since you mentioned it, let’s talk about Uber for a second. What are their prospects looking like in China? 

JL: This is a market where one merger between Didi and Kuaidi has created the No. 1 player in the market. It’s one player that owns 95% marketshare in over 300 cities and does 1 million to 1.1 million rides per day. Uber has done extremely well but they are a latecomer. The other companies have been here since 2012 and they were local and started working with taxi cabs. They know how to work with the government and where the touch points will be will be with local taxi cab companies and the government. 

Uber is maybe doing in the tens of thousands rides per day in China. They have strategic relationships with Chinese internet giants to expand their user base from foreigners to local people. But it’s hard. Never say never, but the odds are against them given the dynamics in the market.

F: What kind of investments are you looking for now?

JL: I’m looking for generation three-and-a-half or four. This is still based around mobile disruption. To give you a sense, if we’re looking at the fourth generation we’re looking at five to 10 years out. We’re looking for a technology convergence: in five years do you see innovation in China?

We actually see China potentially coming out with business models or products that lead the global market. In the area of the Internet of Things, there is the convergence of sensors, hardware, data and software where we see a lot of activity in China and China has a chance to lead the global market. Chinese entrepreneurs are finally putting the manufacturing power of China to use. Xiaomi is a classic example.

F: How did you notice Xiaomi so early?

JL: I’ve known CEO Lei Jun for many years. I’m on boards with him for three different companies. The first time I heard about Xiaomi was at a GGV event. It was GGV’s 10th year anniversary and we had a two-and-a-half day conference in Shanghai for our investors. We invited [Alibaba CEO] Jack Ma and [Baidu CEO] Robin Li, and we had Lei Jun, who was at the time known as an angel investor. Xiaomi was still in stealth.

As we were mingling, I asked Lei Jun what he was looking at. I remember it was during the cocktail event, when Jack Ma was talking. By the time [Lei Jun and I] were done talking, it was midnight and most of the guests had left. He had this kind of prototype, but it was not a real phone yet. You could see the shape and you could understand that he’s going to make a phone for the Chinese population that is going to have a better user experience.

F: Did the phone impress you?

JL: To be fair, no! We couldn’t quite see the actual interface because it was the hardware team’s design. And that portion was very close to the Nexus, which was Google’s first phone. It was still a very primitive prototype.

F: Then why did you invest?

JL: When Xiaomi first came out, there was a lot more controversy around the business model. It was one of those deals, we did not come in with originally from the fund. We had to get special approval for us to participate.

Venture is sometimes about looking at the guy in this eyes and seeing his passion and his wanting to win. You need to believe that you can clear everything in your path. I also know he put in quite a bit of his own net worth into the business himself and that helps.

F: You mentioned looking into the eyes of “a guy.” But what about women? Are you seeing any women entrepreneurs in China?

JL: I would say on the entrepreneur side in China, we may have 10 to 20% of companies that are led by women, which I think is a much better ration than in the U.S. The U.S. may only be 10%. But for me, at the end of the day, the success of a business is not gender-driven. The question is: do you have the right background and the right team?

F: What about on the investor side? The gender issue has been put in the spotlight in the U.S. because of the on-going Kleiner Perkins lawsuit. Are you following that at all?

No, personally I’m not following it. This is how I look at it. In every business you’ve got to understand the nuances and dynamics. Whether you’re a woman or man, you have to have the right passion to be successful. The VC industry is a very tough industry. It’s very obvious when you perform well--or when you’re not.

I would not term the industry to be friendly. It is capitalism at its ultimate. To do well you have to understand this point. No one is going to be nice to you because of your age, or where you come from or your gender. The VC industry is about survival of the fittest, and that’s the same mindset we give to our entrepreneurs. I tell them if you’re not No. 1, you’re dead. So how do you get to be No. 1?

F: But have you been in situations where being a woman puts you at a disadvantage in this industry?

JL: Actually, not so much in China. I haven’t spent as much time in the U.S., but in China the culture is pretty supportive. If anything people think that I have an advantage. If 10 term sheets are from guys and I’m the only woman, I’m the one that’s usually selected. Women can bring different perspective when we talk to CEOs and we can offer different angles.

Most CEOs are guys. Guys sometimes just want to talk and you need a partner VC who can listen to you and be nonjudgmental and help you through these issues. With me it’s easy. I can be part VC, part lawyer and part psychology counselor. We have to be there. I actually meet with the families [of CEOs]. I talk to the wives and kids. It’s all part of my due diligence.

F: Do you have any issue with the gender imbalance in the industry though?

JL: Yes, but the question to answer is how do we get more women in the industry? That starts with education whether that’s in high school or college. If you talk about VC today, its much more technology driven than 10 years ago. To naturally be able to do well in this industry, or have the confidence to do this well, you would need to have the right background and a science or engineering background would give you the basic tools.

When I went to Cornell for my undergrad, my class of more than 100 engineers had less than 10 women. We need to get more women to start early in these areas.

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