Page 78 - How China Is Winning the Tech Race

Zhang has had no shortage of power-packed investors who wanted to
profit from his handiwork at Chinacars. He pulled in his first several million
dollars in fall 2001 from a longtime personal acquaintance, the superwealthy
Lu Weiding, CEO of China’s largest automotive company, Wanxiang Group.
Weiding became chairman of the board at Chinacars.
In light of the scope of his new business, the highly competitive envi-
ronment, and the fast-paced marketplace, the disciplined Zhang has managed
to raise venture capital sparingly, an indication that he has kept the burn rate
(operational costs) low enough to keep going as the start-up expands. “Good
start-ups put a strong emphasis on cash flow,” says Zhang. “Surviving is all
about cash flow and profits—growth and sustainable growth.”
In October 2005, he landed overseas funding of $8 million from Granite
Global Ventures (GGV), which joined Goldman Sachs in August 2006 for
follow-up funding of $25 million. “It’s an excellent company run by a great
team of professional managers with the ability to deliver sustained growth,”
says David Chou, the Hong Kong–based managing director at Goldman
Sachs. Thomas Ng, a cofounder and managing partner at GGV, boasts that
Chinacars will become “not only the biggest auto brand in China but also one
of the most recognized brands in the world.”
The next milestone for Chinacars is to go public on Nasdaq. To gear
up, Zhang recently hired a new chief financial officer—the third in six
years—Jonathan Zhang (no relation), the former CFO of the recently
Nasdaq-listed Chinese semiconductor firm Vimicro International Corp. His
first CFO, Philip Feng, a high
school classmate, left for Chi-
“Chinacars will become not only the biggest nacars’ first investor, Wanxiang.
auto brand in China but also one of the most Zhang scrambled to replace him
recognized brands in the world.”
with an automotive research
Thomas Ng, assistant Eric Wen from Morgan
cofounder and managing partner, Stanley, who stepped in as CFO
Granite Global Ventures and chief marketing officer. Zhang
also has a new chief technology
officer, Alex Yi, a former vice
president and the CTO of publicly traded Chinese start-up AsiaInfo Holdings,
a referral from a friend after a search that lasted several months.

52 SILICON DRAGON