To compete with the myriad venture capital firms in Silicon Valley, iFly.vc has a unique vantage point.
Its founder Han Shen has straddled the United States and China for several decades. He was the first hire on the investment team of Formation 8, the VC firm co-founded by Palantir's Joe Lonsdale. After iFly.vc backed Weee! in a Series A round in 2018, Shen arranged for the grocery startup to meet with China's produce delivery leaders -- two of which recently went public in the U.S. -- to learn what was applicable to the American market.
Weee! has since become the go-to grocery app for America's Asian communities and raised hundreds of millions of dollars from Lightspeed Venture Partners, DST Global, Blackstone, Tiger Global and other major institutions. IFly.vc is still Weee!'s second-largest shareholder, and its first fund recorded a 10x rate of return, Shen told TechCrunch during an interview.
On the back of its cross-continental experiences and portfolio performance, iFly.vc recently closed its second fund with over $46 million, boosting the firm's assets under management to more than $95 million.
The limited partners in Fund II include family offices across the U.S. and Asia as well as high-profile entrepreneurs such as Zhang Tao, founder of China's Yelp counterpart Dianping, Free Wu, a founding member of Tencent who now manages Welight Capital, Joe Lonsdale, co-founder of Palantir, and Aayush Phumbhra, co-founder of Chegg.
IFly.vc made another big move during the pandemic, relocating its office from San Francisco to Austin, joining a wave of Californians fleeing the expensive area.
When it comes to investment focus, Shen said he tries to seek out the underdogs in North America's trillion-dollar consumer market.
"On the one hand, enterprise services are growing very quickly. But on the other hand, the rise of enterprise software is helping consumer tech to grow even more quickly and easily. The consumer market is very diverse and serves an array of minority groups, so there is always a new opportunity."
With this premise in mind, iFly.vc recently invested in Cheese Financial's seed round, a digital bank that started out by serving the underbanked Asian American populations.
IFly.vc prefers backing startups early on and seeing them through by providing hands-on, post-investment support. Rather than spray and pray, iFly.vc has invested in just about a dozen companies five years after its founding.
Shen's background of growing up in China and working in Silicon Valley, where he eventually became a partner at Formation 8, led him to appreciate entrepreneurs with a similarly international background because they can learn from mistakes and successes on both sides. They also know how to leverage the different fields of talent across the world.
Cheese Financial, for instance, is setting up an engineering force in the founder's hometown, Shenzhen, to take advantage of the Chinese city's large pool of engineers at costs much lower than those of Silicon Valley.
It's not just about hiring cheaper programmers, though. As Shen puts it: "In the past, American companies were simply outsourcing technical tasks to China. Now Chinese engineers actually have valuable lessons to bring to American companies because many have worked at large, successful Chinese tech companies themselves."