Derek Newberry

The Most Important Businesses You’ve Never Heard Of (Until Now)

China Starts Thinking Alternative EnergyI suppose “alternative energy” and “China” are indeed like peanut butter and chocolate, as Matt Richtel of the NYT analogizes. At first glance the combination seems incompatible (the word China to me for a long time conjured up images of massive coal power plants, not wind farms) – but after the idea sinks in, you wonder why it took so long for the two to come together.

Over the weekend, Matt wrote an insightful piece in the VC Nation column on the coming cleantech boom in a country that will be a key energy trendsetter for decades to come. The article partially focuses on the efforts of consultant Jerry Li (a New Ventures China alum!) to attract investment to some of the most important up and coming entrepreneurs in the country’s green sectors.

Ruikang and Shenwu are singled out as two hot companies making waves among foreign VCs coming into the country I’m glad the Times is picking up on these small businesses and that they are getting the publicity they deserve – it confirms what we at New Ventures have known about them since they joined our portfolio three years ago: that these entrepreneurs are simply ahead of their time.

I would even note here that despite what the Times article implies, neither Ruikang nor Shenwu is actually an alternative energy company per se. One sells organic honey, the other produces ultra-efficient industrial components. The point is, both have been operating in China’s emerging green sectors before consultants and investors like Jerry and DFJ Element were pushing the doors of sustainable investment open for small businesses.

Both of these companies were picked as finalists for our Investor Forums in China a few years back for their incredible prescience in seeing a major trend emerging in China before most people, including American VCs picked up on it. Since then, the New Ventures certification process has been instrumental in Ruikang’s acquisition of $480,000 in expansion capital, and I’ve already outlined many of the successes achieved by Shenwu during our partnership with the company (nextbillion readers should recognize Shenwu from the Rising Ventures feature written on them last month).

Entrepreneurs like Wu Dao Hong have known for a long time that China’s environmental challenges would eventually drive demand for market based solutions. To see them in the NYT shows me they have arrived. And what else can I do but congratulate them? They’ve earned it, and their reward won’t just be an IPO or a higher profit margin, it will be a cleaner China and ultimately A Better World.