Although we see bright possibilities for the sector, businesses still face challenges such as language barriers and fragmented logistics networks, and unpredictable challenges. To address these issues, we recently held an online panel discussion with two of Cherubic’s portfolio founders, Floship CEO Joshua Tsui and GLOSKU CEO Kevin Zhao. Here we’ve organized some of the highlights:

The cross-border eCommerce industry is expanding. China’s eCommerce market is anticipated to recover by the latter half of 2023. 

With the pandemic subsiding, consumers and brands are exploring opportunities beyond their domestic markets. With consumer spending power in China and Southeast Asia on the rise, the cross-border eCommerce markets in those regions in particular are also expected to see growth, albeit at a slower pace than the peak years of 2019 and 2020. China’s market, which experienced a decline from the end of 2021 until the end of 2022, is slowly recovering, with a full recovery anticipated in the second half of 2023, though the market may still face the impacts of macroeconomic instability. 

Market slowly rebounds in China. SEA markets are growing rapidly.

As the unemployment rate drops in China, confidence is growing. We see a market rebound slowly starting in the travel and F&B areas. Shoppers are also increasingly interested in buying foreign brands, such as imported cosmetics, consumption and requirements.

In Southeast Asian countries, we see a growth rate of 20% to 25% in eCommerce year-on-year. While China is still the market leader, global brands are also looking to diversify their manufacturing and set up production in countries throughout the SEA region, thereby supporting the growth of these markets.

However, while Western brands are welcomed, success in their home market does not guarantee success in Asia, as foreign companies need to consider factors such as pricing, products, and advertising. 

Social eCommerce trends are reducing barriers and encouraging brands to expand their reach across borders.

Trends like social eCommerce are also driving brands to sell in Asian markets, with social media platforms such as Xiaohongshu providing a way to reach a wider range of users. These platforms enable Asian users to explore overseas brands and consumer products. And with eCommerce integration on social platforms like WeChat, Asian consumers can find the best deals in one app. 

Macroeconomic pressure is also requiring brands to be more conservative and cost-conscious when entering new overseas markets. That’s why solutions that help companies to reduce risk are in high demand. Finding a balance between targeting individuals and concentrating on specific markets is also pivotal. 

Meanwhile, Chinese brands that are trying to establish themselves overseas are decreasing their reliance on eCommerce platforms like Amazon and are instead using their own online platforms such as Instagram or TikTok to increase their brand awareness.   

Cooperating with partners is crucial to success. Partnerships can make cross-border eCommerce operations smoother, lower uncertainty, and ensure scalability.

Sometimes brands rely too heavily on online marketplaces when entering international markets because it’s the easier option – however, this approach doesn’t lead to long-term success. Thus, finding the right partners is essential for brands entering cross-border markets. Partners such as Floship and GLOSKU can simplify the work of navigating tedious and complicated supply chains and support marketing enablement in local channels.

Floship is experienced in taking other brands to international markets, specializing in helping small brands grow globally, with many growing from the crowdfunding stage to unicorns. With an understanding of supply chain duties, taxes, and customs, Floship can provide brands with transparency on how data works and how to succeed in these markets, not only in terms of fulfillment but also in terms of strategy.

GLOSKU was created to address the challenges and mistakes that brands encounter when entering China marketplaces directly without assistance. Helping companies to find an entry point that suits their brand with a step-by-step approach, GLOSKU offers businesses flexibility and support through different growth stages, enabling them to scale into the market. One of its clients went from 0 orders per day to over 1,300 orders per day within a week – GLOSKU helped them scale their services and transition from a mini retail app to their own platform. 

I can’t describe how emotional it is for me to share this milestone. As someone who spent the greater portion of his life on the ballfield, I never imagined that I would become an angel investor, let alone the founder of a global venture capital firm.

I remember when we started out in 2014 and were still putting our team together, I met with a multitude of US mainstream institutional LPs. We were of course shot down many times, but one time in particular left a deep impression when an investor looked me straight in the eyes and said: “It is literally impossible for you to raise money from institutional investors.” 

I think a lot of people when being handed such a blunt rejection would give up right there, but on a gut instinct I instead reacted with a question: “Then what should I do?” The funny thing is, after I asked my question, this particular investor came to like us, and even though they didn’t invest in us at the time, they eventually became a great friend and mentor.  

Somehow, we eventually managed to scratch together the capital for our first fund. Then, we set a unique and ambitious strategic direction: investing in the US and Asia at the same time! The thinking behind this plan was quite simple – if these were the two biggest markets with the most potential, then we should of course invest in teams from both. 

Not surprisingly, in executing this bold idea we came up against a lot of challenges. With most funds only focusing on one region, we found cross-market investing to be a bigger test of resource integration and management. Fortunately for us, we encountered a lot of people over the last eight years who believed in and supported us on the journey to today’s milestone. Since our founding, we’ve invested in over 150 startups from across the world, among them 10 companies that went on to be unicorns and over 27 that launched successful exits. Most importantly, for many of those companies, we were one of their earliest investors.

2021 was an especially significant year for Cherubic. Two of our portfolio unicorns went public and another was acquired by a huge global company, all of them becoming benchmarks in their respective markets. 

Established just five years ago, telehealth startup Him & Hers went public on the New York Stock Exchange, becoming the fastest-growing healthcare startup in the US. Meanwhile, omnichannel eCommerce solution provider 91APP became Taiwan’s first unicorn to launch an IPO on the Taiwan Stock Exchange, an accomplishment that attracted the attention of many overseas investors to Taiwan. Lastly, the Japanese buy now pay later platform Paidy was acquired by PayPal for $2.7 billion dollars. 

In addition, our number of unicorns doubled in 2021. Flexport, the leader in digital transformation for the logistics sector, hit USD$ 8 billion in valuation. Space startup and low-cost telecommunications satellites provider Astranis along with Tezign, the pioneering Contech startup in China, also reached unicorn status.

We are so lucky to have worked with these amazing startup teams from day one, to have had a front-row seat to their growth, and to have played a part in helping them realize their dreams. And in terms of our own journey, even though we picked a rougher road to travel, we still made it to today! One point that brings me particular satisfaction is to see that for our Fund V, our investors not only continued their funding, but continually increased the amount they were willing to contribute.  

Remember that investor that told me I would never raise a penny? Years after our meeting, while Cherubic was in the middle of another fundraising round, this person called me up and said:  “Matt, I think you’re ready, and we are also ready. We’ve decided to invest in you.” I can only say that some tears fell onto my phone. To receive this kind of validation not only made me see that all the effort was worth it, but it also filled me with gratitude for everyone that had ever put their faith in me.

Those who know me or read my blogs might notice how I keep coming back to the importance of “Never Stop Believing”. Perhaps the idea sounds overly romantic, but only on the faith of investors do those startups with nothing but their unique ideas and a drive to make the world better have a chance to realize their dreams. 

Reflecting on my own journey from athlete to entrepreneur to investor, if so many people hadn’t put their faith in me, there would be no Cherubic Ventures. That’s why I want our company to keep paying the power of that faith forward with our Fund V and investing in pre-product/market fit.

Our strategy goes beyond good faith investment to helping our portfolio teams grow through our strong global network of resources. It also gives us a practical edge ahead of many top-tier institutional investors by being the first to invest in companies that go on to be unicorns in their industries. A few examples: the world’s #1 sleep meditation app Calm, the leader in digital transformation of the logistics industry Flexport, Croatia’s biggest Edtech startup Photomath, Women’s physical and mental health startup Bellabeat, and Chaldal, the largest grocery delivery platform in Bangladesh. 

I’ll also mention that we have reserved 50% of our Fund V to support high-performing teams into later, even pre-IPO rounds.

Eight years already! Every day when I wake up, realizing I get to work with the smartest group of people in the world, brainstorm solutions to our challenges together, and make the future brighter, I feel filled with excitement and gratitude. 

I also want to take this opportunity to thank our founders, investors, Cherubic staff, and partners in the Cherubic community. Without all of you, we could not have reached this milestone. Each one of you is very important to Cherubic’s growth journey, and I am honored to have walked with all of you!

2021 is the seventh year since Cherubic’s founding back in 2014 and it has proven itself to be the most exciting year so far! It’s just an unimaginable ride for us. I guess “lucky 7” is true! 

It seem like yesterday when I was having a coffee with Andrew (the founder of Hims & Hers) and listening to his idea for starting up a new business. In just short 4 years, Hims & Hers is already the all-time fastest-growing healthcare startup in the U.S. and IPOed on NYSE! 

In 2005, I started a company with Happy and Sean, and then we met Steven who shared the same vision as us and therefore we merged our companies to become 91APP. This year, 91APP has become the most successful IPOed startup and also the very first homegrown SaaS unicorn in Taiwan! 

Paidy, one of our portfolios in Japan, started out as a P2P lending platform and pivoted several times along the journey to become Japan’s leading BNPL platform. Paypal announced that it will acquire Paidy at $2.7B this year, making it a record-high among Japanese startups exits! 

In addition to the three amazing teams above, there are two other new unicorns born in the Cherubic family in 2021, and they are — Astranis and Tezign! 

While celebrating the outstanding performances of our current portfolios, we are also exploring new opportunities to ride on into future technology trends. Some of the blockchain portfolios we invested in earlier this year have even achieved amazing milestones already! For example, XY Finance and Highstreet launched their own NFT projects, IDOed, and also listed on Binance. 

All of these magical milestones wouldn’t have been possible without the trust from our investors and of course the hard work of the teams! I would like to take this chance to thank all of the friends who have helped us and believed in us! WE MADE IT!