Some Thoughts on the First Anniversary of XIAOXIAO FUND

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(Originally published on the eve of Chinese Lunar New Year, 2026.)

 

Chinese New Year’s Eve arrives!

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This letter is written for our LPs, as well as for the founders who have partnered with XIAOXIAO FUND over the past year.

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Before writing this year’s letter, I revisited last year’s LP Letter. Suddenly, I was struck by a sense of emotion—one person, over a year has managed to stumble through four seasons. Looking back, it’s clear we’ve already come a long way.

Today, you are among the recipients of this letter because we share a common belief. You believe that AI will bring about something different, that young people are capable of making a difference, and that the VC industry and entrepreneurial environment might undergo changes. Although uncertainty is intertwined with these beliefs, it is still a form of “uncertain belief.” XIAOXIAO FUND, in essence, is a small testament to this “uncertain belief” of yours.

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Although it might be a bit cliché and “business-like,” I still want to start by expressing my gratitude!

First, thank you to the LPs who have chosen to support XIAOXIAO FUND. It is your backing that provides the foundational confidence for XIAOXIAO FUND. Your almost unconditional support has made me realize that “sometimes favoritism can indeed sustain us.”

Next, thank you to every founder who has partnered with XIAOXIAO FUND. I often say that the founders willing to accept funding from XIAOXIAO FUND deserve even more credit in return. Because deep down, you are not enamored with authority—you are bold. It is you who make me feel even more strongly that “the younger generation is truly formidable; who’s to say the future won’t surpass the present?”

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Next, I would like to share my personal journey.

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First of all, I have gained a lot, both in terms of achievements and lessons learned. Of course, lessons are also a form of achievement

I am accompanied by an increasing amount of visibility. I have met many new friends, including peers, partners, new LPs, and various founders. Some connections came through introductions from friends, while others were through portfolio companies. They opened door after door for me, making me realize that the world paves the way for those who dare to be bold.

However, what accompanies this journey more is my internal struggle. There were many moments of confusion, attempts, reflections, improvements, and then more attempts. Transitioning from being an investor at my previous firm to managing a small fund of my own, I deeply felt the enormous difference brought by the phrase “where you sit determines where you stand.” I increasingly empathize with the challenges my former boss faced and understand what it means to “stride boldly during the day and tread cautiously at night.”

How to set the tone for the fund from the perspective of a fund manager, how to craft a narrative that attracts the founders I want to collaborate with, how to allocate the fund effectively, what kind of founders I would choose to back, how to maximize the fund’s interests within my capabilities, and what I hope the fund will become in the future—these questions bring countless back-and-forth thoughts. Each one of them could spark extensive deliberation. And these are just the macro-level issues; there are even more micro-level challenges. Many problems are ones I’ve encountered for the first time, and many tasks are ones I’ve handled for the first time. My mental CPU has overheated countless times. Sitting alone at WeWork, I’ve watched the tree outside the window transform—from bare branches to budding leaves, lush greenery, falling foliage, and back to winter’s barren branches. Honestly, I’ve stared at it so much I feel like I’ve almost worn its bark thin, haha.

But it’s also exhilarating because I know I’ll push through it. Just as I know that tree, no matter how its exterior changes, has certainly added another ring to its trunk.

Secondly, I want to address some natural questions people might have about me running a Solo VC.

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1. “Does the concept of Solo VC actually work?”

I feel it can work, but it might not be suitable for most people.

Many have asked me, does it really have to be just one person? Is it necessary to go to such extremes? Functionally speaking, I don’t think it absolutely has to be a one-person operation. However, considering the current state of resources in the early stages and the flexibility I aim for, operating solo is indeed essential. So, what are the challenges that are hard to handle or even unmanageable in this process? After all, running a fund involves a lot of moving parts. It encompasses various aspects, including numerous operational tasks. It’s a long-term, multi-threaded endeavor. Even though I’ve outsourced everything that can be outsourced and have alliances to assist me, I still find that figuring out a mechanism for myself to act as the hub within these multiple threads is crucial. To be honest, I’ve gained some insights, but I’m still continuously optimizing. Overall, it’s not easy and certainly not as effortless as it might appear from the outside.

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2. “Why would founders take money from a small fund like XIAOXIAO?”

This was a question posed to me by a senior from a US dollar fund when I first started XIAOXIAO. At the time, I mentioned that I would continue investing in young Chinese founders in Silicon Valley. He asked, “They’re in Silicon Valley, with so many VCs around—why would they take your money?” My response was, if it’s purely for XIAOXIAO FUND’s connections and resources, that’s at best a 60 out of 100. But if it’s because they feel a mutual trust with me, genuinely like me, understand that I’m also working hard, and sincerely hope for my success, then they will definitely take my money. So far, there hasn’t been a single project I wanted to invest in that I didn’t get into, which says something.

I often say that the relationship between the startups I invest in and myself is one of mutual growth. We are like partners in a “growth-oriented” journey—founders and shareholders learning and evolving together. They don’t need investors who preach to them, nor do they want investors who act condescendingly. At the same time, they truly and sincerely hope that XIAOXIAO FUND can grow and thrive as well.

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3. “How do you handle post-investment? What kind of post-investment work can one person do?”

My answer is that I position myself as a “cheerleader + therapist.” When the company achieves something, I clap and cheer louder than anyone else; when the founder feels a bit down or burned out, I tell them, “Every challenge can be overcome.” I feel they really appreciate this. Because, to some extent, the belief that “every challenge can be overcome” is truly a remedy.

Then someone might ask, “Is your post-investment approach just about playing the emotional card?”

Of course, the VC ecosystem is vast, and there are many players in the VC space. Large platforms with significant resources and capabilities can certainly provide founders with a sense of reliance, offering substantial help in areas like recruitment, PR, and company branding. I can only speak from the perspective of a small fund making modest contributions at the early stage. At this stage, I believe it’s about being friends with the founders and fostering a relationship with minimal friction.

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4. “Why did you invest so early? What’s the unfair advantage?”

Build Conviction Fast.

After investing in a company, the founder once introduced me to another institution with these words: “Xiaohan, she builds conviction with founders pretty fast.” When I first heard this, I didn’t think much of it. But later, the words kept echoing in my mind. I reflected on it repeatedly—it’s not just a founder’s personal impression, but perhaps a fundamental truth about venture capital. It doesn’t matter whether it’s early-stage or late-stage investment; the principle remains the same.

So, where does conviction come from? I once posted on Twitter that it mainly stems from intuition. While intuition is hard to quantify and may sound abstract, it follows an internal logic, especially in the very early stages when the product isn’t ready, and there’s no data to analyze. In fact, intuition often relies on a more scientific chain of reasoning—arguably, it’s even more reliable than scrutinizing polished data or profiles.

Of course, the biggest gain and lesson from last year is to firmly invest in the founders I admire the most: Founder-Centric! Be resolute in investing in the people I deeply respect—some founders have a certain charisma that allows others to truly “enter the story.”

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5. “Why invest on both sides when the fund is so small?”

Here, “both sides” refers to Chinese individuals based in China and Chinese individuals based in Silicon Valley. Generally speaking, for those based in China, I tend to lead or solely invest, as the valuations are more controllable. For those based in Silicon Valley, I usually co-invest, because the checks I can write are relatively small.

From the very beginning, it was clear that the theme of XIAOXIAO FUND I is “young people working on AI-related projects targeting the global market.” The reason for betting on both sides is the genuine belief that young Chinese founders, regardless of their location, are confident and do not see barriers between themselves. They need to strengthen mutual communication and even help one another. Both sides have their unique advantages to learn from and challenges to support each other with. More often than not, I find that startups can even become each other’s customers. This is a process of banding together for mutual support—”many hands make light work” is crucial here. Only when they unite can the overall AI adoption rate significantly improve.

For me, even with a small fund, it must have its own value proposition. AI is something that requires global talent to co-create and global sharing of results. To some extent, it must transcend geopolitical boundaries. This is my advocacy, and I must vote for my own belief.

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Apart from the doubts about new species like me, the market has seen the emergence of many new media platforms and a flourishing array of funding news. However, I know that there’s a subtle concern among people regarding this wave of VCs and startups: “Will this wave actually work?”

An LP once sent me an article, which essentially argued that many of today’s application companies might be crushed by the unlocking of model capabilities. A peer also mentioned that an internet mogul once asked him, “What is the boundary between models and applications?” This is indeed a profound question, and surely everyone has their own perspective. Here’s my humble take:

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Q: “Will models replace all applications?”

A: In terms of capability, it could be.

In terms of ecosystem, I bet it would never be.

(Maybe I’m wrong, but that’s the essence of VC spirit—to back founders who see possibilities in impossibilities.)

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This might sound a bit sentimental, but it genuinely reflects what I feel. It’s not about the endgame; it’s about exploration. There’s no harm in giving it a try.

I also want to say to the founders I’ve invested in:

“You may not have perfect résumés, may not have golden credentials, or the prerequisites to please VCs. But what you do have is a spark of raw talent, some wild and seemingly unachievable ideas, an unrelenting drive, and a glimmer in your eyes that shows a desire to change the world—even if only a little.”

It’s these qualities that make you unique, and it’s this unorthodox diversity that makes you shine. I hope—and I truly believe—that you will become a remarkable stroke in this grand picture.

This is why I am unwavering in my commitment to being the support system for these “Underdog” startups.

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Lastly, allow me to share a small anecdote, something I’ve posted about before. A young founder once told me, “Xiaohan, do you know? The day I received your investment was the happiest day of my life so far.” I was deeply moved and somewhat shocked because I hadn’t realized that check could carry such weight. That money wasn’t just money—it represented something far greater. At that moment, what I felt wasn’t the financial leverage of investment but the emotional connection it created.

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The kind of VC I admire isn’t just about making money. The kind of VC I aspire to be is one that uses capital to connect with founders who are closest to the pulse of our times, to closely observe and experience their highs and lows. I want to support the founders I believe in, to help them chase their dreams. I want to create stories with them, stories that intertwine and unfold. And in this process, to earn returns as well.

Just like the message I include every time I wire funds to a invested portfolio company: “I’m so grateful that you chose XIAOXIAO FUND at such an early stage. But just as the name ‘XIAOXIAO’ suggests, it’s about two ‘small’ entities joining hands. Right now, XIAOXIAO FUND is still small and its resources are limited, and so are yours. But I firmly believe that by working together and growing together, we will live up to each other’s expectations.”

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From the very beginning, I hoped that XIAOXIAO FUND could stand out, achieve great things, and find its unique identity. I share these words with all of you, as mutual encouragement.

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At the very end, another New Year has arrived.

This time, aside from Happy Chinese New Year,

I also wish for both of us to have oceans in our eyes and still waters running deep.