XIAOXIAO FUND:
Who am I, Where do I come from, Where am I going?
Throughout their lives, people use words and actions to answer the questions, "Who am I? Where do I come from? Where am I going?" in an effort to showcase their uniqueness. These are individual questions, but at the same time, they are also collective ones.
Similarly, many people ask me about the past and present of XIAOXIAO FUND, posing the universal philosophical trilogy: "Who am I? Where do I come from? Where am I going?" But the birth, growth, and eventual fading of a fund also carry the sense of destiny as a "product of the times." As the fund manager, or "product manager," I must also face and answer these individual and collective questions.
First, the first article on the fund's official account once answered "Who am I?" To briefly reiterate: "This is a small Solo USD fund, primarily investing in AI applications, projects led by young people, and global markets."
Next, to answer "Where do I come from," I’d like to first address "Where am I now." From what I’ve observed, both the VC fund ecosystem and the entrepreneurial ecosystem are undergoing "subtle but profound" changes. Moreover, there is a significant gap between the two.
The gap between existing investment tools and the innovative ecosystem I want to embrace:
(1) The young entrepreneurs I see eager to explore AI ventures are all globally connected, no longer distinguishing between domestic and international markets. In theory, domestic investment tools like RMB funds have deeper pockets, but they do not align well with the kind of innovation these young people want to pursue or the potential exit channels in the future.
(2) Many AI innovations are highly decentralized. The era of "ant armies" has enabled underdogs to challenge frontrunners. However, due to factors such as fund size, historical positioning, capital efficiency, and management scale, domestic USD funds have long preferred to bet on big white horses. The so-called "shining profiles" and "high-level titles" are used to reference founders' past successes, reducing communication costs during IC meetings, aiding investment decisions, and attempting to increase the odds of success. This strategy has worked in the internet, mobile internet, and even hard tech fields. At least, it could still "achieve miracles with brute force." But in the application layer of AI innovation, does this still work? The answer is unknown.
The dual challenges of the local microclimate and global macroclimate for USD funds:
(1) The baton of history and the reshaping of a new investment narrative: This is a grand historical topic, beyond what I can elaborate on here. But in short, USD funds are redefining their ecological position, and one clear point is the need to connect with "going global, young people, and AI."
(2) The potential generational gap and the relatively rigid hierarchy make it difficult for young frontline investors to convey the trust and resonance they establish with founders upward. This "lack of smooth resonance transmission" is problematic. LPs invest in GPs, and GPs invest in founders, which is inherently a transmission of trust. If the transmission of trust is not smooth, then what is being transmitted? Moreover, are young investors willing to risk their personal credit to back "underdogs," seriously committing to "identifying young people"? What drives them? Is it worth spending 3-5 years accompanying, enduring, and waiting for a project? Given this structural issue, the answer remains uncertain.
Given this, why choose to be a Solo GP?
The premise of believing in AI is that it will inevitably bring about an increase in productivity, leading to a flattening of organizational structures. If that’s the case, VC itself is also an organizational structure—why can’t it become flatter? Moreover, the capability of AI is already there. The key is how to mobilize people’s initiative to actively use AI tools and outsource certain functions. If tools are used effectively, then a significant portion of social roles in the future will belong to small and medium-sized enterprises. The willingness and ability of SMEs to pay should no longer be underestimated. Among the startups I see today, regardless of the type of entrepreneurship, software or hardware, to B or to C, they all convey a notion: "No matter how much revenue or scale we achieve in the future, the team size will not exceed a certain number." And that number is usually 100 people. This is a very interesting phenomenon. For ventures, the business model is simpler than that of ordinary companies because adding headcount and final output are not directly proportional. Thus, starting as a solo GP and running a minimal viable product (MVP) first is the lightest practice. Solo GPs are popular in the U.S. because the ecosystem there is like a tropical rainforest. But in China, which values the "towering tree" business ecosystem, it does seem unconventional. However, I firmly believe—and am pleased to see—that more solo GPs and other diverse organizational forms will emerge in the future to complement the functions of VCs.
Finally, to answer "Where am I going," simply put, I want to "embrace dark horse, embrace outliers、embrace their agility, and embrace other possibilities."
"dark horse": The definition of dark horses follows the principle of "relative comparison." Compared to teams that immediately appear to be big white horses, small dark horses are relatively younger, less experienced, lack past accolades, may not be graduates from prestigious schools, and often have smaller team sizes. However, small dark horses must exhibit "tenacity, vitality, and a spark in their eyes"—these somewhat intangible evaluation criteria. As for how to identify and judge them, that’s a matter of individual perspective.
"Agility": The opposite of this is "achieving miracles with brute force." I don’t think this is an era where brute force alone can create miracles—or rather, it’s not an era where miracles can be created everywhere with brute force. For a project to succeed, the product’s entry point must be clever, the marketing strategy and so-called "viral success" must also be strategic. It must also be "light" enough—the team size cannot be too large. If a pivot is truly needed, decisions cannot be delayed. A core mindset in the AI era is pivot and iterate. A good pivot combined with rapid iteration constitutes most of the moat. And this seemingly effortless "agility" is, in fact, a kind of mastery.
"Other possibilities": I believe many peers feel the same way—that the current environment and era are in flux. Every step forward is filled with uncertainty, yet it feels as though something is guiding you. Regardless of how many resources are currently available to leverage, being willing to vote for the possibilities you see is already brave enough.
Finally, a peer once said, "I increasingly feel that instead of discussing the product itself, especially to C products, I’d rather discuss the founder’s journey—what experiences brought them to where they are now. While it seems like everyone is doing similar things now, differences in vision will inevitably lead to vastly different futures." Ultimately, we still need to bet on young people because they represent unverified possibilities. It’s not so much about choosing AI opportunities to embrace young people; it’s more about choosing young people, who just happen to have AI opportunities. AI is the so-called big opportunity that everyone can see. But wave after wave, only young people are the ones riding the waves—riding the wave to create the products of the era and capturing them. That’s my perspective.
One generation will eventually grow old, but there will always be someone who is young.
The reason why "Who am I? Where do I come from? Where am I going?" is a philosophical trilogy is that there has never been a standard answer throughout history.
But being on the journey itself is the entire answer.