How Cyril Ebersweiler Built the First Startup Accelerator in Asia
Q&A with Cyril Ebersweiler, General Partner at SOSV; Founder & Managing Director at HAX
About Cyril Ebersweiler:
Cyril is a General Partner at SOSV, the venture capital firm behind Chinaccelerator, and he is also the founder/MD of SOSV’s hardware accelerator HAX.
He is a board member/advisor to a few startups including Leap Motion, Formlabs, AngelList, Collaborate (ACQ: CISCO), Hackster (ACQ: AVNET), Adoreme and Breather. He is an experienced investor in deep tech (250+) and has invested globally.
Cyril is a popular speaker at international events (TC Disrupt, Collision, Pioneers, MIT Forum, etc.)and Universities (Stanford, UC Berkeley, etc.), has written dozens of articles and publishes regularly on topics such as technology, robotics, health and crowdfunding. He has been featured in The Economist, Popular Mechanics, The New York Times, Bloomberg, Huffington Post, Wired, BBC and more.
In this interview, Cyril spoke with Eva Shi, who is the PR and Marketing Manager at Chinaccelerator.
Eva Shi (Eva): Why did you come to China upon your graduation in France? What did China look like back then?
Cyril Ebersweiler (Cyril): When I was back in France as a law student, I saw a lot of news saying that China was starting to become an interesting place at the end of 90s. So I spent some time in China when I was a student through an exchange program. It allowed me to go to China (Shanghai and Beijing) and at the end of my undergraduate studies, I managed to find jobs in Beijing. I’ve been staying abroad for more than 20 years now.
Eva: What did you do before founding Chinaccelerator?
Cyril: For about 10 years, I was building operations for big companies from scratch. For Carrefour, I built their first-ever retail e-commerce in China. I built the e-commerce platform for Air France-KLM group too, and I managed their whole back office center that I created from scratch. At Carrefour, there were about 15 people. At Air France, there were only 5 people.
Afterwards I worked for a company in Japan called TBWA in the advertising industry. And at some point, I went back to Dalian in China to set up the Asia office for TBWA. We started from zero and ended up with 50 employees in a couple years.
Eva: How did you get to meet Sean O’Sullivan, who is now Managing Partner of SOSV, and how did everything get started?
Cyril: As I just said, I came to Dalian as TBWA to set up an office there for the Chinese market. We were one of the first ones to have an office in the newest park in Dalian facing the sea. And it turned out that most of the people ended up coming to our office because we looked like a very fancy good-looking advertising agency. We removed the ceiling and put lots of cool stuff in the office. I think that’s what brought Sean to our office. However, the first time when Sean visited the office, I wasn’t there. And that could have been the end of the story. You and I would not be chatting now (laughter).
But luckily Sean was back in our office for the second time when he was coming to Dalian to open an office. As usual, he just walked in without asking anything. That’s how we met. Then we grabbed a cup of coffee and started chatting.
Sean enjoyed investing and was also running his own company. We both agreed that Dalian was a good place to try new things and had many ideas about building a few companies by ourselves or investing in other companies. After doing some research, we found a new model for investing, which is the accelerator model. There were several accelerators launched in 2007 and I had an eye on that for quite some time. Ultimately, we decided to do it. But before doing that, we went to TechStars Boston to study the model, where our current GP Shawn Broderick was working at. That’s also where I met people like Nick Plante who runs SOSV’s blockchain accelerator dlab now.
I believed that the accelerator model was a cool model and it was going to work in China. But building a startup in China in 2010 was still considered as madness and almost everybody was afraid of building a company from scratch. So I positioned Chinaccelerator as a source for people who were less afraid of starting a company, which was a very new thing back then in China.
I essentially got the idea of the curriculum and mentor network. A lot of historical mentors like the founder of Qunar Fritz Demopoulos, Richard Robinson and William Bao Bean, who were among many very first people to support Chinaccelerator, still stick with us over the years. And many of them got to participate in the first program we ran in summer 2010 with six teams. Half of the teams were Chinese, and the other half were foreigners plus Chinese.
And we had the first Demo Day in December which was probably one of the most memorable Demo Days for many of us. Everybody got up at 6 a.m. to fly to Beijing from Dalian, but it turned out that there was an actual snowstorm in Dalian and Beijing. Everybody was so afraid to land. This was a very memorable experience as that was the first Demo Day.
Eva: What did the office look like when Chinaccelerator was in Dalian?
Cyril: The office was really cool! We had a speak-easy type of entrance, leading to a space-warp tunnel, exiting on an amphitheater which could comfortably host 40 people and led to a mezzanine with the view on both sides of the office and the sea… Did I mention each meeting room had a theme and matching furniture all around? We surely had a great time there. My wife essentially made what was in our mind with Sean a reality.
Eva: How many people were in the founding team? How was the program run?
Cyril: It was just myself, and quickly I received help from a few people including Zhu Cui who is now at SOSV’s back-office.
We were fairly busy. We were typically taking 6% of the company and the program lasted three months. And for curriculum, we invited mentors coming over for coaching just once a week. Many people took the trip, including Nick Plante who must have spent a month over there helping the teams out. As for the mentors, I just reached out and met with them in Beijing and Shanghai over the years. They’ve all been very kind and involved. William Bao Bean and Oscar Ramos were essentially here from the very beginning. The first mentor was Richard Robinson – a known figure in the world of startups in China.
Then I created the Geeks On A Train trip . The teams got to meet with the Shanghai and Beijing ecosystem. I also created what was called “10X10”, which is “8X8” now. And I created many infrastructures and processes for the legal system, deal flows and more. All of this happened between 2010 and 2012.
Eva: We still have GOAT and 8X8 now!
Cyril: Yes, I know. The only difference was the train. And it was also one of the fun things. We had to take the overnight train, from Dalian to Beijing, and from Beijing to Shanghai. That was quite crazy but a lot of fun!
Eva: Yeah, it’s a very fun experience. Also, it’s a very good start to the program because we can get to know each other better.
Cyril: And we created some of the other things in the program, like Founder Stories. Probably there were a few other things I can’t remember.
Eva: Chinaccelerator is now focusing on helping companies cross borders. Was that the same mission back in the early days?
Cyril: Yeah, it’s always kind of mixed. You know, the Chinese teams were focusing on China or sometimes on foreign markets. And most foreigners came over to work on the Chinese market. Sometimes some foreigners based in China were building global things. That always happened.
That’s very different from HAX. In HAX’s portfolio, there are more than 85% foreigners and 15% Chinese and nobody works on the Chinese market except the Chinese.
Eva: Why did we pick that vertical to invest – Internet?
Cyril: This is very interesting. I was actually not making a difference between hardware and software, which might be dumb (laughter). The idea was simply about helping startups in China. The interesting thing is that there were actually a lot of consumer apps, a few marketplaces and rarely any SaaS in 2010.
It turned out that we had two hardware companies in the first Batch, one founded by foreigners and another one founded by Chinese. And that’s how I got the idea to start HAX.
Eva: Since you mentioned that there were a lot of consumer apps, what did China look like back then in terms of the early-stage startup ecosystem and internet industry?
Cyril: So we don’t call the Internet industry in 2010 non-existent. What was non-existent was the early stage ecosystem.
Most people in the US started to have more information because it had the dot.com boom and people talked about how to discover good early-stage companies. But in China, early-stage was something extremely risky.
There were funds, like Chinese funds that had very good brands, and also funds from the US that were already in China since early 2000. Some others who came later were focusing on investing much larger amounts, and they were not pretty active at investing in the early stage.
There were probably 50 or 60 famous funds but not a lot of deals were being made on an early basis over there. Therefore, it was still very difficult for companies to raise and they had to count on their traction and growth to be exponential.
So, we kind of started forming the ecosystem. It was very important for us to be the pioneer in the ecosystem but also was extremely “dangerous” from an investment perspective. But eventually, as we stuck with it over the years, which is exactly 10 years now, we continue to make a good impression on the ecosystem and keep on building credibility.
Eva: So even though it was very risky, you still decided to do it. What’s the motivation behind building an accelerator which in fact was also just a startup back then?
Cyril: Spending 10 years as an operator gave me experience about how to run businesses. And since I’m very curious by nature, I really enjoyed working with companies over the years and spending my time trying to help them. I think it was worthwhile.
Also, learning to be an investor and having the chance to work with Sean were also determinants for me to do that. Sean was crazy enough to believe that we could build an accelerator from scratch (laughter) and then eventually indeed we could make some money back.
The way I see it is that as long as you can essentially feel that the world around you supports you and things can settle over time, you should make enough effort and also, make enough noises. Getting to participate in the efforts to help with the rise of the early-stage ecosystem is absolutely incredible. Look at the rise of VCs in the last 10 years! It was impossible for us to hear about 10 years ago, even 5 years ago, that having 100 million dollars rounds was something that could happen every day.
We can consider ourselves to be difficult in some cases during the course of 10 years. But we’ve built a brand name overall and are one of the most active investors in the world now. We’ve also created the only fund of this kind and everything about it is not conventional. And perhaps we are just getting started.
Eva: It’s so great to hear about the passion and motivation behind building all of these from scratch.
Let us talk about HAX. What drove you to found a hardware accelerator in Shenzhen?
Cyril: I made two hardware investments, one in a company called Formlabs, which is a unicorn nowadays and another one in a company called Leap Motion. I started to get more interested in hardware and the dynamics of the business and trying to understand if we could bring in a company to take advantage of being based in China.
Back at that time, I knew nothing about hardware, manufacturing, and supply chain which actually wasn’t a great start (laughter).
But I went to Shenzhen to visit and I met some important people there. There was the founder of a 3D printing company Maker Box. There was Xbox’s founder. And there were many other cool people in Shenzhen at that moment. We had many technical discussions about open source hardware and rapid prototyping.
At that time, something was happening in China, Shenzhen in particular, which was called “ShanZhai 山寨”. I would call it incremental innovation on products, supply chain, and more. The idea was that startups could leverage the supply chain, manufacturing and others in Shenzhen to build products for very cheap. So we decided to give it a shot.
We started with nine companies. But I was not quite sure exactly what we were going to do. We were still skeptical about whether China was a good place to do prototyping. That’s what we tried to validate for the first Batch. And it was also very revolutionary to think about it in that way because many people commented that China doing prototyping in millions of units was not possible.
So we started and executed the same concept as the accelerator except that we were inside of a supply chain. We managed to do it a lot more than we would be able to do anywhere else on the planet regarding the speed. And on top of that, it was also cheaper to do things there.
The first Batch was very successful from a validation perspective. One of the tricks was that we debuted the Batch in San Francisco because most of the teams were foreign teams. And it became quite known very quickly because the New York Times wrote about us in the very first year and the Economist came over and spent a few weeks with us. That’s the beginning of HAX.
Eva: Now you are still a General Partner at SOSV and you’ve been working with Sean for 10 years. What is SOSV in your eyes? What are your observations based on SOSV’s investments in Asia?
Cyril: For the last 10 years, we have been pursuing only one thing: how to help entrepreneurs start from scratch and become successful. The world can probably tell that we take this to heart and have developed a world-class team with world-class facilities. We have also built novel ways to invest and think about ecosystems. We will continue on this path which has proven to be successful.
Our investments in Asia have been primarily focused on China and we were the first money into some spectacular companies over the years. It takes consistency and patience to build a great track-record and brand. We are still very young.
Eva: What startups are suitable to join an accelerator?
Cyril: While some veterans might think this is beyond their needs, I do think that the size and knowledge of the SOSV ecosystem can benefit every single entrepreneur. We are now beyond the ‘cute’ accelerator program which is a one-off. We have an entire system which truly accelerates the development of companies.
Eva: Looking back when you started Chinaccelerator and HAX, is there anything you would have done differently?
Cyril: You do your best with the available data you have at one time. What matters is what we are doing moving forward.
 Qunar is a Chinese-language online travel information provider and mainland search engine for web-based and mobile users.
 Geeks On A Train, shortened for “GOAT, is a tradition where Chinaccelerator brings the cohort of each Batch on a train trip to Beijing and Hangzhou (it used to be Shanghai before Chinaccelerator moved to Shanghai), to visit companies that will be valuable for the cohort.
 Twice a year, Chinaccelerator – the 1st accelerator in Asia – invites 8 of our mentors – serial entrepreneurs and investors – to share their experiences on starting up in China and beyond for 8 minutes, in Beijing and Shanghai.
 Founder’s Story is a time for candor with the Batchmates. A personal sharing of founders’ life stories, major moments, monumental influences and what shaped them to be who and what they are today. The event is only for internal community sharing.