How SOSV Started its History in Asia
Talk with Sean O’Sullivan, Founder and Managing General Partner at SOSV
Editor: We started by talking to Sean O’Sullivan, founder of SOSV, and Cyril Ebersweiler, founder of Chinaccelerator & HAX. By elaborating on the history of the organization and how it has evolved in the past decade, we would like to showcase the big ambition that a US venture capital firm holds in Asia and how it is supporting the innovation globally.
About Sean O’Sullivan:
Sean O’Sullivan founded SOSV in 1995 as a “super angel”, basically a guy with a checkbook. In 2007, based on the success of several investments, Sean began aggressively expanding SOSV, transitioning it from a personal investment vehicle into an organization which today has over 110 staff supporting investments in over 150 new startups every year.
Sean got his entrepreneurial start in 1985 as a founder of MapInfo, bringing street mapping technology to personal computers. MapInfo went on to become a $200 million revenue public company with over 1,000 employees worldwide. In 1996, while at the helm of his second company, NetCentric, he created “software for inside the Internet” and is credited with co-creating the term “cloud computing” alongside George Favaloro from Compaq.
Sean continued as a visionary entrepreneur and investor, creating and supporting a range of business, humanitarian and educational endeavors.
As the founding Chairman of the Irish Entrepreneurship Forum and founder of Open Ireland, he was a leader and influencer of Irish government policy in fueling economic growth and recovery in the technology sector.
Oscar Ramos (Oscar): Sean, you’ve traveled around globally. Can you explain to us what brought you to China for the first time?
Sean O’Sullivan (Sean): I built a company called MapInfo that can put street maps onto computers and I co-invented the word “cloud computing”. MapInfo has had a presence in China since the early 1990s. And it was a big thing at that time. Basically, all the maps in China were created by ex-MapInfo employees. But I actually had never been to China until 1998.
In 2007, I came back to China again to set up a division of a European company that I was running, called Avego (now called Carma). We wanted to massively expand our engineering teams, however, it was quite difficult to source technical talents for software engineering in Europe. But in China, there was a tremendous number of the smart folks who were directed to engineering as their first option. Statistically, seven out of the top ten students went into engineering in China versus probably only two in the West. This differential was kind of crazy. That’s why I went to China.
So I set up an office in Dalian, Liaoning Province. It was a R&D center and market development center. We were doing bus information systems and other rapid transit solutions for commuters.
Oscar: Why did you select Dalian?
Sean: For those who don’t know, at that time, Dalian was an IT outsourcing center, just like the Chinese version of Bangalore. There were hundreds of Fortune 500 companies and companies from Japan and Russia, because of the city’s history. Citibank, many insurance companies, and all the Japanese car companies set up their operations in Dalian even for manufacturing. Intel has a big plant up there for manufacturing semiconductors. So it was a large center for IT outsourcing.
Also it was far more inexpensive than Beijing and Shanghai. And the government was promoting that region so they were trying to attract us to Dalian.
Oscar: How did you get SOSV and Chinaccelerator started?
Sean: SOSV existed before becoming the accelerator VC. But we existed just as a man with a checkbook. I just went around as a super Angel writing six-digit checks typically to lots of different startups that I believe had a good chance to be successful.
I was also figuring out the best way to do innovative investing because I wasn’t happy with the way that VC investment was done in general. There was not enough support for early stage entrepreneurs.
There were also other models. I looked around and talked to all those super successful entrepreneurs before determining the accelerator model. I looked at Bill Gross’s Idealab, which is the predecessor to accelerator, started in the 90s. I had been co-investing with Brad Feld, who was instrumental for Techstars, since the 90s. The first attempt of Techstars at going global was in Boston, which is still one of their most successful programs globally. Shawn Broderick was the guy who ran that. And I invested in Shawn Broderick’s startups a couple of times. So I was sort of well connected with what they were doing. It was obvious to me that the accelerator model was far superior than other models that had come before it.
In 2009, I met Cyril when he was setting up an IT operation subsidiary for a global PR and marketing firm TBWA in Dalian and we got to know each other by working in the same office park and hanging out from time to time.
Obviously, China has been a very difficult environment to do business. I knew that there were risks (laughter). But you know, on the other hand, there were huge opportunities. And if you can provide value to entrepreneurs, you’re going to be able to get ahead of the game. But the accelerator model was only just starting to work at that time. I remembered YC (Y-Combinator), Techstars and 500 Startups were existing with nobody else back then. And we were an initial investor in 500 Startups as well.
Back in early 2010s, none of the other guys had access to China. I had access to China, right? I’ve been doing business here and we had people on the ground, just like Cyril.
So I said “Hey, let’s act on it! Let’s take our intrinsic advantages and leverage them.”
We decided to set up Chinaccelerator and the first Batch graduated in 2010. And obviously it’s working here, because we’ve had many kick-ass companies.
That also led us to establish a back office in Ireland, with other Investment Partners and staff.
This is the start of the whole SOSV as the accelerator VC. Now SOSV has 5 accelerators in total, based in New York, San Francisco, Shenzhen, Shanghai and Taipei.
*This Q&A interview is transcribed and edited from two episodes we had with Sean on China Startup Pulse Podcast. The conversations were led by Oscar Ramos, Todd Embley and Ryan Shuken separately. Listen to the full episodes:
- Investing in Humanity – with Sean O’Sullivan, Managing Director of SOSV the Accelerator VC
- China’s Role in 4 Investment Areas with Sean O’Sullivan, Managing General Partner of SOSV