In the past, Lee invested in food and beverage companies in China for several reasons.
Firstly, he noticed that the brand-based companies in this sector were valued lower in China compared to those in the United States or Japan, presenting an opportunity for growth and potential returns. Secondly, investing in this sector served as a hedge against the risks associated with investing in science and technology companies. Additionally, Lee believed that a company did not need to be the market leader to be successful, and that capital had more power in this industry compared to science and technology-based companies.
However, Lee has since shifted his investment strategy away from food and beverage companies for several reasons. He realized that clearly understanding an investment opportunity is only a small part of the work, whereas in technology, the impact of a clear understanding can be much more significant. This shift aligns better with Lee’s strengths and expertise.
Moreover, Lee found it challenging to exit investments in food and beverage companies, as selling stock in the secondary market was often not feasible, and IPOs were almost blocked. This lack of liquidity made it difficult to realize returns on investments.
Lee also discovered that there were other ways for food and beverage companies to generate revenue, such as leveraging their brand and resources through franchise models, rather than relying solely on traditional sales channels.
Finally, Lee believes that certain practices, such as venture capitalists suing other founders’ companies or pressuring companies to acquire irrelevant assets, are morally questionable. He prefers to avoid such practices in his investment approach.
In conclusion, while investing in food and beverage companies in China initially seemed promising, Lee has since adapted his strategy to better align with his strengths, values, and the realities of the industry. By focusing on investments where his expertise can have a greater impact and by prioritizing ethical practices, Lee aims to optimize his investment outcomes while staying true to his principles.