Lightspeed veteran Herry Han bets on China with new VC fund

Herry Han, also known as Han Yan, is an investor who defies convention.

At just 27, he left McKinsey in 2008 to join Lightspeed China, the nascent China arm of Lightspeed Venture Partners. Back then, Han was a mere investment manager. Over the years, he climbed to general partner (GP), steering the China office’s independence, pioneering its dual-currency structure, and propelling its growth.

Unlike peers who departed big-name firms to launch their own ventures, Han stayed put, carving his legacy within Lightspeed. He spearheaded first-round investments in standout companies such as Full Truck Alliance, FinVolution Group, Xingren Doctor, Xpeng Motors, and Rox Motor. While his portfolio reflects his investment acumen, Han’s public commentary often shifts to topics like organizational transformation, employee commitment, and team vibrancy.

Eight years ago, at 35, Han landed on 36Kr’s “36 Under 36” top investor list, which led to an in-depth profile of his philosophy. Back then, 36Kr highlighted a divide in the venture capital industry: theoretical, framework-driven investors versus those who instinctively spot gaps and dive in. Han belonged firmly to the latter camp.

This distinction has shaped his reputation as a non-conventional investor. Eschewing formulaic investment methods, Han frequently speaks about humanity, mindfulness, and emotional resonance. He shares tales of deep connections with founders, recounts the curiosity of Middle Eastern limited partners (LPs) about China, and recalls unconventional retreats—such as taking his team to Sicily. Han describes his approach as a blend of rational deduction and emotional interpretation.

Two years ago, Han founded Soul Capital. The firm recently closed the first round of a new RMB-denominated exploration fund, targeting RMB 1 billion (USD 140 million).

In today’s private equity market, it’s notoriously challenging for US-backed new GPs to successfully raise RMB funds. When asked how he achieved this, Han’s answer was straightforward: “To raise RMB funds, you must understand LPs’ needs and fears, creating long-term mutual benefits—a realization that took me a year and a half.”

Characteristically, his answer was rooted in emotional insight.

Han is also breaking industry norms with Soul Capital’s dual-currency fund, which excludes USD entirely. “Non-US means non-US brands, non-US nationalities—we won’t accept a single dollar from US investors in our fund,” he told 36Kr. His reasoning is evident in Soul Capital’s portfolio, spanning sectors like new energy, semiconductors, aerospace, and artificial intelligence. Investments include Full Truck Alliance, Xpeng, Worldwide Logistics Group, LandSpace, MinoSpace, Xpeng AeroHT, Sharge, Baichuan Intelligence, MetaX, Lanhu, LynkSoul, and Rox Motor.

“Soul Capital focuses on the top percent of core assets in AI, robotics, new energy, and new transportation,” Han said, “with the aim of being the first institutional investor in outstanding Chinese entrepreneurs.”

If intuition has been Han’s way of uncovering needs and spotting opportunities early, it also reflects his sensitivity to societal shifts and his adaptability in creating a new brand. This might be the real key to his success in overcoming obstacles.

The following interview has been edited and consolidated for brevity and clarity.

36Kr: What’s the most important decision you’ve made in recent years?

Herry Han (HH): The world has changed dramatically. The era of US dollars is over, and everyone must make a choice. For me, it was simple: don’t make the wrong but easy decision.

36Kr: What’s an example of a wrong but easy decision?

HH: Relocating for a false sense of security. A lot of young people moved to Singapore, thinking they’d be safe there. That’s a wrong but easy decision.

36Kr: And a hard but right decision?

HH: Creating an investment firm that’s essentially a non-US and non-USD fund. The industry is undergoing a major reshuffle, and it’s undeniably difficult. The first challenge is that many can’t make a decision. The second is figuring out how to embrace China and open up to the world more effectively.

Logically, choosing China or the US is valid, as long as you commit to one of them. For me, as a Chinese person, it was clear that for a long time, Chinese investors couldn’t access core US assets. So why hesitate? All in, on China.

Given the fragmented world we live in, people need to adapt to multiple spheres. I’m flexible enough to embrace China and capable of taking China’s top companies global. For me, it wasn’t that difficult.

36Kr: Many USD funds have already diversified their LP structures, reducing the proportion of the US dollar. Isn’t this similar?

HH: Non-US means non-US brands, non-US nationalities—we won’t accept a single dollar from US investors in our fund. Unless you’re not planning to invest in new materials, semiconductors, deep tech, or large models—that list of sensitive areas is only going to grow.

Competition between China and the US is healthy—a natural result of two powers reaching certain stages of development. It’s not short-term but a long-term dynamic. Once I fully understood this, my decision followed naturally.

36Kr: New GPs raising RMB-denominated funds while being backed by the US is rare. Did you need to make a clear stance?

HH: The key is deciding to raise RMB funds and fully embrace China. In 2016, when Lightspeed China raised its first RMB fund, I participated in the fundraising. Some of those LPs have since joined Soul Capital.

36Kr: But the environment has changed significantly over the past eight years.

HH: Today, RMB fundraising relies heavily on state capital. Local governments need to meet reinvestment quotas and advance regional industries. A GP must consider three points: investing in areas aligned with local industries, helping governments manage risk to avoid potential accountability issues, and planning for exits in the second, third, and fourth years, not just the first.

To raise RMB funds, you must understand LPs’ needs and fears, creating long-term mutual benefits.

36Kr: Can you elaborate?

HH: For example, I discuss the lifecycles of robotics and electric vertical takeoff and landing (eVTOL) solutions with local governments. When is it worth investing? When should you hold back? Local governments often follow a simple model: “Invest and bring three midsized companies to the region.” They meet their first-year goals but find problems by the second or third year when those companies fail. Such GPs are essentially high-end brokers.

My approach is clear: I’ll bring one or two companies to a region, no more. But these companies will be industry leaders with clear exit paths. Even if risks arise, we’ll have solutions in place. In return, I ask governments to fully support these companies’ growth alongside Soul Capital.

36Kr: How did you build this trust?

HH: By helping localities make real money.

Early in 2023, I received a call from someone who introduced themselves as a local technology bureau director. Initially, I thought it was a scam. It turned out that Full Truck Alliance and Rox Motor, both of which I had invested in, had become major taxpayers in his region. This market-oriented state capital entity later became our first confirmed LP.

36Kr: Can you operate solely with RMB funds?

HH: No, because our companies will have overseas business. I believe they will expand internationally, possibly listing in Hong Kong or other global markets, and I want Soul Capital to be part of that journey.

36Kr: You visited the Middle East in 2023. Was your goal to raise funds for a USD-denominated fund?

HH: That was only part of it. I also brought ten companies from our ecosystem with me. This process not only introduced Middle Eastern funds to Chinese technology but also brought significant collaborations, investments, and orders for our companies.

36Kr: What was your biggest takeaway from the trip?

HH: Chinese companies are far too easily misunderstood. In Abu Dhabi, a local investor told me that “Americans do one part and claim ten, Indians do one part and claim thirty, but the Chinese do ten parts and claim one.”

That’s why Soul Capital has started recruiting Chinese talent globally in places like the UK and Dubai, to help outstanding entrepreneurs integrate into international cultures.

36Kr: Why are you able to do this?

HH: Over the past three years, I’ve traveled extensively across Europe and the Middle East, visiting places like London, Oslo, and Abu Dhabi. When I interact with local LPs, they often remark how rare it is to meet a second-generation Chinese GP.

Being someone who worked his way up from junior to GP, without rushing to acquire foreign nationalities, able to speak fluent English and drink baijiu, is actually quite rare among Chinese investors.

36Kr: For a first-round fund like Soul Capital, do mainstream LPs still buy in?

HH: Most LPs don’t see us as a first-round fund. That’s the advantage, because I didn’t leave an institution as just a typical partner to start my own firm—I’ve always held a 50% ownership stake. To this day, for the 2016 and 2019 dual-currency (RMB and USD) funds of Lightspeed China, I’m still a 50% shareholder and key figure. My team and I continue to ensure proper exits and fund management.

36Kr: One recent trend is that LPs are allocating a smaller proportion of their portfolios to private equity. Is now still a good time to start a new firm?

HH: It’s both good and bad. The downside is that we’re a new brand, but that doesn’t bother me. Brands are built by people—if you have the right people, you have the brand. The upside is that while we’re a new brand, we’re unburdened and carry a legacy. From another perspective, entrepreneurs will always need early-stage investors. The ones who create the most value are always the ones who believe in them early.

36Kr: Looking back, no one would think 2022 was an ideal time to launch a new VC firm.

HH: I think it was great. The opportunities were tremendous. Don’t you think so?

36Kr: Issues like raising funds, finding quality projects, and achieving exits—weren’t they daunting?

HH: I think what makes people most uncomfortable is that the game has changed. The old model of USD funds making 100 investments and finding one home run no longer exists. The future is essentially an arms race for embracing AI, energy, robotics, eVTOL, high-end chips, and other “sensitive” technologies.

So, why can’t companies in these fields exit? Either they burn cash without making money, lack advanced technology, or fail to represent China’s core assets. Why not adjust our approach to invest in the most “sensitive” and core technologies in China?

36Kr: Was changing the game the key motivation behind launching Soul Capital?

HH: I know what you’re trying to ask, but I’ve promised my longtime partners not to address that question. What’s important is this: people need to embrace change.

36Kr: Why did you invest in Wang Xiaochuan?

HH: Many people ask me this. The reason is simple: today’s entrepreneurs must possess seven core skills to “summon the dragon”—team-building, technical depth, fundraising, government relations, commercialization, relationships with major corporations, and data capabilities.

In the realm of large models, they also need one more: the ability to secure computing power.

36Kr: Why were you able to invest in Baichuan Intelligence?

HH: I met Xiaochuan six or seven years ago through the China Europe International Business School (CEIBS). We went to the US together, not for research, just for tourism. Baichuan co-founder Ru Liyun is also an old friend—I was an investor in his previous AI edtech startup.

What connected Xiaochuan and me was a mutual recognition of each other’s dreams. While everyone else was talking about general-purpose large models, he wanted to focus on healthcare. For smart people, their brains are always active, but for a successful entrepreneur, an unyielding determination to tackle a tough problem is critical.

36Kr: Non-consensus bets were a hallmark of traditional USD funds, but the real profits came from high growth. Is that still possible today?

HH: China still offers high growth, but two conditions must be met.

First, the direction taken must be one that is widely recognized in China and globally—a concept.

Second, within that direction, you must select companies with both revenue and profit. A concept enables continuous fundraising. A concept without revenue can still raise valuations, but it won’t be the biggest winner. A concept with revenue, however, creates opportunity for high growth and high returns.

36Kr: As an early-stage investor, how do you determine revenue potential so early?

HH: Good question. You look for signals. I’ve had one success and one miss. I invested in Xpeng Motors because I was one of the first Tesla Model X owners. Driving a Tesla gave me a sense of the pleasure it could deliver and convinced me China needed its own Tesla.

But I missed Pony.ai. I met its founders, Lou Tiancheng and James Peng, when the team was just ten people. At the time, they were valued at USD 100 million, raising USD 20 million. I thought it was expensive, hesitated, and looked at competitors. When I circled back, its valuation had already risen. Later, I realized this: autonomous driving can generate explosive revenue—it’s not just a valuation game.

Revenue and profit are signaled by certain factors. You have to be bold and dive in.

36Kr: Is the signal about market size?

HH: Market size doesn’t require a signal. Signals are about the repeatability of small-scale use cases.

36Kr: Venture capital is often hierarchical. Does your previous position weigh on you?

HH: I was born in 1982. I’m still young. What baggage could I possibly have?

As a child, I tinkered with radios and telegraphs with Zhou Haiying, the son of Lu Xun. That experience inspired me to study electrical engineering at Shanghai Jiao Tong University. Later, I worked at Microsoft China, McKinsey, and co-founded a fund. Building on what I’ve learned, I’m now dedicating my resources and experience to a new fund. There’s no baggage.

The past 20 years were a time of thriving growth for China’s internet and tech sectors. My career—from an engineering student to a high-tech investor—has been in sync with this era. Those two decades have concluded, and a new journey begins. Moving forward, I aim to keep my mind sharp and my heart even sharper.

36Kr: Why name the firm Soul Capital?

HH: Investing with heart is just the most basic layer. Over the next two or three decades, I hope not only to support entrepreneurs with money but also to become a “co-cultivator” of their spirit—supporting them with “soul power.” The most important thing in life is having heart: truly feeling what you want to do and who you want to work with.

36Kr: That sounds a bit abstract.

HH: Let me give you an example. Is Elon Musk successful solely because of his personal brilliance? Not entirely. He brings together some of the best people who are as crazy as he is to work on Tesla and SpaceX. How does he convince them? Is it just his intellect? No, it’s his belief—an almost infuriating yet deeply inspiring savior conviction. Does that belief come from his brain? No, it comes from his heart.

36Kr: Among the entrepreneurs you’ve invested in, who has given you that “soulmate” feeling?

HH: Many. For example, Zhang Hui, the chairman and CEO of Full Truck Alliance, with whom I’ve had countless conversations about personal spiritual growth.

Another is He Xiaopeng, the chairman of Xpeng. I didn’t invest in Xpeng just because he’s good at building cars. Once, he told me, “I don’t want my child to ask me someday what I’ve done in life, and all I can answer is that I created a mobile browser.”

The root reason I invested in them is that their passion and belief resonated with me.

36Kr: How can you see into someone’s heart?

HH: By allowing yourself to be imperfect and vulnerable, only then can you see others’ authenticity. Be your true self.

In 2008, when I first entered the industry, I wore suits and ties every day because the most powerful figures in this field were all older men. If someone called me young, I’d take it as an insult. Today, I’ve come to terms with myself. Instead, I’m grateful that, as a GP, I’m still considered young. Youth has something elders can’t possess: time.

36Kr: Looking back over two decades of RMB fund development in China, we’ve noticed that no matter how exceptional a GP is, their decisions always revolve around survival. Has this changed in the current climate?

HH: Let me answer that with a number. Over the past few years, I’ve personally invested tens of millions into Soul Capital. This is clearly not about survival but about the meaning of life for the next 20 years.

Today’s VC industry is entering a more segmented phase. Those entering now will need much stronger foundations to survive. These include capability, financial resources, and heart for the business. Without these, you won’t make it.

36Kr: In previous public statements, you’ve mentioned missing out on investments in companies like Didi, Meitu, and Kuaishou. Is Soul Capital your way of proving yourself?

HH: I don’t need to prove myself. Yes, I’ve missed many opportunities. But even when I’ve done well, like with Xpeng or Full Truck Alliance, is it because I’m extraordinary? No, it’s because I was lucky enough to join the game. As investors, our contribution is often no more than a percent.

That said, investing still holds meaning in life. Its significance lies in the privilege of sharing this journey with excellent peers, co-cultivating a temple of life.

36Kr: One last question. Over these challenging years, what has been the hardest thing for you?

HH: Let me share a memory that has stayed with me over the past few years. Shortly after Shanghai lifted its Covid-19 lockdowns, everyone around me was getting sick. I took my parents to Mount Longhu in Yingtan, Jiangxi. That day, there were only ten people on the entire mountain. Can you imagine? Sunshine, birdsong, no other noise, just family, hope, and love. In that moment, I felt a profound sense of gratitude.

The power of love can transform grief and pain into gratitude and curiosity. You’ve asked me several times what was hardest. My answer is: using a loving heart to understand the world.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Chen Zhiyan for 36Kr.