iFly.vc Closes $46M Second Fund

iFly.vc's Distinct Approach to Venture Capital

In the competitive landscape of Silicon Valley venture capital, iFly.vc distinguishes itself through a uniquely positioned perspective.

Founder Han Shen possesses extensive experience navigating both the U.S. and Chinese markets over several decades. He initially joined Formation 8’s investment team, a venture capital firm established with Joe Lonsdale of Palantir. Following iFly.vc’s Series A investment in Weee! in 2018, Shen facilitated introductions between the grocery startup and leading produce delivery companies in China – several of which have since launched successful IPOs in the U.S. – to identify strategies applicable to the American consumer base.

Weee!'s Success and iFly.vc's Returns

Weee! has evolved into the preferred grocery application for Asian communities throughout America, securing substantial funding from prominent investors including Lightspeed Venture Partners, DST Global, Blackstone, and Tiger Global. iFly.vc remains a significant shareholder in Weee!, holding the position of second-largest, and its inaugural fund achieved a tenfold return on investment, as Shen disclosed to TechCrunch.

Leveraging its cross-continental expertise and strong portfolio performance, iFly.vc recently finalized its second fund, amassing over $46 million and increasing the firm’s total assets under management to exceed $95 million.

Fund II Limited Partners

The investor base for Fund II encompasses family offices located in both the U.S. and Asia, alongside notable entrepreneurs. These include Zhang Tao, the founder of Dianping – China’s equivalent of Yelp – Free Wu, a founding member of Tencent and manager of Welight Capital, Joe Lonsdale, co-founder of Palantir, and Aayush Phumbhra, co-founder of Chegg.

Strategic Relocation and Investment Philosophy

iFly.vc made a significant operational shift during the pandemic, relocating its headquarters from San Francisco to Austin, aligning with the broader trend of companies leaving the high-cost Californian area.

Shen articulated that the firm’s investment strategy centers on identifying promising, yet overlooked, opportunities within North America’s trillion-dollar consumer market.

“While enterprise services demonstrate robust growth, the advancement of enterprise software is simultaneously accelerating the expansion of consumer technology. The consumer market is incredibly diverse, catering to numerous minority groups, consistently presenting new avenues for investment.”

Investment in Cheese Financial

Guided by this principle, iFly.vc recently participated in the seed funding round for Cheese Financial, a digital bank specifically designed to serve the underbanked Asian American community.

iFly.vc prioritizes early-stage investments and provides substantial, hands-on support to its portfolio companies post-investment. The firm adopts a focused approach, having invested in approximately a dozen companies over the past five years.

The Value of International Experience

Shen’s upbringing in China and subsequent career in Silicon Valley, including his tenure as a partner at Formation 8, have instilled in him a deep appreciation for entrepreneurs with international backgrounds. He believes these founders are uniquely equipped to learn from both successes and failures across different markets.

They also possess the ability to effectively utilize global talent pools. For example, Cheese Financial is establishing an engineering team in Shenzhen, China, to capitalize on the city’s abundant and cost-effective engineering resources.

Leveraging Chinese Engineering Talent

This strategy extends beyond simply reducing labor costs. As Shen explains, “Historically, American companies outsourced technical work to China. Now, Chinese engineers bring valuable insights to American companies, drawing from their experiences at leading and successful Chinese technology firms.”