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Dispatches from Shanghai’s Investors Under Lockdown

By Shelly Xu

Last updated: Feb 15, 2023

Shanghai-based investors look back as lockdown restrictions ease after a strict two-month COVID-19 lockdown that dealt the city an economic blow.

Hu Chengwei / Stringer / Getty Images
Hu Chengwei / Stringer / Getty Images

The spring of 2022 is very significant to those who live in Shanghai. Under the impact of almost two months’ strict COVID-19 lockdown, the financial hub for 25 million residents experienced an unprecedented economic blow, especially in the venture capital industry.

Under the lockdown, the city’s investors have recalibrated their investment standards and rhythm. Many investors believe that the impact of the pandemic should be considered in how investors assess new projects, create more room for negotiation and accelerate investment for new opportunities.

To remember the spring of 2022, a startup entrepreneur and a venture capitalist in Shanghai shared their lockdown stories with the Org.

“Locked in the office for over 40 days, my lifestyle and workflow completely changed.” - Yaodong Ni, founder and CEO of Shanghai Yisu Technology

May 13 was the 43rd day that Ni stayed inside his office.

On April 1, Shanghai’s Puxi region began its lockdown. Located in the Jiang’an District, Ni’s company Yisu Technology was notified that it would be locked down for four days. Before this, Pudong District, where the company's factory is located, had been sealed off as well.

At first, Ni thought, to just let the workers go home for a rest—after all, four days is not too long, and the employees could bring their work home. But the company needed someone to be there. So, as the CEO and a single man with no dependents, Ni decided to stay in the office.

Unexpectedly, the total days of lockdown changed from four to 40, and then to 60.

The company has a small dormitory, usually prepared for overtime work, where Yisu’s employees can sleep and take showers. Now it has become Ni Yaodong's temporary shelter. There is an induction cooker in the office. The property distributes instant noodles, eggs and a small number of vegetables every day, so Ni can cook for himself.

Simple cooking can solve the problem of eating. For more than 40 days, Ni Yaodong ate a boxed lunch, and over the course of the rest of the time he was there, he ate about 80 packets of instant noodles. As a result, Ni has lost about 20 pounds since the lockdown began.

But compared to weight changes, his biggest concern right now is how his company will survive. When the pandemic hit, Yisu Technology was at a critical stage of product launch and financing. It was originally planned to launch a demo in early April, but it has now been delayed. Investors did their due diligence on the company in March. Without the new lockdown restrictions, the Pre-Series A round funding should have come in at this time. But everything stopped in March.

Since the partial lockdown of Shanghai in early March, the pace of Yisu Technology has slowed down. "Three months of extra expenses out of thin air, the financial pressure is particularly heavy," Ni said.

But the life of an employee goes on. Every day when Ni opens his eyes, he has to face the problem of feeding 60 or 70 people in the company. This is also the main source of the company's current financial pressure.

Ni negotiated with a co-founder that he would not receive a salary for the time being, and the other two co-founders would take 60% of the salary. "At this time, you have to take the lead," he said. Some of the wages of other employees are on hold. In this way, the labor cost for a month is about 60% of the previous one, including the social security that must be paid.

In his free time, Ni is also the same as usual: reading books, doing push-ups, sit-ups and skipping rope. When he was anxious, he just lies down for a few minutes and relaxes. "There will always be many problems in starting a business, and finding ways to solve them is worthless," he said.

Shanghai authorities are now moving forward to end the city’s lockdown starting June 1. The reopening applies only to those in low-risk areas. People will still be required to wear masks and are discouraged from gathering in groups.

On May 30, Ni was able to leave his office and go back home. After the city fully reopens, he plans to go to the factory and deal with the delayed work. “Shanghai is still my first choice”, Ni said. “Even though this experience has been very stressful, I still learned a lot, both about myself and my company.”

“Everything will pass, there is always hope.” - Sui Ling, Project Manager at Shanghai Purplesky Capital

Sui Ling still remembered the day she sent out the email to her employees to start working at home. Since a lot of workers at Shanghai Purplesky Capital had almost no remote working experience, Sui had to rethink the working flow for different teams and departments.

“When working from home, the biggest feeling is to slow down because everything is delayed," Sui said. “The epidemic has affected each aspect of fundraising, investment, management and withdrawal to varying degrees.”

Sui believes talking about projects face-to-face can generate more “chemistry" and have a deeper understanding of the entrepreneurial team. But under the lockdown, the team can only meet through video calls.

“Surprisingly, I find myself working even more than when I was in the office, which is not healthy both physically and mentally,” Sui said. “So I decided to make sure we have a casual team meeting on Friday to catch up with everyone and see how they are doing at home.”

For investing companies, Sui added, software-oriented companies will be less directly affected, but for the companies that make hardware, especially those that need upstream and downstream supporting materials, their operations will be more affected by the epidemic due to supply chain problems.

“People in the investment industry are usually optimists because they believe that the world can be changed,” Sui said. “What has happened in the past two months is a disturbance, but it is unlikely to fundamentally shake people's hopes for a better future.”

Sui was happy to hear about the city’s plan to reopen after the two-month lockdown, but he is still unsure when he will be able to have his team back in the office. “At least we are making progress. I can’t wait to see everyone again in the real world,” he said.

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