Lei Jun -- A Dominant Figure in China's Internet Sector
Zhu Dan|Yang Jie
/SOURCE : Yicai
Lei Jun -- A Dominant Figure in China's Internet Sector

(Yicai Global) Jan. 26 -- Lei Jun, founder of smartphone maker Xiaomi Inc., is known as a role model in Beijing's tech hub Zhongguancun, and will likely top the China rich list this year.

Recent speculation suggests Xiaomi is ready to list in Hong Kong, which could shoot its market value to USD100 billion making Lei, who owns 77.8 percent of the company, the richest man in the country. Property tycoon Xu Jiayin, who heads Evergrande Group, is currently China's wealthiest person with net worth of CNY290 billion (USD46 billion).

Lei has built a lucrative investment business in the tech sector and describes the value of his assets as "astronomical." He is an angel investor, designer of Xiaomi's ecosystem and co-founder of financial investment firm Shunwei Capital Partners. He is also the man behind a sprawling business empire which includes such brands as Toutiao, Meituan, Iqiyi and Kuaishou, as well as public firms and several Xiaomi affiliates.

Chinese news outlet Iheima recently researched businesses backed by Xiaomi, Shunwei and Lei to get insights into the billionaire's investment realm.

Xiaomi and Shunwei have invested in a total 427 firms, while Lei has backed 33 as an angel investor.

 

Lei Jun, the angel

Lei is renowned as an angel investor. After retiring from software maker Kingsoft in 2007, he became a full-time investor for three years. His first venture actually came in 2004, when he joined a funding deal involving tech firm Lenovo Group Ltd. Lei contributed almost CNY4.2 million (USD664,000) to help set up consumer finance firm Lakala Payment Co.

Lei dabbled in angel investment at a time when mobile devices began to replace desktop computers as the preferred way to get online. He made a bet on mobile internet, e-commerce and online communities back in 2000, and the bet paid off. He bases his investments on people, rather than projects, and believes execution, not ideas, is what China's venture capital market needs the most.

He pulled off two major investment deals to earn himself a reputation as a successful angel. He plowed USD1 million into video-based social media firm YY Inc., multiplying his investment 112 times over after the firm listed in the US, and invested CNY4 million in internet browser maker UCWeb Inc., which was later acquired by e-commerce giant Alibaba Group Holding Ltd. Lei invested in more than a dozen other dotcom startups to create an online empire.

He started Shunwei Capital in April 2011, shortly after founding Xiaomi. His investment firm's first move was to pump USD225 million into mobile internet and smart device businesses. The company has funded over 200 projects to date, mostly early startups. Its investments generally tie in with Xiaomi and the pair have a network of next-generation internet and smart home businesses centered around the phone maker.

 

A Xiaomi-centered business empire

Xiaomi began its 'ecosystem' program in late 2013, releasing a series of new product lines: televisions, routers and smart wristbands as it deviated from its core product.

The firm has an extensive user base in China, but rising domestic competition has made it impossible for any single manufacturer to dominate the market. Lei adapted his business domain by investing in other products that could infiltrate the lives of consumers.

He plans to grow the Xiaomi ecosystem to cover more than 100 market segments. Its investment activities center around several core areas: smartphone peripherals, wearables, smart white goods and gadgets.

It had already invested in 89 ecosystem businesses as of last July, 16 of which had annual sales exceeding CNY100 million and four of which topped CNY1 billion. The firms pulled in CNY20 billion in total.

Building on this success, Lei decided to expand into the Internet of Things to create a web of connected devices, covering content retrieval, consumer goods and financial software and services. The decision led to Xiaomi and Shunwei investing USD300 million in online video platform Iqiyi and striking a deal with social media platform Kuaishou.

Xiaomi's financial arm has grown considerably over the years. Working in tandem with Shunwei, it has invested in a broad range of financial businesses, including Jimu, Tigerbrokers and Doucaitou, and stepped into the mobility sector. It backed electric car maker Nio, which released its first model late last year, and also led C-round funding at bike-sharing startup Ofo in 2016.

Lei has also made steps into India in recent years, buying Krazybee, a consumer finance platform geared at college students, and news aggregator RozBuzz.

 

Lei Jun's public companies

Xiaomi's sub-brand Huami applied to list in the US earlier this month. If successful, it will become the first public company within the Xiaomi ecosystem, although the conglomerate does have shares in many listed firms.

Lei, his wholly-owned units and others acting in concert own almost 27 percent and are the actual controllers of Kingsoft, which went public in Hong Kong in 2007. He also holds a 17.5-percent stake in YY Inc., which listed in 2012.

Xiaomi partnered Midea in 2014 and took a 1.29-percent stake in the home appliance maker for CNY1.27 billion. It is also the largest shareholder in tech firm Xunlei Ltd. with a 28.3-percent holding. Kingsoft owns 11.3 percent.

Xiaomi and Kingsoft combine to hold more than 14 percent of internet service provider 21Vianet Group, and Shunwei backs China Online Education Group, which floated on the New York Stock Exchange in 2016.

It would be no exaggeration to say that Lei Jun, with his extensive investment tech empire, holds half of China's internet market in his hands

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Keywords: LEI JUN , Xiaomi , Entrepreneur , Venture Capitalist , IPO , China Rich List