Giant on the move
Google's former China head Kai-Fu Lee wants to create China's next internet giant in a factory. He believes that by combining the smartest entrepreneurs, the shrewdest business people and the brightest business ideas, he will be able to create five highly sellable companies a year. That sounds like an ideal model for venture capital, but is he being realistic?
Lee's plan, formulated while he spent time in hospital over the summer, follows a battle with Beijing regulators who wanted to censor Google searches that lead to pornographic sites. It has drawn strong support from investors.
Lee has managed to raise $115 million in just one month, winning support from YouTube Inc. co-founder Steve Chen, as well as Foxconn Electronics, Legend Group, New Oriental Education and venture firm WI Harper Group.
They believe that as China embraces a start-up culture, Lee's business, which is a mix of venture capital and development lab, will be well positioned to capitalize. Lee's plan is to hire 100 to 150 young engineers, help nurture their ideas, then spin off 50 to 75 of them a year with
funding from his venture, whiling hiring new people to make up for the loss.
However, it looks as if his company, called Innovation Works, has yet to line up ideas or engineers. This kind of "incubator" model became popular in the U.S. and Europe during the dot-com boom, but most of them just burned through a lot of money and then folded.
Lee and his backers believe that China's market is more favourable, as it is at a crucial point regarding "cloud computing" and mobile technology, and there is a strong need for early-stage funding.
The new fund is still starting off, but Lee plans to expand from its base in Beijing to places such as Taiwan, the Asian hardware manufacturing base and his hometown.
Investors are attracted by Lee's reputation as the single largest magnet for talent in China. Lee, who went to school in the United States, has won a loyal following from Chinese students
through his numerous coaching books, public speeches and blogs, although critics say he has spent too much time promoting his personal brand.
An expert in speech recognition technology, he founded Microsoft's China research lab in the late 1990s. When he left to join Google, Microsoft sued him for violating a promise not to join a competitor.
Kai-Fu Lee, Google’s former China head, has officially launched his new firm, Innovation Works, an idea conceived while Lee was sick in a hospital and dogged by an investigation.
Lee said the idea for his new company, a venture capital-like fund aimed at high-tech start-ups, and the $115 million to fund it have all come since June.