The top 25: Jeffrey Li, Tencent Investment
For the past eight years, Zhaohui “Jeffrey” Li has been a managing partner at Tencent Investment and a general manager at Tencent M&A, subsidiaries of the largest internet company dominating China’s artificial intelligence (AI), enterprise, automotive and security industries.
As Tencent noted last month for its 2018 annual results: “We have invested in more than 700 companies. More than 100 investees were valued at over $1bn each. Among which, over 60 went public.”
According to Hurun, China now has 186 tech-focused unicorns, which included the fastest growing startups backed by Tencent, now China’s largest listed tech company and its most active corporate venturer. For example, photo and video-sharing platform Kuaishou, a deal sourced and led by an executive director at Tencent, Haiyang “Chris” Yu, who was one of this year’s GCV Rising Stars nominated by Li.
Last year, Tencent invested in more than 163 deals according to South China Morning Post, including group buying platform Meituan-Dianping and online entertainment platform Bilibili, both reaching initial public offering (IPO) respectively on the Hong Kong stock exchange and on the Nasdaq Global Select Market.
32 China-headquartered companies listed in the US last year, raising more than $9bn in the process. Tencent Music Entertainment (TME), a subsidiary that manages internet group Tencent’s music streaming and karaoke services such as QQ Music, KuWo, Kugou and WeSing, floated on the New York stock exchange in December 2018 with an initial market valuation of $21.3bn. In 2017, TME also swapped equity stakes with Sweden-based music streaming platform Spotify, which had its own well-received listing last year.
China-based, Tencent-backed ride-hailing platform Didi Chuxing, which acquired its rival Uber’s China business in 2016 with Uber also acquiring a 20% stake in Didi as part of the deal, is considering an IPO later this year. As Uber prepares to go public, Didi is eyeing an expansion in Latin America, such as Chile, Peru and Colombia, South China Morning Post reported. Didi already had a presence in Brazil and Mexico, having acquired Brazil-based rival 99 last year and offered competitive pay to Mexico-based drivers.
Tencent’s intricate tactic to corporate venturing under the leadership of Li, who became a co-managing partner at Tencent Investment with Forest Lin since September 2015, leverages the capital markets as the natural next step in accelerating its ecosystem development for both Chinese and global market success and to compete with its rival Alibaba, a China-focused, US-listed e-commerce company.
Of social media fame, Tencent owns microblogging platform WeChat and messaging platform QQ, Tencent has been China’s largest listed company since 2016 with a total market cap of about $420bn. Li said for 2017’s Powerlist award nomination that the company was “committed to an open platform strategy, through which they aim to provide users one-stop lifestyle services by working with different partners”.
Li added: “As part of the efforts in developing such an open platform, Tencent Investment’s team of 40-plus professionals, including a post-investment management team, has built an investment portfolio of hundreds of companies across all stages and in various sectors, including online gaming, social, e-commerce, online-to-offline (O2O) services, content, finance and healthcare, with multiple notable names like Riot Games, Didi, 58.com and JD.com.”
Li and Lin run a venturing and M&A team that draw on exceptional dealmaking experience in two former Goldman Sachs alumni, Martin Lau, Tencent’s president, and James Mitchell, its senior executive vice-president and chief strategy officer. Both Lin and Li report to Mitchell, who spent more than a decade as Goldman Sachs’s head of communications, media and entertainment research.
Analysing the celerity and proactivity of China-based corporate venturing units’ activities, Li said for his 2017 Powerlist nomination: “The competitive landscape of China internet space, especially the very high iteration speed of the market, forced all major players to capture future innovation. In that case, there might be relatively more minority deals [in China] compared with the US market. And the giants might leverage their market resource to speed up the growth of the investee company.”
At the second GCV Asia Congress last year, Li cited Meituan-Dianping’s $4.2bn flotation in Hong Kong as evidence that corporate venture was being used as a coalition-building tool in China. “Our belief in the entrepreneurs actually leads to our supporting position when we make investments. Tencent is keen on making investments in digital content, especially in the gaming sectors. China, with its population of 1.3 billion people, and being a single-currency single-language country, definitely helps startups to thrive in this market.”
Li, who was promoted at the end of 2014 from executive director covering earlier-stage deals to managing partner, said helping portfolio companies was one of his main successes and this approach has been fundamental to Tencent’s success.
Li joined Tencent in 2011 and launched and led Tencent Investment’s efforts to penetrate key O2O sectors, including automotive, education and healthcare. He was responsible for Tencent’s investments in Huayi brothers, Zhihu, Netmarble Games, Howbuy and many others around the world.
Before joining Tencent, Li worked as an investment principal at Germany-based publisher Bertelsmann’s Asian corporate venturing unit run by Annabelle Long for two years.
He led deals there for Chinese automobile industry content and marketing services firm BitAuto and others, such as Phoenix New Media, in which Bertelsmann invested $2.8m for a 2.9% stake as part of a $25m round. Bertelsmann sold its stake in BitAuto to unidentified buyers for $65m at the start of 2014. Bertelsmann had reportedly invested $12m in BitAuto in 2009 and it floated on the New York Stock Exchange a year later, a year before Phoenix New Media.
Before that, Li worked for Google and Nokia in various product and business roles, where he gained substantial experience in the internet and mobile arenas. He holds a bachelor’s degree from Peking University and an MBA from Duke University’s Fuqua School of Business.