The Top 25: Wen Jiang, Xiaomi

In November 2017, Lei Jun, co-founder and billionaire CEO of China-based phone maker Xiaomi, said: “In China, in the past four years we have invested $4bn in over 300 companies. In the next five years, we will invest [$1bn] in 100 companies in India. We will basically replicate the most successful ecosystem business model of China in India.

“We will have all types of services and products and integrate them. That is the Xiaomi business model. We focus on a few key things and everything else, we let our partners provide. We have reached just a huge scale in seven years because of this partnership and affiliation model.

“Any apps that increase the frequency of usage of smartphones – we are interested in this. As long as it is related to acceleration of mobile internet. We only pick minority stakes. The purpose is to work closely on the business side with these companies.”

According to the Economic Times, earlier this year, Xiaomi outdid its South Korea-based peer Samsung to lead the smartphone market in India and invested Rs35bn ($510m) in its India-based subsidiary Xiaomi Technology India in two tranches in January and March. It was the highest amount since it entered the country over four years ago.

While only a fraction of these 300 investments have been made public, Xiaomi’s focus on apps to boost usage often leads to Wen Jiang, its entertainment and content lead investment manager, and, before 2014, an investment manager at personal computer maker Lenovo Group’s corporate venturing unit, Legend.

In November 2017, Xiaomi co-led a series B round for China-based review and self-publishing platform operator Jinying and India-based news aggregator mobile app RozBuzz’s A round alongside Shunwei Capital.

Shunwei Capital is the venture capital firm co-founded and chaired by Lei for early to series B rounds of up to $10m and which would be a co-investor alongside Xiaomi for the Indian deals.

Tuck Lye Koh, chief executive and founding partner of Shunwei, said the top 10 to 20 most-downloaded mobile apps in China should serve as references to startups looking to succeed in India.

In China, the most popular apps include mobile-payment apps, navigation apps, search engines, news readers, and music streaming services.

Over the past two years, Shunwei or Xiaomi or both have invested in India-based ShareChat, video app Clip, mobile gaming Mech Mocha’s $5m round, $3m in second-hand car market Truebil, e-books and self-publishing platform Pratilipi and microlending platform KrazyBee’s $8m A round.

Xiaomi made its first publicly-disclosed investment in India in April 2016, a $25m round in online entertainment company Hungama Digital Media Entertainment, less than a year after a scion of Indian industry, Ratan Tata, invested in the Xiaomi’s own last equity round.

Xiaomi had led the Hungama round as part of Wen Jiang’s strategy to introduce local content on Xiaomi’s Mi smartphones.

Last summer, Xiaomi made at least three investments in India. In September, it participated in a $99.2m series C round for social networking app developer ShareChat. Shunwei Capital led the round, while Morningside Ventures, Lightspeed Venture Partners, SAIF Partners, Venture Highway and an unnamed Cayman Islands-based fund also contributed to the round. The round reportedly valued ShareChat at about $458m.

In August, Xiaomi co-led two series A rounds of $13.4m and $7m respectively for e-commerce consumer finance provider ZestMoney and chat-based entertainment platform developer Samosa.

In a Wired article last year, Xiaomi had initially relied on a dual business model of selling hardware products and online services. Most revenues came from the sale of affordable phones and smart TVs, which serve as platforms for Xiaomi’s online services that provided the most profit. Xiaomi offers small loans to Xiaomi phone users. However, the company saw a fall in the sale of its Mi phones in 2016 to a reported 41 million units from a reported 70 million the year before, which lead to the development of its open ecosystem corporate venturing model and the company borrowing $1bn in debt In July to fuel its development.

Xiaomi set up offline retail stores but created an ecosystem of about 100 startups as partners to provide Xiaomi with other Internet-connected home and tech products that would draw customers to its stores, Wired reported.

Wang Xiang, Xiaomi senior vice-president and who used to run one of its earliest corporate venturing investors, Qualcomm’s, China business, said to Wired: “Buying a phone or TV is a low-frequency event. How many times do you need to go back to the store?

“But what if you also need a Bluetooth speaker, an internet-enabled rice cooker, or the first affordable air purifier in China – and each one of those products is not only best-in-class but costs less than the existing products in that category? Our ecosystem even gives customers unusual new products that they never knew existed. So, they keep coming back to Xiaomi’s Mi Home Store to see what we have got.”

The combination of entertainment, content and affordable hardware is a powerful platform and Xiaomi went public on the Hong Kong stock exchange last summer which valued the firm at $100bn.