Hong Kong Tycoon Li Ka-shing Ventures Deeper Into Tech
THE WALL STREET JOURNAL: When the venture-capital fund of Li Ka-shing, Asia’s richest man, hosted a gathering of its portfolio companies in Shanghai last year, it broke the ice with a scavenger hunt.
The fund divided the 100-plus technology entrepreneurs into teams that pursued clues through the city’s historic quarters and flashy business district. One trail took participants to a traditional bun shop, another to the former courtyard residence of Mao Zedong, according to participants. The prize, won by a team that included the co-founder of a designer of energy-efficient light bulbs: $10,000 to a charity of choice.
The hunt typifies the quirky tech-financing approach of Mr. Li, who is best known as the chairman of Hong Kong-listed conglomerates Hutchison Whampoa Ltd. and Cheung Kong Holdings Ltd., with personal assets estimated by Forbes at $33 billion.
The tycoon’s tech fund, run by his longtime companion Solina Chau, is Horizons Ventures Ltd. It has sunk at least $470 million in more than 80 technology firms, including Facebook Inc., music app developer Spotify AB and Internet-calling operator Skype, according to data compiled by The Wall Street Journal.
Horizons recently invested $50 million in Slack, valuing the workplace-collaboration startup at $2.76 billion, according to people familiar with the matter.
While the 86-year-old Mr. Li made his name through old-school investments in property, utilities and retail, Ms. Chau, a Hong Kong citizen in her early 50s, frequently shuttles between global tech hubs—with an entourage and several bodyguards—to seek out what she describes as “disruptive” technology pioneers. She has backed plant-based egg substitutes, GPS-enabled bike locks and smart cups that analyze their contents.
Horizons remains a niche player: It invested about $70 million in 20 deals in 2014, its busiest year yet. In contrast, the 100 most-active venture-capital firms in the U.S. averaged $250 million in investments last year, according to Pitchbook Data.
But in Israel, where Horizons has led fundraising rounds totaling more than $180 million since 2011, it is the largest foreign startup investor, according to IVC Research Center, which tracks the market. In 2013, Mr. Li gave $130 million to Technion, the country’s top engineering university, with most of the donation coming from the sale of Israeli mapping and navigation startup Waze.
Horizons’ successful investments include Waze, which was bought by Google Inc.for $1.1 billion, and Siri, the voice-activation program acquired by Apple Inc. for its iPhone. The fund doesn’t disclose its returns, but Mr. Li’s $120 million investment in Facebook in 2007 had grown fivefold by 2012, according to filings.
Some companies Horizons backed have faded into obscurity, such as financial-transaction app RFinity and mobile-security firm Fixmo. Horizons, Mr. Li and Ms. Chau declined to comment for this article.
Ms. Chau’s ties with Mr. Li, who is widowed, go back two decades to when they met through a mutual friend, Debbie Chang. Horizons was incorporated in Hong Kong in 2006 and is closely held by a British Virgin Islands holding company. Ms. Chang is the only person named as a director.
The backing of Asia’s richest man gives Horizons a different flavor than other venture-capital firms, some of the fund’s portfolio companies say.
Ms. Chau has invested in startups after meeting their founders just once over coffee and doesn’t need a sign-off from Mr. Li to make investments, according to interviews with more than two dozen people who have dealt with her. Ms. Chau is valued as much for her connections and access to expert advisers as she is for the money she brings, which typically ranges from $1 million to $20 million.
“She’s the opposite of your button-upped venture capitalist,” said Sonny Vu, chief executive officer of wearable-fitness and sleep-monitor company Misfit. Ms. Chau invested in his California-based startup 24 hours after she met him by video call, Mr. Vu said.
While typical venture-capital funds spend time and effort raising money, most—if not all—of Horizons’ cash comes from Mr. Li, according to people briefed by the firm.
Horizons has close ties to the tycoon’s charitable foundation, also run by Ms. Chau, and investees say the fund has an almost philanthropic nature. They say that means Horizons exerts less pressure on founders to make quick profits and is less hesitant to gamble on ambitious but unproven technologies.
“They understand that it doesn’t matter how many of their startups work out,” said Hans Tung, a Silicon Valley-based managing partner of GGV Capital, which invested alongside Horizons in Misfit. “Only one has to break out to make up for the losses.”
Ms. Chau, who attended Australia’s University of New South Wales, invests largely in Western companies, which she views as more innovative, according to several startup founders. Horizons has backed only one Chinese company.
The fund employs some heavy hitters: Its chief technology officer, Gilad Novick, is a former European technology executive at Hutchison and advises Berlin-based Lock8, which makes GPS-enabled bicycle locks.
“Having someone who has connections and understands what you’re doing is particularly appealing,” said Lock8 co-founder Daniel Zajarias-Fainsod.
Several startups including Waze, Misfit and Zoom Video Communications Inc. said they weren’t seeking investors when Ms. Chau approached them.
“Solina forced us to take their money,” Noam Bardin, Waze’s CEO, said. “She’s an extremely persuasive person.”
After Horizons invested, Mr. Bardin said he turned to Ms. Chau when he wanted to meet a senior Internet company executive, months before Waze was purchased by Google in 2013. Ms. Chau, who was in Silicon Valley on business, surprised him by flying him along with the executive and others on a private jet to a dinner hundreds of miles away in Las Vegas.
“Those kinds of opportunities aren’t normally available to a small startup trying to break through,” Mr. Bardin said.
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