Global Corporate Venturing Rising Stars Awards 2018: #11 Wen Jiang

In November, 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/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.”

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, 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 cofounded and chaired by Lei for early to series B rounds of up to $10m and which would be a coinvestor 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 12 months, Shunwei or Xiaomi or both have invested in India-based ShareChat, video app Clip, mobile gaming Mech Mocha’s $5m round, $3m in secondhand 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 Jiang’s strategy to introduce local content on Xiaomi’s Mi smartphones.

In a Wired article last month, Xiaomi had initially relied on a dual business model of selling hardware products and online services. Most revenue 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 so Xiaomi is reportedly speaking with investment banks about a flotation this year that could value the firm at at least $100bn.