Chinese start-ups may not have escaped the turmoil from Silicon Valley Bank’s collapse, but they still have plenty of potential sources of funding in the form of the country’s burgeoning venture capital scene. One firm that’s risen to prominence in recent years is Beijing-based Shunwei Capital, which has already helped fund the rise of companies including iQiYi, NIO, ByteDance, XPeng, and CloudWalk.
Shunwei, which has $3 billion of funds under management, has close ties with smartphone maker Xiaomi and in particular Lei Jun — a legendary figure in the Chinese tech sector sometimes referred to as the Steve Jobs of China. Lei, one of six people who launched Xiaomi in 2010, was in turn one of Shunwei’s two co-founders in 2011. To this day, Xiaomi and Shunwei often co-lead funding rounds for companies.
At The Wire, we periodically showcase prominent firms investing in China. So far, we’ve looked at Huawei’s in-house VC fund, Yunfeng Capital, Hillhouse Capital, IDG Capital, 5Y Capital, and Qiming Venture Partners. This week we’re taking a look at Shunwei Capital.
SHUNWEI’S MANAGEMENT TEAM
Lei Jun and his Singaporean co-founder Tuck Lye Koh first connected in the mid-2000s when Lei was chief executive of online gaming and software company Kingsoft. Koh later became an early investor in Xiaomi, serving on the board from 2013 to 2019.
To date, Shunwei has co-invested in 37 companies with Xiaomi Technology, and a further 15 alongside Xiaomi Ventures, Xiaomi’s in-house investment firm, according to Pitchbook. Shunwei also invested in Xiaomi Technology itself during the company’s early stages, exiting during Xiaomi’s IPO in 2018. It still holds a small stake in Xiaomi, although it’s dwarfed by Lei Jun’ personal 24.2 percent stake, currently valued at around $8.4 billion.
Analysts say aspiring tech entrepreneurs are often eager to receive investment from Shunwei and Xiaomi, both because of the implied imprimatur from Lei Jun, and because it usually means their rivals won’t be receiving similar financial and technical backing. Taking investment from Shunwei-Xiaomi also means companies can avoid having to choose between the rival camps of tech sector behemoths Tencent and Alibaba.
“Shunwei Capital offers investors a chance to bet on Lei Jun’s deep relationships in the China tech world,” says Rick Carew, a visiting lecturer of global commerce at the University of Virginia’s McIntire School of Commerce.
“Many young Chinese entrepreneurs seek Lei Jun’s advice and an investment by Shunwei gives his seal of approval to their ambitions. Lei Jun has a wide range of business interests and experience, which makes him an ideal partner to connect investors to new emerging companies.”
SHUNWEI’S LIMITED PARTNERS
Shunwei has had 23 limited partners in China, Hong Kong, Canada, and the U.S., according to data from PitchBook. Some big-name backers include Tencent, Xiaomi, and Kingsoft, plus a number of state-owned funds and companies, such as the Haihe River Industry Fund and the Shanghai Science and Technology Innovation Center.
MAJOR INVESTMENTS
Shunwei Capital is actively invested in 405 companies, according to Pitchbook. The most recent company in its portfolio to make the leap to IPO is Lalamove; a delivery service provider which filed in late March to go public on the Hong Kong Stock Exchange, after previously pursuing a flotation in the U.S. in 2021.
Below you’ll find a selection of some of the deals the Shunwei Capital has participated in since its founding:
ONE INVESTMENT: NINEBOT
Gao Lufeng and Wang Ye, two engineering graduates from Beijing’s Beihang University, founded Ninebot in 2012 with the goal of bringing innovation to the short-distance transportation market. During its first major funding round in 2014, Ninebot raised more than $80 million from Shunwei, Xiaomi, and other prominent investors such as Sequoia China and WestSummit Capital.
Now officially named Segway-Ninebot after acquiring U.S. firm Segway in March 2015, the company continues to lead the self-balance scooter industry. In recent years it has been exploring the electric bicycle market: the company invested in Chinese e-bike company Sur-Ron in 2019.
At its IPO on the Shanghai Stock Exchange on October 29, 2020, the company raised $198 million, valuing it at nearly $2 billion. The company has gained in value since then and is currently worth around $3.4 billion, with Shunwei retaining a 5 percent stake.
Here are some of Ninebot’s major investors:
Ella Apostoaie is an editorial associate at The Wire. She is a 2021 graduate of Wellesley College, where she majored in East Asian Studies, with a primary focus on Chinese history and politics. Ella grew up in Norwich, England and is now based in the Boston area.
