"We've Invested in 160 Unicorns"​ Tencent President Talks Investment 2020

“To date, Tencent has invested in more than 800 companies, of which more than 70 have been listed, and more than 160 have become unicorns (market or private valuation of US $1 billion+).”

Tencent Investment held its annual IF (Insight & Forecast) conference in Beijing earlier this year. Tencent President Martin Lau shared his thoughts with the more than 500 Tencent investee companies and partners present at the closed-door event where he disclosed the latest achievements of Tencent Investment:

He further divulged that of the more than 800 companies Tencent had invested in, 15 companies had generated returns of more than $1 billion, 6 companies had generated returns of more than $5 billion, and 1 company had generated returns of more than $10 billion.

A likely list of candidates for those $5 billion+ returns:

Lau reaffirmed investment as one of Tencent’s core strategies and core businesses with a primary goal and core logic is to create value, specifically user value. He pounded home multiple times the cheesy but memorable message that Tencent follows the “user first, invested company second, Tencent third” principle.

Unsurprisingly he also took the opportunity to repeat several of Tencent’s core investment value propositions to entrepreneurs (i.e. we won’t control you but we’re not silent investors either, we have lots of resources and synergies to offer). He also took note to call out perceived bad practices in the industry. Softbank wasn’t named, but it’s not hard to work out who he was referring to in the below part of the speech:

“Many investors, or some entrepreneurs, are hoping to raise a lot of money, get a lot of subsidies, and constantly use the power of capital to crush their competitors, it’s easy to sink into such mistaken practices.

We believe that the development of an enterprise is a long-distance race. Funding and traffic are only the raw materials in this process. The most important thing is the physical fitness, skills, and willpower of the enterprise. These are the core capabilities of the enterprise. It is these capabilities that we hope to build for the invested companies.”

At another point he chose to emphasize the less visible, behind the scenes help that Tencent has provided many of their biggest investee companies.

“For example, when JD.com wanted create an experience for mobile, when Didi upgraded its technical architecture, when Meituan merged with Dianping but faced a severe subsidy war, and when Meituan expanded its food delivery business, Tencent provided critical help.

In terms of overseas companies, when Epic Games was transitioning from console to mobile games, when SEA (Garena) was transitioning from an agent into an independent games developer later developing into e-commerce, we also provided much help. We think help at this critical moment is crucial.”

Picture Credit: Tencent Investments

Looking forward Lau let people know where Tencent’s attention will lie in terms of new investments:

“With the development of Tencent’s mini-program ecosystem and payment platform, we will invest more attention in transactional platforms and smart retail in the future.”

WeChat mini programs have become a favorite vehicle for startups in China to acquire users providing Tencent early and deep insight into the startups which are gaining traction.

Lau's prognosis for the macro environment in 2020:

“Looking ahead, perhaps we will still face various uncertainties, and the market environment in 2020 may also be volatile.”

Faced with a coronavirus outbreak, a fragile truce in the US-China trade war and continuing doubts on the strength of China’s macroeconomy, “2020 may also be volatile” might be putting it lightly.