After $30b return on its Kuaishou investment, 5Y Capital plans new $1b fund

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5Y Capital, the venture firm that delivered a $30 billion return on its investment in Chinese short-video app Kuaishou, is seeking to raise another fund to bet on a new generation of startups, according to people familiar with the matter.

One of the earliest investors in Kuaishou, 5Y Capital is planning to raise at least $1 billion, the people said, asking not to be named because the matter is private. A representative for the firm declined to comment.

Before its Kuaishou windfall, 5Y Capital was best known for generating an 866-fold gain from its bet on smartphone maker Xiaomi Corp. Founded by Richard Liu and Ken Shi, 5Y Capital has also invested in Agora Inc., the Chinese company that is said to power the breakout social networking app Clubhouse.

Formerly known as Morningside Venture Capital, 5Y Capital was a spinoff from Hong Kong property mogul Ronnie Chan’s Morningside Group. The fund renamed itself last year after a Shanghai street known as Wu Yuan where it started operations about 13 years ago. It manages about $3 billion of assets for sovereign wealth funds, family offices, university endowments and pensions, according to its LinkedIn page.

Liu’s early career included a stint in IT maintenance at a state-owned steel factory in the 1990s. He joined Morningside in 2000 after receiving a degree from China Europe International Business School.

‘Great Experiment’

Around 2011, one of Liu’s investment managers spotted an app that focused on sharing GIFs, the precursor to Kuaishou. The fund invested 2 million yuan ($310,000) for a 20% stake the following year. 5Y Capital also helped Kuaishou’s creator find a chief executive officer to focus on business operations.

“I am still thrilled that we were able to take part in this great experiment so early on,” Liu said in a speech last year. He and the fund declined to be interviewed for this story.

5Y Capital holds a 16.59% stake in Kuaishou, which is now worth about $35 billion after the shares more than tripled since listing on the Hong Kong stock exchange earlier this month.

Other 5Y Capital investments include Musical.ly, which was sold to TikTok’s owner, and Trip.com Group Ltd., which is now a $23 billion company, according to 5Y Capital’s website.

Expand Table

5Y Capital portfolio companies

Portfolio companiesCompany value       
Xiaomi$94b
Keep$2b
WeDoctor$5.5b
Agora$10b
SenseTime$7.5b
Xiaopeng$34b
Trip.com$22.6b
Source: Bloomberg, CB Insights

5Y Capital has faced setbacks in some of its investments, especially in ride-hailing. Even though it made early bets in the sector, 5Y backed Yongche and a smaller company that was acquired by Didi Chuxing, instead of the bigger startup. Liu, a proponent of value investing, said in an interview in 2017 that he had to adjust his strategies in light of the ‘burn-cash-to-win-market-share’ mentality prevalent in China in previous years.

For new areas of growth, 5Y Capital is investing in cloud computing, artificial intelligence, semiconductors and bio-pharma companies, Liu said in last year’s speech.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.