Kai-Fu Lee Wraps up Fund from All-Star Cast

Nearly two years after he launched Beijing-based incubator Innovation Works, Kai-Fu Lee announced in China early this fall that he has wrapped up raising a $180 million fund to invest in Chinese Internet startups.

The fund is backed by an all-star cast of investors, including Yuri Milner of DST Global and angel investor Ron Conway.

Other investors include WI Harper, Silicon Valley Bank, Baillie Gifford, Sequoia Capital, IDG-Accel, Foundation Capital, Mohr Davidow Ventures, Chunghwa Telecom, Singapore Telecom, Mediatek, Foxconn, New Oriental, SAP, Bertelsmann, Motorola, Autodesk, as well as pension funds from the U.S. and Canada, and executives and former executives from Yahoo, Google, YouTube, Facebook and Amazon.

How much each investor put into the fund is undisclosed.

Kai-Fu said the fund will be used for seed and Series A and B rounds. A total of 15 companies have so far received funding from Innovation Works in such sectors as social media, gaming, location and entertainment.

Kai-Fu told VCJ that on average each company in the program has raised $8 million from Innovation Works and other investors at an average valuation of $41 million.

Chairman and CEO of Innovation Works, Kai-Fu launched the organization with WI Harper shortly after he resigned as head of Google China. So far, many of the projects coming out of the IT incubator program have a definite Google-like feel.

Among the companies under the Innovation Works umbrella are Tapas, which has developed an Android-based OS for Chinese users, and XingCloud, a cloud-based developer of a social gaming platform.

In addition to being adept at raising money from a well-known cadre of angels, VC firms and other investors, Innovation Works has attracted plenty of tech luminaries to help lure startup candidates to the incubator.

Entrepreneurs at Innovation Works have met and interacted with such guests as Yahoo co-founder Jerry Yang, as well as Kai and Charles Huang, the brothers behind the video game Guitar Hero.

“When we started, we didn’t know we become such a hub for tech and entrepreneurship, but we have,” Kai-Fu says. “Lots of top entrepreneurs and VCs are working with us.”

Kai-Fu told VCJ that the organization is considering international expansion, “but we’re not ready for that just yet, and our expertise right now is the China market.”

—Alastair Goldfisher