In one of his last blogs as president of Chinese operations for Google, entitled “Goodbye, Google,” Kai-Fu Lee ends the post with a quote from Apple’s Steve Jobs that exhorts people to “follow their hearts and intuition.”
That’s what Kai-Fu says he did when resigned in early September as head of Google China to launch Innovation Works, an incubator for Chinese technology startups. The incubator is funded with $115 million in commitments, led by the venture firm WI Harper Group. Other investors include Steve Chen (co-founder of YouTube), Terry Gou (chairman of Foxconn), Liu Chuanzhi (chairman of the Legend Group) and Yu Minhong (chairman of New Oriental).
Kai-Fu, who joined Google from Microsoft in 2005, says he launched Innovation Works because there’s an abundance of entrepreneurs in China, but a lack of seed stage funding sources. He says the entrepreneurs just need a little help to get off the ground.
“Whatever you might think of Y Combinator or Idealab in the United States, the China market is different,” he says. “China needs this type of business-building platform to hire and train people and provide angel funding, which is scarce.”
Innovation Works will focus on seeding companies in cloud computing, mobile technology and e-commerce. Kai-Fu says the program will be a little slow at first as he ramps up, but he expects to provide seed rounds of about $500,000 to 10 startups a year, and Series A rounds of about $2 million to five companies a year. He expects Innovation Works will continue to fund the startups in later rounds, and that he will bring in other venture firms, not just WI Harper, for follow-on investments.
Asked about how involved he will be with the startups and whether he plans to take any board seats, Kai-Fu said: “We are not ready to discuss this yet.”
Kai-Fu, considered the face of Google China, has written several books about education and career counseling, earning him a reputation as a mentor for Chinese students. He plans to publish a new book called “Making A World of Difference: The Kai-Fu Lee Story” soon in China.
Though he has no experience as a traditional venture capitalist, Kai-Fu has a long history in the tech community. Prior to Google, he spent seven years at Microsoft, part of that time as founder of Microsoft Research Asia, considered one of the world’s top computer science laboratories.
After leaving Microsoft, he helped Google launch its Internet services in China and gain market share behind local rival Baidu, the leading Chinese search engine. Under Kai-Fu’s reign, Google China launched such products as an online music-sharing service.
But Google has also encountered scrutiny from the Chinese government, which has blocked its video-sharing services. In June, a Chinese official accused Google of spreading obscene content over the Internet. The comments came shortly after Google’s email and other online services briefly became inaccessible to many users in China.
Kai-Fu says the recent dealings with Chinese authorities did not influence his decision to leave Google and launch Innovation Works. He adds that the Chinese government supports his program, though he disclosed few specifics, other than to say that China is supporting the development of 3G technology nationwide for the country’s 650 million cell phone users.
China needs this type of business-building platform to hire and train people and provide angel funding, which is scarce.
Kai-Fu Lee
“The Chinese government strongly encourages startups, and we are getting a lot of encouragement and incentives, even days after our announcement,” he says.
Dan Primack contributed to this report.
Profile: Innovation Works
http://en.innovation-works.com
Location: Beijing, China
Founded: 2009
Team: Kai-Fu is currently the only professional listed on the organization’s website. But he says that he envisions the workforce as being fluid, with between 100 and 150 people. “As we spin off companies, people will leave, and they’ll be replaced by new people, by new engineers. Right now, though, it’s just me and my collaborators.”
Focus: Mobile technology, cloud computing and e-commerce startups
Fund: $110M
LPs: WI Harper Group and individual investors Steve Chen (co-founder of YouTube), Terry Gou (chairman of Foxconn), Liu Chuanzhi (chairman of the Legend Group) and Yu Minhong (chairman of New Oriental).
Did you know? When Kai-Fu left Microsoft to join Google in 2005, Microsoft sued him and Google, claiming he had violated his non-compete agreement. The high-profile dispute lasted for several months before the two sides reached a settlement.
