Angel investor gives wings to new firms

New career

Lee worked at Apple Inc from 1990 to 1996, where he started as a research and development executive.

The talented individual then moved to Silicon Graphics Inc, a global high-performance computing solutions provider, and spent a year as a senior executive.

At Microsoft Corp, he founded the company's research facility in China, and helped Bill Gates deal with problems the company experienced in China. He also set up the Chinese business side for Google Inc, introducing the search engine to the nation.

However, after decades of success in leading multinational companies, Lee decided to start up his own business - Innovation Works - in 2009. It's a company that acts as an incubator for entrepreneurial young Chinese people with innovative business ideas to initiate startups.

According to Lee, when he was heading Google China, he saw a lot of people who worked for him leave and start their own companies with passion and determination. Some succeeded, some failed. Lee then decided he would like to use his experience and social network to give people - not just former Google employees - the backing to start new companies.

"I think I can. I believe the elements that made Google, Facebook and Apple become great companies can be - and will be - duplicated in China," said Lee.

What Innovation Works does is to find promising entrepreneurs early and provide them with all-round support, including recruiting people, product manufacturing, management, and financial and legal consultancy.

Lee's company usually helps young entrepreneurs in their first 12 to 18 months in business. "That's when most mistakes are made. That's when people have the chance to succeed. If you make one mistake, everything can fall apart," he said.

With initial funding of $500 million, Innovation Works focuses on the IT, software and mobile segments. It has made 50 investments over the past three years. The majority have so far survived and 18 of them have received a second round of funding averaging around $30 million. "But these companies still have a long way to go before they can go public," said Lee.

He added that of the hundreds of companies Innovation Works has invested in, so long as one becomes an Internet giant in 10 years, the investment return will be considerable.

Two years ago, Jiang Fan, a 25-year-old engineer, decided to leave Google and set up his own company - Umeng Co Ltd - to provide services for mobile Internet application developers. Jiang described his business plan to Lee and immediately received support.

"He had never done anything other than engineering. He is a great engineer but has no business experience, so we first had to mentor him to be a good manager," said Lee, adding that he felt Jiang has good business sense.

Just 28 months later, Jiang's company has grown from only one person - himself - to almost 100 people and become the leader in the niche market. The company received another round of funds of $10 million from venture capital firm Matrix Partners in 2011. Lee estimated that Umeng will be profitable by the end of this year.

"Without help from Lee, companies like us at the early stage may not survive and develop the business so well," Jiang said. "More importantly, Lee has made 'angel' investments more widely recognized in China. As a result more rich people and successful businessmen are joining in the trend."

Angel investors are wealthy people who help entrepreneurs they believe in to start businesses by funding them.

Xu Xiaoping, founder of the venture capital fund Zhen Fund and Lee's friend, said: "Lee feels a strong social responsibility to help both young Chinese people and companies to list in the US market."

Q+A: Kai-Fu Lee