Under the guidance of a set of radical but well-designed growth strategies, Tencent became the largest investor in start-up companies among China’s non-financial companies last year. Tencent consolidated its loose partnership through capital ties and promoted the development of this strategy. However, China’s regulatory authorities are taking measures to strengthen the monitoring of technology giants, which may test the feasibility of this strategy.
According to the data of it orange, a research company, Tencent began to seriously invest in start-up companies in the late part of the first decade of this century, and by the end of February 2020, it has taken shares in 880 companies. Short video apps Kwai Chung went public in Hongkong in February this year, but investment funds at home and abroad agreed that the biggest winner was Tencent. Since 2017, Tencent has increased its holdings of Kwai Kong Holdings several times, with a total investment of about 2 billion 800 million US dollars. As Kwai’s shares surged on IPO, Tencent’s book profits exceeded $18 billion 400 million.
In 2020, Tencent invested 163 start-up companies, an increase of 40% over 2019, with a total investment of over 1.3 trillion yen (about 12 billion US dollars), excluding investment cases with undisclosed amounts. Tencent’s investment strategy has been heavily tilted to the entertainment and game industries, with 183 shares and 142 shares in these two fields.
Tencent’s financial report shows that as of the end of September 2020, the value of Tencent’s shares in listed start-ups (excluding its subsidiaries) has increased to 890.7 billion yuan (about 137 billion US dollars), a 12 fold increase in five years.