Added On: Monday, September 07, 2009

Google’s Ex-China Head to Fund Start-Ups


SHANGHAI — Three days after announcing that he was resigning as the head of Google’s China operations, Lee Kai-Fu said he had raised $115 million to create a company that would fund high-tech start-ups in China.

That company, Innovation Works, will search for talented Chinese engineers and entrepreneurs and help them develop the next generation of Internet and mobile computing technologies, Mr. Lee said in a telephone interview Monday.

“We’re going to collect the best ideas, and we’re going to hire the best engineers and entrepreneurs,” he said. “After one year, we’ll send the companies into the open. If they get venture capital funding — great; if they don’t, they won’t live.”

Innovation Works is being backed by the YouTube co-founder Steve Chen, Foxconn Technology, the Legend Group, New Oriental Educational and Technology Group and WI Harper Group, the American venture capital firm. Foxconn is one of the world’s biggest manufacturers, producing everything from Apple’s iPhone to HP computers. Legend is the parent company of Lenovo, the Chinese computer maker.

Mr. Lee, 47, a former Microsoft executive, said that he was leaving Google after four years because he had simply found a new challenge.

He dismissed as “outrageously wrong” the notion that his departure had anything to do with Google’s difficulties in complying with China’s strict censorship rules or due to fierce competition from China’s leading search engine, Baidu.

“In my career I’ve never run away from anything — I run toward things,” he said. “There’s clear evidence Google has doubled its market share in China under my leadership. It’s on the upturn.”

In a telephone conference call with Peter Liu, the chairman of WI Harper, one of the lead investors, Mr. Lee said part of the logic behind forming the company was the lack of early stage funding of high-tech start-ups in China, or angel investors — who could provide financing and coaching of young companies.

Talented managers now working for technology companies in China were primed to leave those companies to become great entrepreneurs, he said.

“Our experience is in company building,” he said. “I can coach them with my many years of experience.”

China is already a hotbed of high-tech growth, with fast-growing Internet companies like Baidu, Tencent, Shanda and Alibaba already worth billions of dollars. Venture capital funds are aggressively scouting out new companies that can capture share in what is already the world’s largest Internet market, with over 300 million users.

Innovation Works recently signed a lease to rent part of a building in Beijing’s high-tech district, next to Google’s offices, and the company will house its start-ups there.

Despite the economic downturn, Mr. Liu of WI Harper, said he had no trouble raising the money for Innovation Works.

“We raised the money in less than 30 days,” he said, and called the hiring of Mr. Lee “a miracle.”

“He can identify the next Google in China or the next Baidu,” he said.



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