It’s no secret that Tencent, the Chinese tech giant behind WeChat and a handful of blockbuster video games, is an aggressive investor. Even during 2020 when the epidemic slowed economic activity in many parts of the world, Tencent was moving ahead with its investment ambitions.
During the year, the company participated in more than 170 funding rounds, according to the Chinese startup database ITJuzi, totaling 249.5 million yuan ($ 38 million). This made 2020 the most active year for Tencent’s investment team, yielding better results over the last decade.
By January 2020, more than 70 of Tencent’s 800 portfolio companies had gone public and more than 160 of them had acquired more than $ 100 million in valuations, Martin Lau, president of Tencent. told At that time a room of investors. The achievement could well place itself on behalf of Tencent with some of the world’s top venture funds.
Tencent established an investment and M&A unit in 2008 and began funding seriously around 2012. Since 2015, it has been funding over 100 companies per year, ITJuzi data show.
The social and entertainment giant has long kept its funding activity close to its chest and data shining by third-party organizations such as ITJuzi is often not exhausted. The company did not immediately respond to TechCrunch’s questions about its investment in 2020, and the story is primarily coming from public disclosure and interviews with people with knowledge.
While Tencent’s overall investment strategy remains consistent – a diversified portfolio with a focus on digital entertainment – it has quietly stepped up efforts in areas outside its core gaming sector. For example, the firm has paid more attention to enterprise services since it announced B2B axis in 2018, More focus on cloud computing, fintech and likes. According to ITJuzi, the number of investments made in enterprise software increased from five in 2015 to 28 in 2020.
With its new focus on enterprise, Tencent has also taken its game to fintech. In 2019 and 2020, it supports 18 and 15 fintech startups respectively, ITJuzzi shows, up from just four in 2015. The increase, although incremental, reflects the firm’s increased interest in an area that is both highly attractive and also comes with many constraints.
In China, Tencent is Competed with ant group for a long timeAlibaba fintech affiliate to court users in payments, loans, money management, and even insurance. Regulatory problems in front of ants Jack Ma is not exclusive to Empire and will likely come to sink its smaller contenders, including Tencent’s FinTech segment.
Said that, Tencent is “not nearly as aggressive” as Ant when it comes to consolidating its position in China’s financial market, a man who partnered with Tencent’s overseas fintech business told TechCrunch.
The company is also prudent with its fintech expansion overseas in times of geopolitical tensions. Until now, it limited its ambition to provide cross-border payment services to outbound tourists to China, rather than serving directly to most locals.
“There is a lot of scrutiny about what Tencent and Alibaba are doing within the United States and the challenges it presents,” the CEO of a Tencent-backed startup based in the US declined to name .
Through investment, however, Tencent has familiarized itself with foreign financial markets. In 2015, the company made a fintech investment outside China. In 2020, it was eight funded, according to public data collected by Crunchbase.
A significant portion of Tencent’s external investments do not hold strategic importance, and the company lets its portfolio startups operate autonomously. Partly for that reason, Tencent became infamous for prioritizing investment and financial returns over product development and innovation in a viral article in 2018 titled “Tencent is no dream.” Hands-off stance is in contrast to Alibaba’s practice of Struggle, which prefers to buy control bets in businesses and shake up its top management, As it was for Lazada.
But many Tencent investments add value to their business, even when press announcements leave a potential strategic synergy. Over the years, Tencent has made a series of small investments in the US and other Western countries. Some of them appear to bring collaborative opportunities in the near term, but Tencent will still invite executives from these companies to China where they learn from each other.
“Tencent made those investments really just to know what people are doing in the US and how it might apply in China,” said the executive from a Tencent-backed startup.
“We have no plans to do anything in China. But Tencent is a very prestigious name, whether it’s in China or the US and you know, it’s good to have the option of being able to do something more strategic in partnership with Tencent down the road. “
According to the Hong Kong-based fund manager, Tencent’s fintech investment outside China could also be favorable for gaming expansion of foreign companies. The goal is that half of its gamers are foreign users, Tencent’s Mortgage In 2019.
The fund manager told TechCrunch, “For the gaming industry in Latin America and Southeast Asia, the biggest bottleneck is surprisingly not the hardware but the payments.” “Of course, localization and compatibility are also important.”