Li Ka-shing’s Horizons: the name behind big-ticket tech start-ups

How has Hong Kong outfit chosen to invest early in likes of Skype and Spotify?

In the Autumn of 2007, Facebook was an upstart challenger to the now defunct MySpace.

It was early days for social networks, but a couple of investments put a $15bn valuation on the company, making a paper billionaire out of founder Mark Zuckerberg. One of those investors was Microsoft, the other was a very old, very rich man from the other side of the world, Li Ka-shing.

Mr Li, one of Asia’s richest tycoons whose business empire spans property, retail and ports, followed up with investments in Spotify, the music site now heading towards an IPO; Siri, the voice software bought by Apple; Summly, recently taken over by Yahoo; Waze and Deepmind, both taken out by Google in recent months; and Misfits, one of the handful of upstarts leading the way in wearable tech.

His early adventures into the world of tech venture capital took a lift when an existing Facebook investor introduced the company to Solina Chau, a close business partner and confidante of Mr Li, who was running the Li Ka-shing Foundation, an $8bn-plus charitable trust dedicated to funding education and healthcare projects.

The Facebook investment – in two slugs of $60m in late 2007 and early 2008 – was a winner, returning at least five times its stake when it first listed in 2012. It also followed an earlier investment Mr Li made in Skype.

These deals solidified the idea for Horizons Ventures, also run by Ms Chau, which aside from its remaining Facebook stake, now has more than $350m at work in more than 50 different start-ups.

It has had a string of big name successes, particularly over the past two years, which have made the name of Horizons Ventures almost as familiar as those of its ground-breaking tech start-ups.

Most of its 56 investments are based in either the US or Israel. So how does a Hong Kong based outfit get itself into all these deals?

One Asia-based banker who has worked with the fund says the Facebook investment helped to create a brand for Horizons, which helped attract young companies in search of backers.

“Out on the west coast, when I talk about Li Ka-shing and Horizons, everyone knows who it is and there’s this idea of quality and success,” the banker says. “If I talk about the Korea National Pension Fund, for example [one of the world’s biggest investment funds], people look at me blankly.”

“Early stage companies want these quality backers because it means other investors will then do less due diligence,” he adds.

Rather than hunting for specific companies, Mr Li and Horizons have identified specific societal and industrial trends that are coming and that require disruptive technology to solve, according to a person close to the group. They should also offer scope for China.

Mr Li and Ms Chau already had technology interests before their Skype deal. Aside from the various telecoms businesses owned by Hutchison Whampoa, Mr Li’s listed conglomerate, the pair had co-founded their own Chinese online media company, Tom Group, in Beijing.

The pair wanted to invest in new technology, but did not want to appear to be competing or in conflict with Tom Group, in which they both hold large stakes, but which is listed in Hong Kong. So they went overseas.

The business is unlike other venture capital groups, according to a person familiar with Horizons, because it is not a fund. Every investment is funded by Mr Li personally and only if it is headed for commercial success is it passed to the Foundation.

Horizons has more than 20 staff working on deals, including long-serving Hutchison employee, Gilad Novik, who became the fund’s chief technology officer in 2010, having worked for 3, Mr Li’s UK mobile phone division.

Ms Chau runs the business along with a long-time friend and business partner, Debbie Chang, who was instrumental in Ms Chau’s first meeting with Mr Li and rise from relative middle class obscurity.

Ms Chau, born in 1961, became good friends in the 1980s with Ms Chang – a cousin of Tung Chee-hwa, Hong Kong’s first chief executive – and the two went into business together. Their big break came with a contract to manage the $2bn Beijing Oriental Plaza construction project for Mr Tung’s property group in the mid-1990s.

The pair made millions on that deal, according to contemporary media reports, but it also led Mr Tung to introduce Ms Chau to Mr Li.

Mr Li’s own vast network of business, political and social connections is another big draw for start-ups.

Josh Tetrick, who runs Hampton Creek, recipient of $15.5m from Horizons last week, was introduced by a friend, Sonny Vu, who founded Misfits, another company backed by Horizons. “When he started talking about the group, the relationships they have, how they can really fuel your business, I got very excited,” he said.

Or as another person who knows Horizons puts it: “It’s about his networks. If Li Ka-shing invests in an electronic point of sale business and that company wants to talk to the chief executive of ParknShop [Hutchison’s supermarkets] do you think he’s going to refuse to talk?”

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