Chinese tech giant Tencent dramatically expanded the number of start-up enterprises it took stakes in last year, emerging as a leading player in the venture capital sphere ahead of Alibaba.
Tencent made investments worth over USD$12 billion in 163 start-up enterprises across a range of industries in 2020, beating out Alibaba in the venture capital stakes. The number of start-up enterprises in which Tencent invested in 2020 marked a 40% rise compared to the previous year.
This copious volume of investment makes Tencent the top non-financial enterprise in China when it comes to start-up investments, employing a growth strategy that uses venture capital to cement partnership ties with promising firms.
As of the end of February 2020 Tencent had obtained equity stakes in roughly 880 companies, including 183 in the entertainment sector and 142 in the gaming sector.
As of the end of September 2020 Tencent’s equity holdings in listed venture enterprises (not including Tencent’s subsidiaries) had seen a 12-fold increase within a five year period.
Chinese video platform Kuaishou, which listed in Hong Kong in February, is a recent example of the success of Tencent’s investment strategy.
Since 2017 Tencent has invested over $2.8 billion in Kuaishou via multiple equity acquisitions. Kuaishou’s IPO netted Tencent more than $18.4 billion in profits on paper, following a 194% rise in share prices at the open of Kuaishou’s Hong Kong debut.