Fired by ByteDance, yet raised 30 million US dollars in financing: Has the bottom line of the venture capital circle been broken?

A prodigy was fired by ByteDance, but later received a $30 million investment from well-known institutions. This starkly contrasting attitude has caused quite a stir in the venture capital circle.

Here is the full story.

Tian Keyu, a world model entrepreneur, PhD of Peking University, and the first author of the best paper at NeurIPS 2024, recently secured $30 million in investment from 5Y Capital and IDG.

With such an impressive resume, it was later found that back in 2024, when he was still interning at ByteDance, he committed a "rule-violating" act: he wrote and tampered with codes to interfere with the company's internal model training tasks, and was subsequently dismissed.

Although the facts of the case are still disputed, ByteDance's handling of the incident shows that his behavior was quite serious.

Because of this incident, ByteDance not only sued him for 8.02 million yuan in compensation (the first-instance court supported a claim of 500,000 yuan), but also dismissed him, and synchronized the handling result to Peking University, the Sunshine Integrity Alliance, and the Enterprise Anti-Fraud Alliance.

This raises a highly controversial question: when a person has extremely outstanding technical capabilities, how much bottom line can investors loosen for him?

My point is: if 5Y Capital and IDG can still resolutely invest in him after fully knowing all the facts today — then they are indeed very brave.

But if they regret it now, and regret not doing proper due diligence at that time, that is a completely different story.

If it is the first scenario, why do I say 5Y Capital and IDG are very brave? Because their investment bottom line has far exceeded that of the vast majority of institutions.

From personal experience, investment institutions attach great importance to the moral character, ethics, and compliance bottom line of entrepreneurs. As long as there is any related stain, they would rather miss the opportunity than place a bet on such a person.

Because they attach great importance to these criteria, many unspoken principles have formed in the industry.

The relatively minor ones are related to ethics. For example, institutions will not invest in entrepreneurs who do not love their wives, who are unfaithful in marriage, or who are irresponsible to their families. Why? Because investors will think that if you are not even responsible for your wife and family, how could you be responsible for them in the future?

Take Tian Keyu as an example — if he dares to violate the company's regulations and infringe on ByteDance's interests today, how can we guarantee that he will abide by the investment agreement tomorrow and not infringe on the interests of investors?

Technical capabilities may help him succeed, but they cannot guarantee that he will lead investors to succeed together — these are two completely different dimensions of issues.

Of course, the more serious rules are those related to "abiding by laws and regulations".

For example, investment institutions generally will not invest in entrepreneurs who have a bad record. This kind of record covers many situations, ranging from minor offenses such as fraud, to more serious violent crimes.

Institutions will not listen to any explanations for these issues. As long as a bad record appears in the due diligence report, no matter what the reason is, the project will be rejected directly.

We once recommended a project to investors: the investment committee had already approved it, but a bad record was found in the due diligence report — the case was roughly related to the forgery of stamped documents.

To be honest, in today's bidding and other scenarios, document forgery is not an extremely serious offense. But after the institution found the bad record, they made a decision overnight not to invest. The founder offered to quit the company, but it didn't work. No matter what he said, the institution refused to invest.

So the incident of Tian Keyu is by no means a trivial matter.

Here is a good reference: suppose you are the boss of a company, and when you do due diligence, you find the dispute between him and ByteDance, would you hire him with an annual salary of 1 million yuan? I think a lot of companies would not. For those companies that are not willing to pay an annual salary of 1 million yuan, it is very hard to understand that an institution would invest 30 million dollars in him.

Of course, the above is only the "general rule" followed by most institutions. But investment is a highly personalized business. If everyone reaches a consensus on a project, no one can make profits from it. The group of people who hold "non-consensus" views often get the first share of the profits.

So in my opinion, this investment from IDG and 5Y Capital may also be a "non-consensus" move.

Young people make mistakes in the workplace every now and then. In my first two jobs before starting my own business, I caused quite a lot of trouble to my leaders each time, and I left the job after a big quarrel with my leader every time. But I was very lucky, I met a group of leaders and investors who were tolerant of me.

I think people who choose to start a business more or less have these characteristics: rebellious, dislike following the rules, and dismiss all unfair rules.

According to Tian Keyu's statement, he also suffered unfair treatment at that time, but the method he chose to solve the problem was a bit too extreme. Since he has extraordinary talent in technology that ordinary people do not have, we should give him a chance to contribute to the society.

If in the future, he can use his own technology to promote social progress, all of us will be grateful for this decision we made.

This article does not constitute any investment advice.

This article is from the WeChat Official Account "Pencil News" (ID: pencilnews), the author is Pencil News, and it is published with authorization from 36Kr.