Who is the most important investor of Horizon?
Article | Chen Zhiyan
Editor | Liu Jing
After a full decade, Horizon Robotics has finally made its debut on the Hong Kong Stock Exchange. On the morning of October 24, the company's IPO saw a 28.32% surge on its first day, with a total market value exceeding HK$66 billion. This is also the largest technology IPO in Hong Kong's stock market this year.
"Dark Waves" has reviewed the financing stories of many star companies. The core of these stories is generally the regret or sigh brought about by the wealth effect. However, the financing process of Horizon Robotics is not like this.
As a star entrepreneur, when Yu Kai founded Horizon Robotics, it was an era with abundant capital and confidence. The initial financing of Horizon Robotics went smoothly, and many urban legends of US dollar funds emerged. But the story soon progressed to a challenging and specific stage: a stage composed of multiple industrial capitals and individual orders.
According to the incomplete statistics of "Dark Waves", in the past ten years, more than one hundred institutions have invested in Horizon Robotics. Just for its Series C round, it received investments from dozens of institutions and was completed in about 10 rounds. This is an unprecedented situation for Chinese startups.
For investors, returns are of course the gold standard. Referring to Horizon Robotics' current market value, it is difficult to say that this is an astonishing return. However, the investors we interviewed all stated that from the very beginning, they knew that what Horizon Robotics was doing was bound to be difficult. Even judging by the IPO, it is still too early to tell.
In an era of explosive growth, in the growth of a company, there are usually capital stories filled with power and wealth. But in the story of Horizon Robotics, whether it is financial investors or industrial investors, they play a "proper position": indispensable, but not overshadowing the main business.
"Dark Waves" interviewed nearly ten investors of Horizon Robotics, trying to analyze a question: In an entrepreneurial era dominated by technology, in the evolution process of a company, an industry, and an innovation, what is the role that investment plays.
The Legendary Story Era
Linear Capital's Wang Huai: The First to Decide to Invest
This investment has a long story.
Their first meeting was on November 19, 2013, at the first TechCrunch International Innovation Summit held in Shanghai. At that time, Yu Kai was still the Executive Vice President of Baidu Institute of Deep Learning; Wang Huai had already left Facebook. The book he wrote, "Building Facebook", had become a bestseller in the tech circle, and he was doing some angel investments.
At the TechCrunch conference, they each had their own sessions and did not know each other initially, only knowing that they were "friends of friends". After adding each other on WeChat, they had a long chat at the nearby Starbucks. The topic was said to be "How Deep Learning Can Transform the World".
Nothing happened in the following two years. However, whenever Wang Huai went to Beijing on a business trip, he would make an appointment with Yu Kai to chat. During this period, Yu Kai mentioned many times how artificial intelligence and deep learning could change the world. Although it was far from the later direction of the combination of "computing power + algorithm" in software and hardware, Wang Huai's intuition told him that this person must be invested in.
Wang Huai later mentioned that for such an entrepreneur who is "technologically competent, has ideas, and has visions", he used a subtle "planting strategy": from time to time, he would discuss "Should we come out and do something big together?" "How can I support you if you choose to start a business?" and so on. Therefore, when talking about this investment, Wang Huai said that he "tricked" Yu Kai into starting a business.
Horizon Robotics became the first project of Linear Capital after Wang Huai founded it. Taking this as the starting point, Linear Capital has also become one of the few "VCs that only invest in technology" in China.
Judging from the results after the listing, for VCs who used to get tens or even hundreds of times of returns, the returns brought by Horizon Robotics to early investors are not astonishing.
"In technology investment, a tenfold comprehensive return is already top-notch. Our investment in Horizon Robotics exceeds this return." Wang Huai once said with emotion that technology investment is a game of "winning by probability rather than odds", and the more valuable thing is Yu Kai's vision of transforming the world with technology.
Hillhouse Capital: "A Very Significant One and a Half Hours"
Shortly after, Wang Huai introduced Yu Kai to Hillhouse Capital. In September 2014, the first person from Hillhouse Capital to meet Yu Kai was Li Liang.
Li Liang has been at Hillhouse Capital since 2005 and is one of the founding partners. He graduated from Tsinghua University with a major in Automation and System Engineering. The academic affinity made him and Yu Kai have a great conversation. Soon, Li Liang took him to meet Zhang Lei at Hillhouse Capital's Beijing office.
Yu Kai once recalled his first meeting with Zhang Lei: one and a half hours, "very significant" and "particularly resonant".
At that time, Horizon Robotics had not fully decided to take the vehicle as the landing scenario, but the three of them discussed a lot about the automotive industry chain, Mobileye (an Israeli company with visual algorithms and chips as its core business), as well as the automotive-related industries and business scenarios. In the early stage of the development of autonomous driving, not many people in the investment industry paid attention to Mobileye. But during the communication, Yu Kai found that Zhang Lei and Li Liang had done vertical research.
Yu Kai originally worried that what he was going to do was difficult and time-consuming, and it was not easy for investors to understand. Unexpectedly, Hillhouse Capital quickly made the investment decision. Zhang Lei also encouraged him, saying, "Entrepreneurs should enjoy a period of time when they are not understood by others. When others think you are a fool, it is just the right time to do it well."
The investment was quickly reached. Since then, the significance of Hillhouse Capital to Horizon Robotics is on the one hand resource-based, such as connecting partners including Midea and Belle, helping Horizon Robotics in the early stage of entrepreneurship to find the first round of major customers and business landing scenarios. More importantly, it may be the strategic resonance and conceptual inspiration. Yu Kai once mentioned that Zhang Lei always reminds him to avoid "short-term behavior", "He likes to quote the strategy that Zhu Sheng advised Zhu Yuanzhang, the founding emperor of the Ming Dynasty: Build high walls, accumulate abundant grains, and defer being proclaimed emperor."
In Yu Kai's later public expressions, the shadow of these concepts can be seen. For example, when Horizon Robotics' market share reached the second place in 2023, Yu Kai clearly stated that it is also good to be the second place for a long time.
Hillhouse Capital has invested in Horizon Robotics for a total of 7 rounds. In 2017, Li Liang joined the board of directors.
For Hillhouse Capital, Horizon Robotics is definitely an early investment case from their early days. After a few years, Hillhouse Capital not only launched Hillhouse Ventures, but later also simply established a dedicated "Hillhouse Seed", and Li Liang is the person in charge of this business.
Five Rivers Capital: Another "Lei Jun Moment"
After deciding to invest, Zhang Lei voluntarily suggested to Yu Kai that after all, Hillhouse Capital is not mainly engaged in early-stage investments at this time, and he can recommend a friend to him, who is particularly good at coaching angel rounds.
So, Zhang Lei brought in Liu Qin of Five Rivers Capital (formerly known as MorningSide Ventures).
Yu Kai once shared this experience: When Zhang Lei proposed to introduce Liu Qin to him, he secretly rejoiced: "This is like buying one and getting one free." Liu Qin and Yu Kai have recalled their first meeting on many occasions: Four Seasons Hotel in Beijing, chatting from 9 pm to 3 am. The hotel's restaurants closed one after another, and they were "chased away" by different waiters.
But when Yu Kai told Liu Qin his initial idea of "building a computing platform for robots", Liu Qin's first reaction was "This vision is too big".
Yu Kai's entrepreneurial direction was beyond Liu Qin's 16-year investment experience. Liu Qin started his investment career in 1999. In January of that year, Lei Jun's Joyo.com went online. In February, Ma Huateng launched OICQ. In April, Jack Ma founded Alibaba. In September, Wang Zhidong became the CEO of Sina. Over the years, "Chinese people are good at business model innovation" seems to have become the golden rule of the primary market investment. But Yu Kai actually said, "I want to build a brain for robots." Liu Qin thought this was too niche and too difficult, and the Chinese had never succeeded in doing this before.
But the characteristic of Five Rivers Capital is that it will continuously pay attention to and support cross-industry entrepreneurs with a huge vision. A similar situation is that before investing in Xiaomi, Liu Qin also had a 12-hour late-night call with Lei Jun.
At that moment, the person on the other end of the phone was an "outsider" who had never made a mobile phone, just like at this moment, an "outsider" who had never touched hardware. "True innovation is often brought by outsiders." In an interview at the end of 2020, Liu Qin once said this to "Dark Waves".
Ultimately, on the premise of a consensus on the future of artificial intelligence, a sentence from Yu Kai moved Liu Qin: People who do not understand algorithms cannot do a good job in computing power.
Liu Qin later reviewed the deeper logic behind the "intuition" to "Dark Waves": In the computer era, the key to bringing about variables in the entire industry lies in Intel and Microsoft, one providing a computing platform and the other providing an operating system. In contrast, Yu Kai, from a high-dimensional perspective, has accurately identified two important positions for himself. "If you understand the computer industry, you will understand that software must rely on the hardware computing platform, and the computing architecture must be defined in advance. He wants to solve the most valuable and difficult thing in this industry from the very beginning."
Then, it is the classic "non-consensus and selective over-allocation" investment strategy of Five Rivers Capital. In July 2015, Horizon Robotics completed its first round of financing, and Five Rivers Capital was the lead investor in this round.
Combined with the statements from multiple parties learned in the interviews of "Dark Waves", Liu Qin is one of the financial investors who is deeply involved in the strategic formulation and adjustment of Horizon Robotics. According to the prospectus, before the listing, Five Rivers Capital is the largest financial shareholder of Horizon Robotics, holding 6.3% of the shares.
In October 2020, at the CEO Summit where Five Rivers Capital changed its name, Yu Kai said humorously: A good investor should find those young people who have no experience but have the original intention and dreams. And one of Liu Qin's advantages is that he will also look for "those elderly people who have the original intention but no experience". After Horizon Robotics went public, Yu Kai said: Five Rivers Capital is the true "believer in technology" among VC investment institutions.
After Five Rivers Capital confirmed the lead investment, several subsequent investment institutions such as GSR Ventures and Innovation Works joined at the last minute. When the final terms were settled, the valuation of Horizon Robotics' first round had increased by more than 60% compared to the initial price.
Sequoia China: From Betting on This Person to Betting on This Thing
The connection between Sequoia China and Horizon Robotics can be traced back to 2014: Yu Kai, who was still at Baidu at that time, met Shen Nanpeng and Zhou Kui.
Zhou Kui recalled to "Dark Waves": At that time, Yu Kai was still a "scientist" with dreams and vision. "Subsequently, in the major directions of artificial intelligence, e-commerce, chips, etc., we discussed entrepreneurial opportunities together and reached an agreement, and actively invested in the seed round of Horizon Robotics."
Over the past ten years, Sequoia China has participated in the seed round and Series C financing of Horizon Robotics. If "investing in people" is its core investment logic in the early stage, after Horizon Robotics converges its business to intelligent driving software and hardware and conquering multiple automotive enterprise customers, the company's more pragmatic development trend has strengthened Sequoia China's determination to increase its investment in the Series C round.
After Horizon Robotics successfully landed on the Hong Kong stock market, Zhou Kui rarely sent out a strongly emotional congratulation: Congratulations to Horizon Robotics! Congratulations to Yu Kai! Today, Horizon Robotics has reached a new milestone!
ZhenFund: A Wonderful Fate
The investment story of ZhenFund is rather wonderful.
Xu Xiaoping is one of the donors of the Future Science Prize. In 2015, the organizing committee invited Teacher Xu to visit the office, and Fang Aizhi accompanied him. Unexpectedly, Yu Kai was also there. They got to know each other like this.
At that time, Yu Kai already had the intention of starting a business. Therefore, ZhenFund invested in Horizon Robotics in two consecutive rounds in September 2015 and July 2016.
Fang Aizhi later said that investing in Horizon Robotics is the "most wonderful project hunting story in ZhenFund's history": It is not from the mutual search of each other, but an accidental encounter.
But the more wonderful part of history is that the parties themselves did not discover the hidden thread of fate.
The TechCrunch Summit where Wang Huai and Yu Kai met, in fact, Xu Xiaoping was also present. Less than ten days after the Third Plenary Session of the 18th Central Committee was closed, the emotionally charged Teacher Xu played a famous song by Sally Yeh, "Let's Live It Up", for the entrepreneurs at the scene. He said to the people present with a resounding voice: "The years do not know how much sadness there is in the world. Why not start a business freely? The golden decade of entrepreneurship has arrived!"
Qingyun Ventures, Zhongwei Capital and Today Capital: Investments from Nanjing University Alumni
Among Yu Kai's many investors, there are two of his alumni: Xu Xin and Yu Xiaolu, who both graduated from Nanjing University.
There is no need to introduce Sister Xu too much. Today Capital is the investor in Horizon Robotics' Series C1 round. Yu Xiaolu has worked for Qingyun Ventures and Zhongwei Capital successively, and is the investor in Horizon Robotics' Series A and Series C rounds respectively.
In late 2015, Yu Xiaolu was still the Investment Director of Qingyun Ventures. Qingyun Ventures' main investment direction was previously clean technology, but it also tried to find some new opportunities.
Yu Xiaolu looked at all the AI projects that could be seen in the market. After chatting with his senior Yu Kai, he recommended Horizon Robotics to the investment decision committee. There are two factors for the decision to invest at this time: First, Yu Kai himself is attractive, not only in terms of his educational and professional background, but also because Horizon Robotics already has the idea of combining software and hardware, which is different from the paths of all other autonomous driving startups at that time; Second, the longer fund cycle of Qingyun Ventures also objectively enables the investment patience for Horizon Robotics.
"Two judgments: First, the direction chosen by Horizon Robotics is definitely not an easy path; Second, Yu Kai may be the most suitable person to do this." What Yu Xiaolu said to "Dark Waves" can represent the mentality of the vast majority of early investors in Horizon Robotics. It is precisely because what Yu Kai wants to achieve is so difficult that the institutions that entered in the Series A round all hold "long-term money".
In the same round as Qingyun Ventures, the investors are Shuanghu Capital and Vertex Ventures. The former is the family office of Longfor Properties; the latter is backed by Temasek. These three institutions are relatively long-term funds.
In 2016, Qingyun Ventures participated in Horizon Robotics' Series A investment. After Yu Xiaolu later joined Zhongwei Capital, he also had a good outlook on Horizon Robotics and led an investment round in Horizon Robotics' Series C.
When Xu Xin invested in Horizon Robotics, it was already the end of 2020. After Sister Xu led the investment, it also officially kicked off the well-known - the big Series C round of Horizon Robotics.
From the end of 2020 to June 2021, Horizon Robotics' Series C financing was divided into many rounds, lasting for half a year. A group of institutions including Yunfeng Capital, CPE Yuanfeng, CICC Capital, IDG Capital, Legend Capital, Huangpu River Capital, etc. flocked in. This is a pioneering move in the financing history of Chinese companies.
There is no unified statement on exactly how many rounds the Series C has gone through. The answers from investors are also not the same, with some saying 7 rounds and others saying 12 rounds.
DST, Baillie Gifford: The Most Extreme Money in US Dollar Funds
Shortly after starting the Series C financing, Horizon Robotics announced in early 2021 that it had received a $400 million financing led by Baillie Gifford (BG) and other institutions. The initial $700 million financing target for its Series C has been nearly 80% completed. And as early as five years ago, Horizon Robotics had also received an investment from DST.