Kai-Fu Lee, the former head of Google China, is turning his attention to China's start-up scene with his new company, Innovation Works.
Lee is investing in Chinese companies in the mobile Internet space through Innovation Works, which functions as both a venture capital fund and a startup incubator. He serves as co-founder and CEO of the company and aims to give young Chinese entrepreneurs the mentoring, resources and funds they need to stop relying on copy-cat ideas.
Many Chinese startups simply copy what companies are doing outside China, hoping to replicate their success.
But the latest generation of Chinese entrepreneurs are watching companies in the U.S. and Japan and figuring out how to integrate and optimize their ideas for the local market, Lee said, saying pure copies of foreign companies are no longer viable.
After six months of operation, Innovation Works has so far provided seed funding to nine entrepreneurs, seven of which are in the mobile Internet space, Lee said. Only one is looking to enter the overseas market.
Innovation Works has been compared to venture firm Y Combinator, which targets early-stage start-ups, but Lee says they are "very different."
Y Combinator usually invests US$20,000 per three-founder team for a 6 percent to 7 percent stake, while Innovation Works invests about $150,000 to $200,000 for each entrepreneur, who can be paired with five engineers, and takes a stake of between 15 percent and 25 percent. Lee says that means Innovation Works is pickier when choosing investment targets.
Besides mobile Internet startups, Innovation Works is interested in e-commerce but is steering clear of Twitter-like microblogging services.
While microblogging is becoming popular in China, stringent media regulations means its likely to be left to the big boys, like Sina, one of China's largest Internet portals, said Lee. He has first-hand knowledge of China's censorship policies from his time at Google, where he oversaw the launch of the censored search engine that the company developed for China.