DST founder Yuri's views on investing in China and future investment directions (2025.1.26)
DST Founder Yuri's Views on Investing in China and Future Investment Directions (2025.1.26)
Yuri Milner, founder of DST Global. Based on his past statements, his views on investing in China are as follows:
### Overall Views on the Chinese Market
- **Huge Market Potential**: The Chinese market is incredible, with its tech market performance surpassing that of other countries, including the U.S. When he first visited China in 2003, he saw small companies like Alibaba working out of a single room. Over the past 15 years, these companies have become pillars of Chinese commerce.
- **Dream-Driven Excitement**: The Chinese market excites him because of its dreams. He encounters founders or engineers with grand visions, and witnessing these dreams come true is an honor.
### Investments in Chinese Internet Companies
- **Remarkable Investment Results**: Over the past seven to eight years, his investments in Chinese internet companies have allowed him to tell this story. He was fortunate to invest in companies like Alibaba, JD.com, Xiaomi, Didi, Meituan, and Kuaishou, whose growth has been unbelievable. Since 2011, the total value of Chinese internet stocks has grown 13-fold compared to the first quarter of this year.
- **Witnessing Industry Rise**: He believes the story of China's internet took shape over the past decade. In the last seven years, the number of Chinese companies in the global top 20 internet rankings has doubled from 4 to 8.
### Factors Driving China's Internet Development
- **Consumer Push**: Chinese consumers have fueled the success of internet companies, spending increasingly more time online, while in the U.S., people still spend much of their time watching TV.
- **Characteristics of Offline Retail and Financial Systems**: China's offline retail system, due to its structural issues, never developed as robustly as the U.S. system, which is why Alibaba is now 50 times larger than the biggest offline retailer. China's credit card penetration is one-tenth of the U.S., enabling mobile payments to flourish.
- **Talent and R&D Investment**: China's education system produces a vast number of engineers. Excluding the U.S. and India, China trains as many engineers annually as the rest of the world combined. Chinese tech companies account for only 10% of GDP in terms of revenue but 40% in R&D spending, a figure growing rapidly. Engineers compensated via equity incentives earn 300 times more than those in traditional non-tech fields.
### Investment Philosophy and Style
- **Investment Principles**: Only invest in explosively growing sectors, companies valued at over $1 billion, and those with high barriers to entry + massive user bases, where profitability can be delayed.
- **Emphasis on Communication and People**: He prefers face-to-face meetings with founders, valuing people and project types highly. During investments, he offers high prices without demanding control, not even preferred shares or board seats.
How much credit does Shouzi Chew deserve in DST's investments? Yuri or DST's views on future development (including factors), investment perspectives, current holdings, and future opportunities.
### Shouzi Chew's Role in DST's Investments
Shouzi Chew played a pivotal role in DST's investments:
- **Networking and Project Discovery**: As a partner at DST from 2010 to 2015, he spent a year connecting with over 20 top Chinese financial advisory firms, building extensive networks for DST. Through these connections, he identified and facilitated investments like JD.com (introduced via China Renaissance, leading to DST's $500 million investment for an 8.8% stake), ByteDance's $10 million Series B in 2013, and Xiaomi's $500 million investment for a 7% stake in 2011.
- **Investment Decision Support**: As a bridge between DST and Chinese projects, he provided critical insights and recommendations, ensuring informed investment choices.
### Yuri Milner or DST's Views on Future Development and Investments
- **Future Development and Influencing Factors**:
- **Longer Consumer Market Return Cycles**: While global consumer markets will grow, returns will take longer than before (e.g., Facebook's massive returns).
- **Bullish on China**: Chinese internet companies are just beginning to globalize. China's manufacturing prowess and strong tech foundations (e.g., AI) present opportunities, with internet penetration leading globally.
- **Investment Perspectives**:
- **Criteria**: Focus on founder/team backgrounds, sector potential, and early growth. Only consumer-facing internet companies.
- **Globalization**: Aims to help undervalued companies become industry leaders, prioritizing long-term success.
### DST's Current Holdings
Public data doesn't provide real-time updates, but historically, DST has invested in Facebook, Twitter, Airbnb, Alibaba, ByteDance, JD.com, Xiaomi, and Meituan. Current stakes are unclear.
### Future Opportunities
- **Sectors**: DST is shifting focus to China, targeting fintech, healthcare, IoT, AI, blockchain, 3D printing, and nanorobotics.
- **Geography**: China's vast consumer market, rising tech capabilities, and innovation talent will continue attracting DST.
—Content sourced from Douban
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