HONG KONG (Reuters) - Richard Ji, whose little-known fund was the biggest investor in leading Chinese smartphone maker Xiaomi Inc's [XTC.UL] $1.1 billion fundraising last month, is a numbers man looking to spot 'category killers' - start-ups with the power to disrupt.
Ji, a former Morgan Stanley technology industry analyst, co-founded All-Stars Investment Ltd in Hong Kong last April with half a dozen colleagues from the Wall Street bank.
The fund swiftly raised about $750 million to target China's vast internet sector, Ji told Reuters in an interview at his small office in Hong Kong's central business district. A Xiaomi branded television hangs on the wall.
Ji declined to name investors in his fund, but said half the money came from leading Asian corporations and the rest from business leaders in the IT, consumer and financial industries.
"As a fund, we focus on late-stage opportunities, or companies that are 2-3 years away from potential IPO," he said. "If you focus on growth-stage companies, chances are you'll pick the wrong horse."
Last year's record $25 billion IPO from Alibaba Group Holding Ltd injected new life into Chinese tech hopefuls. Alibaba and other Chinese companies raised a combined $29.3 billion through U.S. listings last year alone, minting millionaires and fuelling a rush to fund tech start-ups.
Ji reckons only one in every 60,000 internet start-ups in China makes it to a public listing.
Ji, whose 11 years as an industry analyst helped him build close ties with Chinese tech entrepreneurs including Xiaomi founder and CEO Lei Jun, says he targets what he calls 'category leaders' and 'category killers'.
"These companies have a disruptive product or business model, and they are the winners of tomorrow," he said.
Xiaomi fits that bill.
Just three years after selling its first mobile phone, Beijing-based Xiaomi, dubbed 'China's Apple', is worth $45 billion, making it the most valuable start-up in the technology sector. Already, the world's No.3 smartphone maker, Xiaomi has ambitious plans to take on Samsung Electronics as it expands into home appliances, televisions and TV content.
"Lei Jun placed extraordinary faith in Richard by handing him the mandate," said one individual who knows both men and is familiar with the fundraising. "That trust was built over a period of time, and Richard did not disappoint him."
Xiaomi's reliance on Ji, 46, to drive the December fundraising underscores the importance of strong personal ties.
"He's connected, well regarded, understands patterns and has learned that the odds are in his favour when he has the courage of his convictions – all in all, a powerful combination," said Mary Meeker, general partner at U.S.-based venture capital firm Kleiner Perkins, and Ji's mentor at Morgan Stanley.
"He comes from an ordinary background. The remarkable thing about Richard is that he's obsessed with analysis, even with simple things in life," said a former classmate of Ji's from Fudan University.
After a first degree from Fudan, Ji went on to Harvard, where he specialised in novel cancer therapy. During a brief stint in the pharmaceuticals industry, he dabbled in tech stocks and trebled his money in 1999, only to lose it all the following year as the dot.com bubble burst.
"I was a victim of the previous technology crash, and so we're extremely cautious about the (current) bubble. But there are key differences between the 2000 boom and now," Ji said.
Ji notes that in early 2000 fewer than 5 percent of Chinese used the internet. Today, some 630 million people - around half the population - log on in some form, making China the world's biggest internet market, and internet companies don't just rely on advertising revenues.
Apart from Xiaomi, Ji's fund has also invested in Tencent Holdings-backed taxi-hailing app Didi Dache, online fashion retailer Meilishuo, and Alibaba.
Ji declined to say how much more money he plans to raise, but said there's no shortage of people looking to invest. His real test will be to secure commitments from international funds, giving him the profile and clout to take on global technology investors.
That will likely depend on the returns his current fund can generate.
Additional reporting by Lisa Jucca; Editing by Ian Geoghegan