When Wang Jun, co-founder of BGI, left the Chinese genomics group to establish a new Shenzhen medical technology company called iCarbonX in 2015, several big venture capitalists of China courted him, hoping that he would take their money. Neil Shen of Sequoia Capital China, who had backed Mr Wang at BGI, thought he would have an inside track. Zhang Lei of Hillhouse Capital offered to write a cheque for as much as Mr Wang wanted. But eventually Mr Wang turned to Tencent founder Ma Huateng, who gave him almost $200m, valuing his young start-up at $1bn.
One reason for these investors’ enthusiasm for Mr Wang was his history at BGI, which is now a leading genome sequencing organisation that works closely with the Bill and Melinda Gates Foundation. When it goes public in Shanghai as soon as next month, its listing is expected to generate big returns for Sequoia and other early investors.
Not long ago, Chinese tech largely meant Alibaba’s ecommerce business and Tencent’s social media empire built around its WeChat app. That is no longer the case. The sector is becoming broader, more value-added and more lucrative. While most investors are increasingly bearish about China’s macro prospects, many are relatively optimistic about the country when it comes to technology. In areas ranging from robotics and artificial intelligence to medical devices and fintech, China is making the transition from imitator to innovator. That raises the prospect of huge gains for investors fortunate enough to get in early. One recent list of the top technology groups that are still private worldwide from CB Insights shows that four out of the top 10 are based in China, compared with five from the US and one from India.