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Tencent
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China’s Tencent chilled by ‘cold winter’ in business environment as it bets on fewer companies this year

  • Chinese internet giant Tencent Holdings, one of the most active investors in the tech world, put money into 108 deals this year compared to 162 in 2018
  • The company’s president Martin Lau had warned earlier this year of a sharp downturn due to “bigger challenges” in 2019

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Chinese internet giant Tencent Holdings is one of the most active investors in the technology world. Photo: Bloomberg
Celia ChenandIris Deng
Chinese internet giant Tencent Holdings, one of the most active investors in the technology world, has significantly scaled down on investments this year after a bullish investing spree in 2018.

As a tech rout spread through the world this year, the Shenzhen-based company put money into 108 deals globally, 33 per cent fewer than the 162 deals in 2018, according to Chinese research firm IT Juzi, whose data is widely cited by both local and overseas media. Tencent also invested less than half the amount of money in total this year – 34.3 billion yuan (US$4.9 billion) compared to 72.7 billion yuan in 2018.

Tencent’s shrinking investments are in line with China’s overall decline of venture capital activity this year, amid the country’s economic slowdown and uncertainties about the ongoing US-China trade war. In 2019, Chinese companies raised US$35.6 billion over 2,047 rounds of funding from January to mid-November, compared to US$93.4 billion from 2,795 rounds over the same period in 2018, according to Crunchbase in November.

This follows earlier indications that Tencent was moderating its investment strategy after what the company’s president Martin Lau has called its “best year” in 2018.

In February, Lau launched a robust defence of the company’s practice of taking stakes in hundreds of companies in response to an online essay questioning whether the company was “losing its dream” by driving growth through investments rather than original innovation.

Speaking at a company event, Lau said investment was part of the Chinese internet giant’s core strategy. “Investing allows us to focus on the most important, the platform business, and make it the best,” he said, adding that Tencent invests in companies with a variety of expertise which helps it collaborate with a larger ecosystem, exposing it to opportunities in new areas.

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