On the eve of the typhoon “Fireworks” with a wind force of up to 16 levels, online education encountered a strong storm ahead of schedule. There are no eggs under the covering nest, and this time the legendary DST Global in the investment industry has also planted in it.
In October 2020, Yuandao Online Education completed the G2 round of $1 billion financing. This round of financing was led by DST, with participation from CITIC Industrial Fund, GIC, Temasek, Trust Capital, Dehong Capital, Ouling Investment, Jinglin Assets and Danhe Capital.
Photo by Yan Wu at a Xiaomi store in Yubei, Chongqing
Yuandaodao was valued at $15.5 billion after being invested. However, in the blink of an eye, the education and training industry was turned upside down in an instant, and the dream of Yuanjiao’s listing may also be broken.
In addition to Yuandaodao, DST also invested in a NASDAQ-listed Education Technology in the D round, and currently holds 3.12% of the shares. In this round of online education stocks plummeting, educational technology has not been spared either.
“At that fatal moment, forget all the unhappiness.” (Russian song “I want to live”) DST, which has a solid record in the global investment community, may not have expected that investment in online education would suffer such a fiasco.
You know, in the past ten years or so, DST has penetrated deeply into China’s Internet industry, claiming to have invested half of China’s Internet industry. DST, what kind of supernatural power does it have?
Smart polar bear
The story begins with a handsome guy. Speaking of the title of “Very Rich and Handsome in VC”, one must think of the second handsome of Xiaomi: Zhou Shouzi .
You may not have heard of Zhou Shouzi’s name too much, but you must have heard of Zhang Yiming, Ma Yun, Liu Qiangdong, Lei Jun…These bigwigs who hold the right to speak on the Internet in China, have been behind Zhou Shouzi.
Back then, the 27-year-old Zhou Shouzi, as a partner of DST in China, entered the Chinese Internet market and promoted DST to invest in a number of Internet giants such as JD.com, Alibaba, Xiaomi, Bytedance, and Kuaishou. But many years later, the fate of forging took place: Xiaomi and ByteDance, the companies that DST had invested in, invited Zhou Shouzi to become the CFO.
Flowing VC, iron-clad organization, DST behind Zhou Shouzi is Dinghai Shenzhen.
The full name of DST is DST Global. This “polar bear” from Russia is extremely flexible. In just over ten years, it has invested in almost half of the world’s Internet industry. Based on its past investment records, it is no exaggeration to say that it is a universe-level investment institution.
DST was established in 2005. At that time, the Internet industry in Russia was surging. After Medvedev was promoted to president in 2008, he strongly encouraged the new economy and Internet entrepreneurship, and DST was even riding on the wind.
From Russia’s Internet to the east wind, to kill on the global Internet journey. This company, which only set foot in venture capital in 2005, can invest in so many giants and become a giant investment giant in the universe?
Save the “American Soldier”
More than 10 years ago, DST staged a rescue operation. The Russians saved the “American soldiers.”
On September 15, 2008, Lehman Brothers, one of the five largest investment banks on Wall Street, went bankrupt. At the beginning of the year, the Fed was still frantically opening the gates and releasing water. The news of bankruptcy caused the Fed to abandon its previous efforts and financial institutions were completely panicked.
Then, the financial crisis quickly swept across the world like a snowball, and all walks of life were hit hard. This “black swan” incident also almost ruined Facebook’s future, and it was DST that saved Facebook.
In March 2009, Facebook launched a D round of financing after experiencing a severe blow to the advertising market under the financial crisis. It is said that the investor has already been negotiated. At this time, DST appeared, and directly offered a price 20% higher than the quoted price of any institution to invest in Facebook, and did not need Facebook’s voting rights. All were given to Zuckerberg, including the secondary level. Shares of old employees purchased from the market. This deterred other opponents who wanted to invest in Facebook at the time, making them feel puzzling and absurd.
This “silly white sweet”, don’t do it for nothing.
Zuckerberg also had a hard time rejecting a generous investment that would not require a seat on the board of directors and consolidate his own equity. According to data from Tianyan Check, on March 26, 2009, DST invested $200 million in Facebook at a valuation of $10 billion.
According to the analysis of risk investors, the financial crisis may become a good time for investment institutions to invest. Often after the arrival of the financial crisis, the entire Internet environment will not be as impetuous as before, but it is easier for investors to find Internet companies with appropriate prices and potential.
DST discovered and identified Facebook. According to data from Tianyan Check, on January 21, 2011, DST Global invested another $1.5 billion to Facebook.
In addition to Facebook, in the two or three years from 2009 to 2011, DST has also won Silicon Valley’s star companies such as Zynga, Groupon, Twitter, Airbnb, etc., which can be described as a sharp edge for a while.
The end of the universe for so many people is Silicon Valley. DST made a dip in Silicon Valley and became famous in World War I!
Facebook’s subsequent results did not live up to DST expectations, or in other words, DST did not bet wrong. According to the research data released by the market research organization comScore that year, in 2010, almost all indicators of Facebook showed a growth trend, and most of the indicators showed double-digit growth. DST invested $200 million in Facebook in 2009 and successfully brought in a return of $4 billion!
Looking back a few years later, it can be said that in addition to saving lives this time, DST has also affected Facebook’s game rules for the next ten years to a certain extent. why? DST encourages Facebook to jump out of product logic and broaden the way to make money by virtue of its social attributes and user size advantages: Facebook can make money by developing virtual currency business.
The fact is indeed the case. In 2010, after DST invested in Facebook, Facebook began to launch virtual currency. According to Dan Rose, the former vice president of Facebook, the virtual currency business once accounted for 20% of Facebook’s revenue.
In any case, DST, the “polar bear”, became famous in Silicon Valley. After becoming famous, DST aimed at the Chinese market, and Zhou Shouzi’s career as a golden VC was immediately staged.
Weekly funded force DST
In 2010, DST moved its headquarters from Moscow to Hong Kong, closer to the Chinese market.
DST was lucky to find Zhou Shouzi.
The young Zhou Shouzi appeared mysteriously in June of this year and joined DST. In the next five years, Zhou Shouzi, a partner of DST China, helped DST open up the two lines of Ren and Du in the investment landscape of China’s Internet industry.
Our resume for several weeks of funding is perfect.
Born in 1983, he retired with the rank of captain after serving in the Singapore Air Force. He then entered the University of London for further studies and joined the top investment bank Goldman Sachs after graduating in 2006. In 2008, when he resigned and went to study for an MBA from Harvard Business School, Zhou Shouzi was only 27 years old when he joined DST as a partner.
Some people are not only excellent, but also very desperate. This young VC is also desperate. When entering the Chinese market with the glorious mission of DST, Zhou Shouzi offered to meet with 30 companies a week, and after a year, he got acquainted with the main partners of more than 20 top financial consulting institutions.
DST’s first investment in China was JD.com. Bao Fan, the founder of Huaxing Capital, who was met by Zhou Shouzi, made a match. DST’s boss Milner flew to China to meet Liu Qiangdong. Rumor has it that he also went to Urumqi with Liu Qiangdong for a drink. In JD’s C round, Tianyan Check data showed that DST invested 961 million U.S. dollars.
This is an investment that delights a strong son. Because DST is the largest contributor, it does not need board rights or voting rights. On the evening of March 30, 2011, the big Qiangzi on the Suning Bar did not say on Weibo: Jingdong Mall’s new round of financing is close to the end!
Like the market, DST is preparing to include the Chinese Internet giants in its capital basket one by one.
Alibaba was the second hand to vote. Both Tianyancha and Enterprise Chacha data show that on September 1, 2011, DST invested $1.6 billion in Alibaba’s Series E investment. Inquiring about relevant information, it can be noticed that in order to reduce the pressure of IPO, Alibaba Group launched an employee equity purchase plan this year. DST partnered with Yinhu Fund and the domestic Yunfeng Fund to participate in the plan.
JD.com and Alibaba’s two thick stepping bricks successfully allowed DST to open the door to China. Under the leadership and matchmaking of Zhou Shouzi, DST immediately invested in Xiaomi, Momo, ByteDance, Kuaishou, Meituan, Didi and other big players to advance in the Chinese market.
There are only a few important opportunities in life. Among these investment projects, the ones that have the deepest involvement with Zhou Shouzi’s later life are Xiaomi and Bytedance.
In many reports, we can find that the identity that really brought Zhou Shouzi to the stage is Xiaomi’s CFO .
On August 16, 2012, Xiaomi’s first-generation smart phone M1 was officially released. At this time, it was only a little over 2 years after the establishment of Xiaomi. It was March 2011 when the young and handsome Zhou Shouzi approached Lei Jun, Xiaomi’s first handsome man, and there was still some time before the M1 went on sale. The future of Xiaomi is not clear.
Zhou Shouzi was introduced by the founder who had been invested by Lei Jun. He first met Lei Jun. After a very happy conversation, in September 2011, DST founder Milner and others came to China to visit Xiaomi. Lei Jun gave a passionate speech on Xiaomi’s “Iron Triangle” plan: integrating hardware, software, and interconnected services. In other words, Xiaomi is not a mobile phone manufacturing company, but an Internet technology company.
After all, DST’s full name is Digital Sky Technologies, and Boss Lei’s idea is right to Milner’s appetite. According to the data from Tianyan Check, on June 1, 2012, DST invested US$216 million in Xiaomi’s C round, and invested hundreds of millions of US dollars in the 2012 D round of financing. What’s more generous is that DST invested 1.1 billion U.S. dollars in Xiaomi’s E round of financing at the end of 2014, directly raising Xiaomi’s valuation to 45 billion U.S. dollars!
During this period, Zhou Shouzi’s other important life node also planted an anchor point for byte beating.
Today’s Bytedance has become a pole of China’s Internet, but the Bytedance in 2013 is indeed out of money.
In 2012, in Jinqiu Homestead near Zhichun Road, Zhang Yiming took a multi-million yuan investment and started his entrepreneurial road with a team of 30 people. At the end of 2013, Byte’s first product was launched on Toutiao today. At that time, bytedance, there were no series of products such as Douyin, Wukong Q&A, and Watermelon Video in the basket. The only thing that can be obtained is today’s headline, and only today’s headline.
But at this time, the portal sites in the Chinese market already have NetEase, Sohu, and Sina. Today’s Toutiao is only regarded as the next portal site. Investors cannot see the pie drawn by Toutiao, and no one is aware of the individuality. The recommended air outlet.
Naturally, the B round of financing has become the most difficult round of Bytedance. In order to promote Toutiao’s financing this time, Wang Qiong of investor Heiner Asia has failed to connect with 20 or 30 investors in China to Zhang Yiming, and Zhang Yiming has found investors himself and found nothing.
At this time, DST had already invested in Prismatic, the US version of Toutiao. He saw the prospect of algorithm recommendation before the domestic market at that time, so Wang Qiong contacted DST’s founder, Milner.
Until the second half of 2013, Zhou Shouzi, who was less than 30 years old, came to his door, and after evaluating the product, he was sure that the byte beating. Later, DST invested $10 million in ByteDance’s Series B financing.
This time, with the exception of Qihoo 360, most domestic VCs have missed the best window period for investment by byte beating. In June 2014, Sequoia Capital made up for the chase investment with a 10 times price. In December 2016, Bytedance’s D round of financing reached US$1 billion, with a valuation of more than US$10 billion.
For many VCs, Bytedance has shut them out, and Zhou Shouzi is inside.
There are rumors that, among the series of investments in Xiaomi, Zhou Shouzi played a very important role in the valuation and pricing process. Soon after Xiaomi’s E round of financing, Zhou Shouzi did receive an invitation from Xiaomi’s first coach Lei Jun: to join Xiaomi, serve as CFO, and become Xiaomi’s second coach.
On July 1, 2015, Xiaomi ushered in this familiar military division. In 2018, Xiaomi went public in Hong Kong and became the first listed company on the Hong Kong Stock Exchange with “same shares but different rights”. CFO Zhou received capital. After all, he was once the person in charge of DST Hong Kong, and the capital circle has been fun. There were some controversies in this listing, and it broke on the day of listing! But at any rate, it can be regarded as on. Judging from Rebs’ later attitude towards Zhou Shouzi, it did not affect his love for him.
On November 29, 2019, Zhou Shouzi took over the International Department and continued to serve as Executive Director and Senior Vice President. In the meantime, Xiaomi’s overseas market has expanded from more than 80 countries to more than 100 countries.
Lei Jun has always admired Zhou Shouzi very much, calling him the second most handsome in Xiaomi. Of course, in addition to being handsome in appearance, he is also handsome in ability. Rumors say that Zhou Shouzi is Xiaomi’s successor. After Zhou Shouzi got to Xiaomi, he also served as director of two Xiaomi affiliated companies registered in Hong Kong, one is MI Space NJ Limited and the other is Xiaomi Best Time International Limited. Zhou Shou Capital also established a company in Hong Kong.
But if the hero wants to go, he can’t stay. In the sixth year of Xiaomi’s boom, ByteDance, which Zhou Shouzi led and invested, has thrown an olive branch. In March 2021, Zhou Shouzi resigned from Xiaomi and became the CFO of Bytedance, based in his hometown of Singapore. This is a farewell to the few Internet circles and full of friendship. On Weibo, the first handsome expresses his reluctance and blessings, and the second handsome expresses cherishment and gratitude.
In fact, in the morning, the media quoted sources as revealing that, as part of the global expansion plan, Bytedance plans to invest billions of dollars in Singapore within three years. Therefore, whether it is Zhou Shouzi’s VC and CFO history or the future regional development of ByteDance, Zhou Shouzi is a very suitable candidate for ByteDance. One month after joining ByteDance, Zhou Shouzi also served as the CEO of TikTok.
From VC to CFO and then to CEO, just as Zhou Shouzi said when reporting on the progress of Xiaomi’s first quarter in 2019: a new start, getting better. Both the Bytedance and Zhou Shouzi individuals are facing a new start. As for whether they can gradually get better, such as promoting the listing of Bytedance, they are still facing the changes of the times.
Zheng Tanjun also learned that Zhou Shouzi is still very popular in Byte, with many fans. In April of this year, BYTE announced that it did not have the conditions for listing at the moment. So, will it choose Hong Kong, which Zhou Shouzi is familiar with, to be listed in the future?
Wait, let time reveal the answer.
Returning to the protagonist DST, from Facebook and JD.com a decade ago to Kuaishou and Dingdong Shopping that went public this year, DST has a very different investment style.
Analyzing part of DST’s investment behavior, it can be found that DST has always offered high prices, and the amount of investment is often hundreds of millions. It is used to entering the market in the middle and rear rounds, and the investment companies postpone the listing. The founder Milner once said in an interview with “Global Entrepreneur”, because this allows him to focus on his products and services, wait for value-added, and avoid interference after listing. This is why we have seen that many companies invested by DST are listed again one or two years after being invested.
Comparison of DST Investment Companies and Time to Market
The lengthening of the investment front can be supported by the position report provided by DST to the US Securities Regulatory Commission.
Take Facebook as an example. In the position report submitted by DST and some of its affiliates to the US Securities Regulatory Commission, Facebook’s last position record stayed on June 30, 2015, and there was no position information after that. In accordance with the requirements for submitting a position report every quarter, it is estimated that DST will liquidate Facebook at the beginning of 2015.
According to the position report published by DST on the official website of the US Securities Regulatory Commission, Facebook’s first position information appeared on June 30, 2013, and then gradually reduced its holdings. In other words, DST held Facebook for two years, and it has been 6 years since DST first invested in Facebook in 2009.
This can also be found by analyzing DST’s position information on JD.com. JD.com appeared in the position report for the fourth quarter of 2014 submitted by DST and some of its affiliates, and then gradually reduced its holdings until the position information reported on September 30, 2018, December 31, 2018, and March 31, 2019 Jingdong’s position is directly zero. It has held positions for almost four years, and nearly seven years have passed since investing in JD.com. However, during this period of time, Dong Ge was caught in the peachy incident in Minnesota. Is it a punitive reduction in holdings?
DST’s shareholding changes in Jingdong Yucheng map
Further analysis can also find that almost all companies invested by DST are industry leaders, and DST tends to invest in late stages, that is, companies with relatively mature marketing systems and management systems. This is why DST always does not require board seats, preferred stocks, special voting rights, or any power that can influence major company decisions after investing, because such companies have been able to control their own destiny. Such an open attitude of power also allows DST to focus on its potential in those competing companies and let go of investment.
On social media, DST has invested in Kuaishou, Momo, Facebook, and Twitter; on digital media, Spotify and ByteDance have been listed in the early years; in the consumer sector, they have invested in Meituan, Alibaba, JD.com, DoorDash, and Wish; sharing In the field, there are Didi and ofo small yellow cars; K12 education has invested in the well-known ape tutoring. Including the new consumption of young fans now, such as e-cigarettes, the pioneers of fashion brands, RELAX, and poison, DST had already voted two years ago.
In the past two years, DST has invested heavily in financial technology. From January 2020 to 2021, DST has invested in 17 financial technology companies. Such as Robinhood and Brex in the United States, Habito in the United Kingdom, and CRED in India.
Overview of DST Investment, Finance, Science and Technology Enterprises
Institutions such as DST, in the process of continuously infiltrating the Chinese Internet, have also promoted the “puffiness” and disorderly expansion of some Internet companies. In addition to online education, the typical example of disorderly expansion is more prominent in the field of shared bicycles. Hillhouse Capital, Warburg Pincus Investment Group, Tencent, Sequoia Capital and other institutions have all invested in shared bicycles.
However, the crazy investment of a large amount of capital in solving the “last mile” traffic problem has led to further vicious competition in the industry . All kinds of bicycles are piled up like a mountain, forming a huge waste of social and economic resources. In the end, the bike-sharing industry ended up doing nothing.
In addition, do investment institutions have deeply tied up Chinese Internet companies, which will have a certain negative impact on national security? In the near future, investigations by relevant departments on certain companies may give some answers.
After online education is baptized by the storm, DST’s strong global investment will not come to an abrupt end. However, the myth of DST’s investment on the Internet in China may have reached a turning point. DST’s next heavyweight target on the Chinese Internet may also be more difficult to find.
“It’s hard to beat the glitz and chaos in the world, and the times have changed without the need for negatives to be clearly visible.” (Zhong Zhentao, “Times Changed”)
This article comes from WeChat public account: Zhengtan Finance, Author: Yucheng, Editor: Zhou Yuanzheng
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-storm-of-education-and-training-the-dst-that-casts-half-of-the-internet-is-also-planted/
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