Blockchain: 2018 Disruptor of the Year, page-47

Mar 20, 2018 @ 11:48 PM 1,819
The Next Frontier For Billionaire Investor Jim Breyer: China And Blockchain

Yue Wang , Forbes Staff I write about interesting Chinese companies

Famed venture capitalist Jim Breyer made his fortune largely by investing in Silicon Valley. Now, he is increasingly looking East where lucrative opportunities are beckoning in China.

The billionaire investor, best known for his early bet on Facebook, already has a long history of investing in the Middle Kingdom. Through a partnership with local investment firm IDG Capital-- an organization he first got to know during a 2004 trip to China and now serves as lead strategic advisor -- Breyer backed Chinese tech powerhouses including ride-sharing firm Didi Chuxing and smartphone maker Xiaomi.

Today, he is looking closely at a number of potential investments in areas including blockchain, healthcare and financial services, allocating tens of millions of dollars a year - or a third of his family office Breyer Capital’s total funds - to promising startups in the world’s second-largest economy, he told FORBES during a recent interview.

Of particular interest is blockchain, the technology underpinning digital coin transactions that is essentially about building secured data storage across multiple computers. Though China banned initial coin offerings last year out of fear of illegal fundraising activities, it still “greatly supports” blockchain-related research, said Hugo Shong, a former journalist who founded IDG China in 1993 and Breyer’s long-time partner in the country. This translates into plenty market opportunities for co-investments like the U.S.-based blockchain startup Circle, which counts both Breyer Capital and IDG among its backers in a $60 million fundraising round in 2016.

Blockchain is already having an impact on healthcare in the U.S. by enabling better medical data collection and records sharing. For example, startups like MedRec(which doesn’t have Breyers as an investor) is tapping blockchain technology to create a common healthcare database that every doctor and patient can access no matter which service provider they use.

Paige.AI, which landed $25 million in funding led by Breyer Capital in February, is combining blockchain and artificial intelligence to develop computer models for early cancer diagnosis. This would be a major asset in China as patient information there remains far more fragmented among its one million healthcare facilities. Data and diagnostic information isn’t always shared efficiently and often recorded in handwriting, making it more difficult to track. Having an electronic, blockchain-based system would increase efficiency by making it easier to retrieve information and improve secure doctor-patient communication across the board.

“A lot of underlying blockchain technologies in China have uses in very specific areas,” Breyer said. “Most of the early significant winners in blockchain will be in the areas of fintech. At the same time, I see opportunities in healthcare services and payments in large.”

What’s more, China’s growing talent pool is also a big attraction. As the country catches up fast with the U.S. in innovation power, its universities are producing top-notch talents in areas like blockchain and artificial intelligence – leading to more startup opportunities down the road as investing in these sectors often comes down to finding teams with the best scientists

“Many of the best technology entrepreneurs and leaders I met are from China, and are only increasing in terms of quality and the depth of innovation,” Breyer said.

Still, investing in the country is not without its challenges. For example, Beijing has been tightening capital controls over the past year, imposing more cabs on the amount of money allowed outside the country as it seeks to stem cash outflows. This could potentially complicate foreign venture capitals, which frequently need to move money across borders to facilitate multiple investments.

Breyer, however, doesn’t worry much about this for now, as the current focus is helping the China companies he backed grow locally. But the ultimate goal is nurturing firms with international appeal, so they can compete on the global stage with the likes of Apple and Facebook, Shong said.

And Breyer knows where to look for advice on Beijing’s policy whims. In addition to IDG, whose local knowledge certainly helps to navigate regulatory challenges, Breyer has built a relationship with China’s prestigious Tsinghua University, where he sits on the advisory board of the School of Economics and Management. Other prominent members include China’s central bank governor Zhou Xiaochuan and e-commerce titan Alibaba founder Jack Ma, as well as western leaders such as Apple CEO Tim Cook and Facebook’s Mark Zuckerberg. Last year, board members met Chinese President Xi Jinping to listen to his view on reform and opening-up, shortly after Xi was given a second five-year term during an important party congress in October.

“I spend lots of time with Tsinghua leaders to understand their view of important initiatives,” Breyer said. “You see many Chinese and U.S. long- term relationships tend to fracture, so I am very lucky.”