Banking

A top VC in China turned a missed investment in Didi into a massive profit on a trucking company. Here’s how he wound up with a 49x return.

  • Lightspeed China’s Herry Han missed a call to invest in Didi while on vacation in Yellowstone.
  • After that, Han jumped at the chance to invest in another Chinese company, Full Truck Alliance.
  • Han wound up with a 49x return on the investment in the Chinese freight platform.
  • See more stories on Insider’s business page.

In September 2013, Herry Han, an investor at Lightspeed China Partners, was on a family trip in Yellowstone National Park when he missed a call to invest in Chinese ride-hailing app, Didi Global. 

“I got a call, but anyhow, I missed the A round of Didi. That’s a big unfortunate story for me,” Han said in an exclusive interview with Insider.

Han and his firm potentially missed out on billions of dollars worth of returns since Didi, known as the Uber of China, raised $4.4 billion in the second-largest US IPO for a Chinese company. The stakes for its three biggest shareholders — SoftBank, Uber and Tencent — were worth about $6.5 billion at the company’s IPO price of $14 per share. 

But Han’s missed call wasn’t a total loss. When he returned to China after the family trip, he decided to go all-in on Full Truck Alliance, the Chinese fleet management platform that went public last month. All told, Lightspeed China and Lightspeed Venture Partners, its partner firm in the US, invested a total of $82.7 million in Full Truck Alliance, securing 3.9% ownership.

That $82.7 million is now worth $760.5 million at Full Truck Alliance’s $19 per share IPO price, a 9.2x return, according to investment performance data seen by Insider. At that price, Han and Lightspeed China’s $12.7 million investment is worth $626.1 million, a 49.3x return. 

Full Truck Alliance’s $1.6 billion IPO is the firm’s largest in value among its portfolio companies. The IPO was also the 10th for Lightspeed China, which has invested in Chinese startups since 2006 under Han and James Mi’s leadership.

Herry Han, Lightspeed, and FTA CEO Peter Zhang this morning at the NYSE:

Herry Han, Lightspeed, and Full Truck Alliance CEO Peter Zhang at the NYSE

Lightspeed


Han said he first learned about Didi and Full Truck Alliance after a man named Wang Gang cold-called him in 2013 with an invitation to meet.

“I traveled to Hangzhou with hesitation a little bit, and then we sit in a cafe for four hours,” said Han, also explaining that Wang Gang was a popular name and wasn’t sure if the cold call was worth traveling from Shanghai to Hangzhou to meet a stranger. 

But turns out, this Wang Gang was legit. A former Alibaba executive and

angel investor
, Gang helped come up with the idea behind Didi and provided $100,000 in seed funding to jump-start the company. 

At the meeting with Han, Gang pitched five startup ideas, including his vision to connect taxi drivers and fleet truck drivers together under one platform. He also asked for half a million dollars. Han initially turned down the investment opportunity because he thought Gang should create two separate platforms. Gang eventually took the recommendation, creating two companies: Didi and Yun Man Man. 

Lightspeed China became the sole investor in Yun Man Man’s Series A round, the first institutional round of the company. In 2017, Yun Man Man merged with another Chinese truck platform, Huochebang, and both companies now operate as subsidiaries of Full Truck Alliance.

Recently, Didi’s data security has come under scrunity by Chinese regulators amid a larger crackdown on Chinese companies listing their shares abroad. Regulators in the country have also opened a cybersecurity review into Yun Man Man and Huochebang.

But Han brushes aside concerns that these reviews will impact other Chinese companies who have or are thinking of listing in the US. 

“This year might be the biggest year for China coming to US listing in past 10 or 20 years,” he said. “The reality is, most of the Chinese entrepreneurs still sees US market as the most open, fair and welcoming kind of market.”

 

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