Amid tech behemoths seeking to diversify and have a finger in every pie, setting up investment funds to put in money into startups has also become quite common. Along the same drive, Chinese Internet giant Baidu has announced the setting up of a mammoth 20 Billion Yuan investment fund for startups.
Called Baidu Capital, the fund has been aimed towards middle and late stage startups. The company said that it will be making investments to the tune of US$50 to US$100 million in Internet companies. The size of the investment points towards rounds B — or even C — and later. Baidu appears to be looking to invest in startups that have already proved their mettle.
Meanwhile, the money for Baidu Capital is expected to be sourced from industry funds, securities companies and government-backed investment institutions. The company also revealed that the investments made by the fund will be managed by partners from the investment industry, with experience in Internet and private equity.
This is Baidu’s second, significantly larger attempt to fund startups in recent times. The company set up Baidu Venture just last month, with $200 million of capital. That fund is headed by Baidu’s Chief Executive Robin Li Yanhong himself and is aimed towards funding startups in up and coming genres, such as augmented and virtual reality.
The timing of this new fund may have been somewhat influenced by Baidu’s latest financial report where the company reported a 34 per cent profit decline to 2.41 billion yuan in the second quarter. 34 percent is a huge figure when you are talking about the profits generated by a company of it’s stature, and significant work will be involved in making a complete recovery.
Meanwhile, the company appears to have made up its mind to take the path many of its fellow Chinese firms have been following lately. Tencent, Xiaomi, Alibaba (a veteran!) all have funds of their own, which are used to back startups in China and abroad. Indeed, Baidu was the only company from the famed BAT triad, that was somewhat lagging in the area. Judging by the size of the recently set up fund, it appears to be ready to catch up to Tencent and Alibaba.