China’s first-generation Internet entrepreneurs are now venture investors in the next generation, placing big, sometimes risky bets on early-stage startups.
In 1999, when China’s per capita income was just $850 a year, a 31-year-old entrepreneur named Neil Shen and three friends nevertheless bet that China would soon develop a huge domestic tourism industry. They created a travel-booking website, Ctrip.com. China’s per capita GDP has since grown ninefold, and the domestic tourism market has ballooned to more than $400 billion. Ctrip, which had an initial public offering on Nasdaq in 2003 (and nearly doubled its price on the first day of trading), now has a market capitalization of over $10 billion—and Shen, who went on to found other travel-related companies in China, is a billionaire.