By LI Jingya
Source Code Capital, an early investor in ByteDance and Meituan, is laying off staff. Source Code Yisu, a seed fund set up last June, has been closed. The green energy team is also affected.
Source Code Capital's name recently cropped up during Meituan’s 2-billion-yuan acquisition of Light Years Beyond, which lists Source Code Capital as an investor. Light Years was the brainchild of the ailing WANG Huiwen, one of the founders of Meituan.
At the end of June, Wang stepped down from all his roles at the food delivery giant citing “personal health reasons." This was Wang’s second departure from Meituan, where he guided the transition from group buying to a business empire including food delivery, ride-hailing, tourism, and bike sharing.
One of the closest aides to CEO WANG Xing, Wang Huiwen was made a company non-executive director in March.
Light Years, a generative AI startup, has attracted much media attention, but in June, after only three months of operations, Wang took a leave of absence for health reasons.
Most of those laid off from Source Code was in the post-investment management team, an employee told Jiemian News. The layoffs started about a month ago, many were voluntary and less than the rumored 30 percent.
Dedicated post-investment management teams are all the rage among trendy Chinese venture capital firms, but not all successfully run them. Cas Star had a 70-person post team two years ago with plans to expand to 120 but reportedly laid off 20 instead.
Partners are said to have complained privately about the underperformance of one of Source Code Capital's dollar portfolios. The product was created in 2017 and has grown by only 50 percent, well below the 75 percentiles of yuan funds. Only 5 percent of the money raised has been paid back, again lower than similar funds. Another portfolio raised in 2019 has supposedly outrun the market.
A tech startup founder said Source Code Capital has slowed its pace over the course of their interaction and probably has suspended dollar investment. When he first made contact, the team was enthusiastically looking for new projects in the spring of 2022. “But they found an excuse and let the matter go,” he said.
Source Code Capital “roughly broke even on Light Years Beyond but didn’t make money,” according to a person familiar with the matter. The fund routinely makes new dollar investments, he said: “Light Years Beyond was typical.”
