Cao Xi, venture partner of Sequoia Capital China, shared his insights on investing in the esports industry by means of his firm’s portfolio, including short-film company Kuaishou, live streaming company DouYu, and esports solutions provider VSPN, during the recent Tencent Esports Global Summit.
Founded in 2005, Beijing-headquartered Sequoia Capital China is one of China’s most prominent venture capital firms. The firm has invested in more than 50 Chinese public companies, most notably Alibaba, Jing Dong, Sina, Meituan, and Didi. Since 2013, the VC has been investing in multiple Chinese esports companies, including esports solutions provider VSPN, esports events company Imba TV, and online gaming network Fighting Esports Group.
Before the 36-year-old Xi became the youngest partner at Sequoia Capital China, he was part of the Tencent Independent Evaluation Group (IEG) department, which was his first job after graduating from university.
To kick off his speech at the conference, Xi discussed his perception of the current esports market size. “We should remain pragmatic and determine the esports market’s size isolated; therefore, it should not include gaming revenues,” he said. “According to a Chinese statement about the market, ‘the esports industry generates more than ¥200 billion ($30.8 billion) in revenues,’ which is not an objective perspective.”
Offering his assessment, Xi revealed that he believes an objective estimation of the global esports market size to be about $1 billion.
Next, Xi shared some of the reasons behind why his firm invested in Kuaishou, DouYu, and VSPN.
“What impressed us the most was Kuaishou’s community philosophy and technology