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Bloomberg

How One Woman Turned a $40 Million Kuaishou Bet Into $12 Billion

(Bloomberg) — In 2014, as their video app Kuaishou began to take off, Su Hua and his co-founders started looking for money to expand. They quickly got a proposal from Ruby Lu, a venture investor who had spotted them earlier as promising engineers and given them feedback on previous businesses.But Lu’s proposal was trumped by a larger venture firm with a much higher offer, according to people familiar with the matter. She refused to concede. Lu pitched Su and his team that she would give them more than money, offering her personal engagement and the support of her partners at DCM Ventures. She won, even with a lower offer.On Friday, Kuaishou Technology started trading in Hong Kong after the biggest initial share sale for an internet company since Uber Technologies Inc. in 2019. By any yardstick, Lu’s investment has been a home run: the roughly $40 million that DCM put into Kuaishou is now worth about $14 billion after the stock more than tripled over its first three days.“There is a methodology in building a company from scratch,” said Lu, 50, in her first interview in years. Part of her strategy is to identify talented engineers like Su, but they also need to have the right strategy and mindset. “You have to endure more pain than the usual person.”Lu belongs to an unusual group of female investors who have risen to the forefront of China’s venture capital world. In 2019, she started her own firm, Atypical Ventures, which seeks to groom China’s next generation of tech darlings using finance from U.S. institutional investors.It was the next step in a life spent as a bridge between the two countries, which started when an American couple invited her to live with them in Maryland and ended up paying for her undergraduate education. Then came a stint working on IPOs at Goldman Sachs Group Inc.’s investment bank at the height of the dot-com bubble, and later a pivot into startup investing.She’s “such a positive force for the Chinese venture community,” said Kai-Fu Lee, chief executive officer of venture-capital firm Sinovation Ventures, who has known Lu for years. “She will help you when you’re winning, she will help you when you’re losing.”It all started in 1989, when Lu bumped into Fred and Virginia Pausch on the streets of Xiamen, the southeastern Chinese port city where she grew up. The couple, in town to help with English language instruction, took a liking to her, inviting her to live with them and study in the U.S. Lu’s parents gave permission — provided the teenager herself collect more than 30 approvals needed to travel overseas. When she succeeded, her mother sewed $200 into her underwear in case she needed to escape.“It would have been impossible for anyone else,” said Tammy Pausch, the daughter of the couple. “With Ruby almost nothing is impossible.”Her new “brother” in the U.S. was Randy Pausch, who went on to become a computer-science professor famous for his “Last Lecture.” He often said he won the “parent lottery.”Lu’s English was poor when she arrived and she understood little in her classes. So Fred Pausch got her a tape recorder she could use to review lectures at home. She finished top of her class in economics at the University of Maryland, Baltimore County, then did a master’s in international studies at Johns Hopkins University.She got a job in Goldman’s investment bank in 1996, first working from Hong Kong to help China’s state-owned companies go public and later moving to the U.S. It was eBay Inc.’s IPO that hooked her on technology, prompting her to change her focus and relocate to Goldman’s tech division in Menlo Park, California. “After that there was no return,” she said.Lu left Goldman in 2003 to join DCM Ventures, the Silicon Valley firm set up by David Chao and Dixon Doll. There, she co-founded DCM’s China business to capture what she calls…