In some ways, Source Code Capital is China’s version of Andreessen Horowitz—it’s a relative newbie to venture investing that has surged to the top echelons of the Chinese venture capital industry and raised billions of dollars—in large part thanks to founder Cao Yi’s early bet on ByteDance.
In fact, some of the shares he got from an initial investment of less than $4 million in the company—the powerhouse behind the hit viral video apps Douyin and TikTok—in 2014 are now worth more than 300 times their original price, according to two people with direct knowledge of Source Code’s data. As of the end of last year, the total value of Source Code’s 2014 fund was 8.4 times higher than the $96 million it originally raised, the people said.
There’s a catch: The firm’s gains are still mostly on paper, as ByteDance has little prospect of becoming liquid anytime soon due to potential challenges its public listing faces from both the Chinese and U.S. governments. Some of Source Code’s limited partners, which include American investors, are getting restless, especially as the performance of one of Cao’s more recent funds has lagged those of rivals.
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