Lightspeed Photosynthesis Group: The Road to China's Hard Technology Layout

From Hesai Technology's first round of financing to 5 consecutive rounds of pre-IPO injections, Lightspeed Photosynthetic is the company's largest institutional investor, showing its recognition and firm support for Hesai Technology's long-term development. On the evening of February 9, 2023, Beijing time, Hesai Technology, a lidar company, officially listed on NASDAQ with the new ticker symbol "HSAI". The IPO was priced at US$19 per share and raised US$190 million, with a market capitalization of US$2.4 billion, or about RMB16 billion. Along the way, Lightspeed Photosynthesis is undoubtedly one of the most committed investors behind Hesai Technology. Since 2018, Lightspeed PS-CC has led five consecutive rounds of financing for Hesai Technology, with a cumulative investment of more than US$100 million, accounting for 17.5% of the company's shares before listing, making it the company's largest institutional investor. Mi Qun, the founding partner of Lightspeed PS-CC, was deeply impressed, and accompanied Hesai Technology through difficult years after period.

Lightspeed Photosynthesis: The Investment Story Behind an IPO

Lightspeed's investment in Hesai Technology highlights the investor's forward-looking prediction of technology, the accumulation and in-depth understanding of industry experience, as well as the original intention of accompanying the company's growth and practicing the long-term investment value concept. Back in 2014, Li Yifan, co-founder and CEO of Hesai Technology, approached Mi Qun, the founding partner of Lightspeed PS-CC, who was seeking their first round of funding to advance the laser gas telemetry business. After the first contact, Mi Qun was impressed by Hesai's technical level, but he decided that the market size for gas detection was small, so he shelved the investment.

Prior to this, Mi Qun, who was born at Google, paid attention to the research and development of his old employer in autonomous driving, and in 2013 he experienced the unmanned driving that was still under development at Google's headquarters for the first time. Although it wasn't mature at the time, he was attracted to some of the highlights, such as the smooth automatic distance keeping and lane changes on the highway. Mi Qun judged that as long as enough time is given, the safety of autonomous driving can be guaranteed through continuous iteration of software and hardware, and finally complete autonomous driving can be realized.

Among them, the importance of lidar is self-evident. Mi Qun observed that the lidar equipped with Google's autonomous driving came from Velodyne, the industry leader at the time, and the cost of one unit was as high as $100,000, which did not meet the actual needs of car companies. This means that whoever can bring down the cost of lidar on the premise of having a technical advantage will be able to break through the industry.

Hesai Technology, which wants to become a "billion dollar company", has also begun to set its sights on the trillion-dollar lidar market. In the process of developing lidar, Li Yifan often communicates with Mi Qun and exchanges views on products and industries.

Mi Qun recalled that at that time, he had already seen all the companies that made lidar in the world, and they were all making mechanical lidar. After Hesai Technology launched its first mechanical LiDAR in 2017, he went to ask Li Yifan if he was considering making solid-state LiDAR, because there were still many shortcomings of the mechanical one that needed to be made up. Although it was only a prototype, Mi Qun was still very interested and hoped to test it in person, and Li Yifan readily agreed. In Li Yifan's impression, no investors had come to him to talk about solid-state radar at that time, and no one asked if he could test it.

In the underground garage of Hesai Technology's office building, the Lightspeed Photosynthetic team tested the detection effect at a distance of more than 200 meters. As soon as the test was over, he turned around and discussed with the Hesai team the shortcomings and what technical paths to take to improve. Although the test results were not perfect, Mi Qun judged that Hesai Technology would be the most potential lidar company.

This time, Mi Qun no longer waits. In May 2018, Lightspeed led Hesai's Series B financing. Since then, Lightspeed Photosynthetic has invested in Hesai Technology for four consecutive rounds, with a cumulative investment of more than US$100 million, becoming the company's largest institutional investor.

There was also a small episode during the period. Later, Hesai Technology sought Series C financing, but no investor was willing to make a move, because it was unclear who would win and did not dare to invest. Mi Qun has a better understanding of Hesai and is firmly optimistic about the development of Hesai Technology, so he led the Series C investment again, and facilitated Bosch Group and other industrial investors to invest in Hesai.

"For the companies we are optimistic about, we have early-stage fund support in the start-up stage; When there is a bottleneck in development and others dare not invest, we have the support of growth funds; In the future, there will be a global lightspeed late-stage fund, with a single investment amount of 50 million ~ 100 million US dollars, which can help enterprises establish a global market position. Mi Qun introduced.

In addition to financial support, Lightspeed Photosynthetic also provides forward-looking help to Hesai Technology in terms of strategic layout. When Hesai Technology decided to enter the U.S. market, Mi Qun gave a key piece of advice: as a start-up, U.S. customers are very willing to give opportunities once they recognize your iteration speed, and once the entrance is opened, the subsequent market development will be a matter of course.

Subsequently, Hesai Technology not only succeeded in the U.S. market, but also conquered the world. In 2019, industry leader Velodyne significantly scaled back its operations in the Asia-Pacific region and was seen as losing out on the competition. However, in August of the same year, Velodyne filed a patent infringement lawsuit against Hesai Technology in the United States. To this end, Mi Qun made a special trip to the United States to help Hesai Technology deal with the lawsuit. Finally, in June 2020, the dispute came to an end and the parties signed a settlement agreement.

"It's common for investors to recruit talents and connect resources for enterprises, but who has ever seen investors help fight patent lawsuits? This is a direct reflection of our unique advantages of post-investment empowerment. Mi Qun said jokingly. And that's why the founder of Hesai has publicly stated that he made the three most correct decisions - returning to China to start a business, making lidar, and taking the investment of the speed of light.

Now, with Hesai Technology's successful listing on NASDAQ, Lightspeed Photosynthetic has won another hardcore IPO. In Mi Qun's view, the successful listing is only a milestone in the development of the company, and Lightspeed Photosynthetic will continue to accompany Hesai Technology on its new journey.

Lightspeed Photosynthesis: Immersed in hard technology for more than 10 years

Lightspeed Photosynthetic has been deployed in the field of hard technology for more than ten years, and has successfully invested in a number of leading enterprises in the industry, showing its deep accumulation in this field. Lightspeed Photosynthesis has been immersed in the field of hard technology for more than 10 years, and has experienced the process of China's hard technology track from cold to hot. So far, Lightspeed Photosynthetic has captured a number of industry leaders in the field of hard technology, such as AMEC (SH:688012), Zhongji InnoLight (SZ:300308), Nanxin Technology (SH:688484), Huizhiwei (SH:688512), Plus, Shine Display Technology (JBD), Junxin Electronics, Aike Micro (AIC), Lingming Photonics, STD Robotics, Philae Technology, and Daishi Intelligence.

In the field of green technology, Lightspeed Photosynthesis has also laid out new energy commercial vehicle companies Qianchen Automobile; Tang Feng Energy, a hydrogen energy membrane electrode company; Hydrogen energy air compressor companies are ready to add Turbo; energy storage technology company Xieneng Technology; sodium-ion battery company Jiana Energy; A number of high-growth enterprises such as Feynman Power, a carbon capture and storage company.

Looking back, Zhongji InnoLight can be called a classic investment. In 2013, based on his own professional knowledge and Google's work experience, Mi Qun predicted that with the rapid growth of cloud computing in the future, the fiber data transmission rate in the data center will also be greatly improved. The biggest overhead of the data center is not the equipment but the electricity cost, which puts forward high requirements for high speed and low power consumption of the media converter products. "The important thing is that the product needs to be replaced every 2 to 3 years, and there is a strong demand for repeat purchases, so I think this is a good track. ”

It was at this time that Zhongji InnoLight entered Mi Qun's field of vision. After in-depth communication with the returnee team of Zhongji InnoLight, Mi Qun believed that they had the strength of rapid iteration and the potential of self-developed silicon photonics technology in the future, so he decisively made an investment and helped the company successfully land on the GEM of the Shenzhen Stock Exchange in 2017. Up to now, Zhongji InnoLight has become a leading enterprise in the world's optical communication modules, with a market value of more than 100 billion yuan.

In August 2022, Mi Qun was also impressed by Shine Display Technology (hereinafter referred to as "JBD"), which was invested by Lightspeed Photosynthesis. As we all know, the concept of the metaverse has continued to be hot in recent years, which has also led to the rise of AR smart glasses. To truly achieve the same AR glasses as regular glasses, the key is to make the microdisplay small enough, and MicroLED technology is considered by the industry to be the ultimate solution.

Founded in 2015, JBD has been focusing on the R&D and production of ultra-micro small displays below 0.5 inches, and is the first company in the world with the mass production capacity of MicroLED micro displays. Mi Qun revealed that the Lightspeed Photosynthetic team actually began to pay attention to technological innovation in the field of microdisplay very early, and had communicated with the company for more than a year before officially investing in JBD, so as to successfully invest before the industry really broke out.

At the same time, hydrogen energy is also one of the key areas of lightspeed photosynthesis. Mi Qun said that hydrogen energy has almost irreplaceable advantages in heavy trucks, ships, airplanes and other means of transportation, because its energy supply form is more similar to the fuel system. The stack is equivalent to the engine, and the hydrogen storage tank is like a fuel tank, and if you need a long cruising range, you only need a hydrogen tank. On the contrary, if you change to a lithium battery, you need to add lithium batteries one by one, and the weight of lithium batteries is very heavy, which will lead to a great reduction in the load capacity of the vehicle.

Based on this judgment, Lightspeed Photosynthetic led the B round of financing of MEA company Tang Feng Energy in 2021. "Tang Feng Energy's previous investors were all from industrial backgrounds, and no financial institution dared to invest, but because we are deeply rooted in the industry, we can understand and dare to invest. ”

Asked how Lightspeed Photosynthesis accurately captures hard technology unicorns, Mi Qun concluded that investors' judgment on technology, experience accumulation and deep understanding of the industry are very important. Therefore, Lightspeed Photosynthesis has built a strong hard technology investment team, the core team has a professional field of science and engineering academic background and cognition, has worked in top enterprises in the hard technology industry for many years, has its own industrial network and excellent talent resources in the field of hard technology, and has experience in the investment industry, and has a cutting-edge sense of future global technology and business trends.

For example, Mi Qun himself skipped a grade to graduate from the Department of Physics of Fudan University, studied silicon/germanium compound semiconductors when he was a doctoral student in the Department of Electrical Engineering of Princeton University in the United States, and has 14 U.S. patents for chip hard technology.

He believes that as an investor, only by really making excellent scientific and technological products can we truly understand the technical route of hard scientific and technological projects, and can we see the essence through the appearance, so as to have the ability to judge the development potential of entrepreneurial projects.

Lightspeed Photosynthesis: Investing requires patience and persistence

Lightspeed Photosynthetic and its founding partner Mi Qun's investment strategy, industry insights, forward-looking layout in the field of hard technology and thinking on future investment directions. Running on the front line of venture capital all year round, Mi Qun deeply feels that some changes are quietly happening. In his view, with the gradual disappearance of the development dividend of the domestic Internet industry, the investment myth of the fund investing a hundred times or even a thousand times the return no longer exists. There is no doubt that hard technology, including semiconductors, optoelectronic technology, and new energy, will be an inevitable trend in the future for both investment and industrial development. At the same time, the hard tech cycle is changing at a faster pace, so investing requires more patience and persistence.

At the same time, the preferences of the LP community are changing. Mi Qun said frankly that the impact of the epidemic and the outbreak of foreign geopolitical conflicts in the past few years have made the fundraising environment cold, and whether it is US dollars or RMB LPs, they have become more cautious. What they are most concerned about is whether GPs have the ability to invest through the cycle, and whether the funds that originally invested in TMT and consumption can adapt to the transformation to hard technology investment.

All kinds of changes are both challenges and opportunities for venture capital funds, and Mi Qun is very fortunate that Lightspeed Photosynthetic began to deploy hard technology more than 10 years ago, accumulated enough rich experience, and established a reputation in the venture capital circle. Therefore, when other institutions are still hesitating whether to vote in the current round, Lightspeed Photosynthetic is even ready to continue to raise in the next round.

Of course, Mi Qun does not deny that good projects are expensive in every round, and what investors need to do is to judge how large the project can be in the future, and if the space is large enough, even if it is a little more expensive, it is worth it.

Although the field of hard technology has ups and downs, he is still optimistic. He believes that based on the characteristics of the hard technology industry, each segment, especially the incremental segment, has the opportunity to grow a wave of leading enterprises and give birth to more listed companies.

Next, Lightspeed Photosynthesis will also focus more on the field of new energy. In the team's view, the underlying logic of the rapid development of new energy in China is to use a strong manufacturing industry to improve the country's lack of energy resources, turn the energy problem into a manufacturing problem, and promote the rapid development of commercialization through continuous technological innovation, manufacturing process improvement and scale expansion.

Mi Qun said that there are many new energy sub-industries and a wide range of technology paths, and it often takes a lot of time for the final winning technology. He deeply understands that investors should take root in the industry, communicate with industry experts, and form an industry puzzle. When you find that you have a different perception from others in the process of accumulation, it is often an opportunity to invest early.

After more than ten years of ups and downs, Lightspeed PS-CC still regards itself as a start-up company, "We believe that the most competitive company in the end must be a company with a global vision, and Lightspeed PS's vision is to become a global partner of these outstanding Chinese innovations." For Mi Qun, the most rare thing in life is to accompany those entrepreneurs with great potential to a broader sea of stars.