David Yu is one of China’s most well-known executives in China’s private equity industry. He has launched several companies including the advertising business Target Media and Yunfeng Capital, one of China’s largest venture capital firms. David Yu graduated from CKGSB’s Business Scholars Program.
In this new alumni series, we track down CKGSB’s most influential graduates, many of whom have gone on to lead unicorn companies – privately held companies valued at $1 billion USD or more. According to CB Insights – a global platform which provides authoritative and up-to-date information on the world’s billion-dollar private companies – China has created a total of 217 unicorn companies between 2017 to 2021. Thirty-nine (or 18%) of these companies are run by CKGSB alumni, including 35 companies where CKGSB alumni are founders or co-founders, and 4 companies where they serve as the chairman, CEO or president.
As China’s leading business school, it’s not surprising that CKGSB has been able to produce so many business leaders playing a pivotal role in China’s economic development. More than 18,000 successful entrepreneurs, industry leaders and executives of multinational corporations have chosen to study at CKGSB for the original China insights, world-class faculty and peer-to-peer learning with China’s movers-and-shakers. More than half of CKGSB’s alumni are at the CEO or Chairman level and, collectively, lead one-quarter of China’s most valuable brands.
While on a business trip in the United States and waiting for an elevator, he noticed liquid-crystal display (LCD) flat-panels being used to display advertisements at the elevator entrance. He thought this was a genius idea that he could bring over to China. “Elevator waiting rooms was a great opportunity to catch people’s attention, particularly before the mobile phone era,” he said.
At that time in 1999, there were only approximately 70,000-80,000 LCD screens in China and were too expensive to commercialize. But the years afterwards, the price for LCD screens began to fall. In 2003, David Yu worked with manufacturers on what he thought was a new business idea in Shanghai. However, just as he was launching his business, he realized that another company called Focus Media had already tapped into the LCD advertising market. “I had contemplated the idea for several years, only to find that someone had already gotten there first,” he said.
Nevertheless, David Yu established Target Media several months later to rival Focus Media. The company went on to become China’s second largest out-of-home advertising operator (second to Focus Media), creating a national network of 25,000 LCD screens across 43 cities in China by 2005.
At that time, Target Media and Focus Media were engaged in a heated price war competing for funds and market share. This eventually led David Yu to withdraw his decision to take the company public in early 2006, choosing instead to merge with Focus Media. The merger has become a classic case study and has even been included into the case study library at Harvard Business School.
Focus Media acquired Target Media for USD $94 million in cash and USD $231 million in the form of shares. The Carlyle Group was Target Media’s second largest shareholder, having invested USD $19.5 million. Focus Media’s venture capital investors included Goldman Sachs & Co, 3i Group, United Capital Investment of China, Beijing-based CDH China Fund, California-based Draper Fisher Jurvetson and Softbank China Venture Capital. Both were backed by private equity firms, making the merger one of the first private sector mergers in China.
After serving as co-chairman and president of the board of directors of Focus Media from 2006-2008, he embarked on a new journey in 2010, partnering up with Alibaba’s founder Jack Ma to establish the private equity firm Yunfeng Capital. David Yu and Jack Ma devised the idea for the business while boating together on the West Lake in Hangzhou, choosing to name the company after their first names: ‘Yunfeng’ combines Jack (Yun) and David (Feng).
Soon afterwards, several of China’s elite invested in the fund – including Ma Huateng from Tencent, his rival Jason Jiang from Focus Media and Wang Zhongjun from Huayi Brothers. Yunfeng Capital became the first private equity fund in China to be founded by a number of industry leaders and successful entrepreneurs.
David Yu built Yunfeng Capital into one of China’s largest private equity firms. According to its 2021 interim report, its income was RMB 4.3 billion (USD $622 million). The fund invests in sectors such as hardware technology, consumers goods, financial services, energy, and health.
As a self-labelled ‘ecological investor’, Yunfeng Capital’s portfolio includes companies like the electric vehicle manufacturer, XPeng, and the lithium battery manufacturer, CATL, as well as companies such as Kuaishou, Xiaomi and Sogou. David Yu also invests heavily in young entrepreneurs and startups. David Yu told CKGSB, “I want to help companies improve their organizational management strategy and give young people more opportunities…the philosophy at Yunfeng is similar to CKGSB’s: we invest in entrepreneurs in the hope that we can grow and progress together.”
