Source Code Capital portfolio company Li Auto goes public, opening a new chapter for Li Auto

From left to right: Xingshi Wang of Source Code Capital, Tie Li of Li Auto, Xiang Li of Li Auto, and Li Gong of Source Code Capital

On July 30, 2020, local time, Source Code Capital portfolio company Li Auto listed on the Nasdaq Stock Exchange in the United States. Li Auto's ticker symbol is "NASDAQ:LI," with an IPO price of $11.50 per share, 95 million shares offered, and a pre-market valuation of $9.724 billion.

Source Code Capital, as Li Auto's earliest institutional investor, was a major participant in Li Auto's Series A round and continued to increase its investment across multiple subsequent rounds, with cumulative shareholding ranking among the top two financial investors.

Ma Hui Acceleration

The 2019 Source Code Capital Ma Hui annual meeting showcasing the latest Li ONE model

At the end of 2013, Tesla entered the China market. Combined with the rapid iteration of internet and technology, the swift development of electrification, intelligence, and connectivity, and the booming demand in China's mobility market, Chinese new energy vehicle startups — distinct from traditional automotive giants — were most likely to give rise to the next generation of world-influencing super-unicorns.

Yi Cao founded Source Code Capital in 2014, and Xiang Li founded CHJ Automotive (Li Auto's predecessor) in 2015. At the inception of Source Code Capital, Xiang Li, as a standout among entrepreneurs, became a limited partner in Source Code Capital's fund. At the founding of Li Auto, Source Code Capital became Li Auto's Series A investor.

Prior to this IPO, according to the prospectus, Xing Wang and Meituan held 23.5% of Li Auto's shares, and ByteDance also invested in Li Auto during the Series C round. Both became cornerstone investors in the IPO. The power of the Ma Hui ecosystem is like the range extender in that Li ONE, providing vigorous and sustained momentum for Li Auto's acceleration.

Before the IPO, Xiang Li stated, "Source Code Capital built Ma Hui as a healthy and sustainable industry connector, providing highly efficient learning and exchange opportunities with top domestic internet companies and founders. Source Code played a significant role in bringing Meituan, ByteDance, and other investors into Li Auto."

Regarding the investment in Li Auto, Xingshi Wang of Source Code Capital said, "New energy vehicles represent a once-in-a-lifetime opportunity. Building new vehicles requires integrating multiple advanced technologies — manufacturing, batteries, motors, in-vehicle systems, cloud computing, autonomous driving. New vehicle makers are breaking down the walls between automotive, materials, electrical, smart terminal, and internet industries. Source Code Capital is honored to have accompanied Li Auto over five years in redefining the product of 'car' and the experience of 'driving, riding, and using,' delivering an outstanding report card in sales volume and user reputation. We believe the IPO is a higher starting point for Li Auto — from growth to retention, from product to intelligence, from sales to service value extension — as Li Auto moves toward its next chapter of success."

Ma Hui entrepreneurs test-driving the Li ONE

In 2016, Li Auto completed a RMB 780 million Series A financing round. At that year's Ma Hui annual meeting, Xiang Li said: "Essentially, the two previous windows of opportunity in the entire automotive market were both directly related to manufacturing. In my view, the third window will open in the coming decade from 2015 to 2025, driven by changes in consumer demand and technological evolution. Three key technology shifts — electrification, autonomous driving, and connected vehicles — mean the arrival of the smart vehicle era. Electrification gives new brands the biggest opportunity to enter this market. Autonomous driving turns commuting in traffic into the best time for reading and learning. And connected vehicles will transform the entire automotive business model."

Xiang Li speaking at the "2016 Source Code Capital Ma Hui Annual Meeting"

In 2017 and 2018, Li Auto completed consecutive Pre-B and B rounds of financing, launched the smart electric vehicle brand "Li Auto," and on October 18, 2018, officially released its first range-extended electric vehicle with no mileage anxiety — the "Li ONE." At the 2018 Ma Hui annual meeting, Xiang Li stated, "We must ensure customers are one hundred percent willing to pay for this vehicle. If customer needs aren't met, we should do everything possible to meet them." In Xiang Li's eyes, only spending money to satisfy customer needs is justified.

In 2019, Li Auto shifted into high-speed motion mode. In April, it announced Li ONE pre-orders; in August, it completed a $530 million Series C round; in November, it officially began deliveries. At the Li ONE launch event, Xiang Li firmly believed that "technology is a productive force that can transform the driving experience, continuously improve vehicle safety, and change currently inefficient business models, making user purchase and ownership costs lower."

In a 2019 Ma Hui interview, Xiang Li believed that "in the future, three types of players will compete in full autonomous driving: first, top technology companies like Apple, Google, and Huawei; second, internet companies that control scenarios, such as DiDi, Uber, Meituan, and Alibaba; third, auto companies with the strength to survive. In the subsequent consolidation, the remaining players will probably be somewhat more numerous than the top players in smartphones." Regarding Li Auto's long-term planning, Xiang Li revealed his hope that by 2035, with 200 or 300 million users globally, Li Auto's market cap could reach $1 trillion. For this immediate decade, Li Auto hopes to "move the automotive industry from past linear management into a high-efficiency networked, systematic management," securing "a ticket to full competition."

Xiang Li at the 2019 Ma Hui annual meeting

In June 2020, the 10,000th Li ONE was delivered to a customer, setting a record for fastest delivery among new forces. Li Auto had already become one of the top players in China's new energy vehicle sector.

The Entrepreneur's Ideal

Xiang Li founded PCPOP in 2000 and Autohome in 2005, successfully listing the latter on the New York Stock Exchange. In 2015, Xiang Li launched his entrepreneurial journey once again, establishing the smart electric vehicle brand Li Auto. He has publicly stated this would be his "last" venture. Regarding this entrepreneurial endeavor, Xiang Li's primary goal is "to use digital technology to transform transportation efficiency, achieving our ideal of car and home."

Beyond his industry-recognized top-tier product capabilities, Xiang Li explained in an internal Source Code interview that "my learning method is framework-based — I organize what I'm studying into a framework, then thoroughly understand the whole thing." Faced with smart vehicles as a new peak of knowledge, Xiang Li has engaged in deep learning across technology, organization, strategic planning, and other dimensions, gradually refining his knowledge framework. On the road to achieving this ideal, an entrepreneur needs not only clear strategy, outstanding execution, and rigorous organization, but also high-dimensional connections with the external ecosystem.

Three entrepreneurial ventures spanning the PC internet era, the mobile era, and the smart era — from IT products to automotive content to new energy vehicles — with absolute adherence to user needs, continuous deep learning in industrial transformation, organizational development, and top-level strategy, Xiang Li embodies the purest entrepreneurial spirit of the new economic wave.

Once again, congratulations to Xiang Li and Li Auto — today marks an important milestone on the journey to becoming a world-class unicorn company. We also wish Ma Hui and all entrepreneurs continued success; Source Code Capital will continue to walk alongside you, the resilient and bold, hand in hand, co-creating lasting and genuine value.

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