Fortune growing inside world’s most valuable startup

HONG KONG: Software engineer Zhang Yiming started out producing apps for sharing jokes before focusing on news aggregation. That pivot proved lucrative.

The 35-year-old founder of Bytedance Ltd is worth about US$13bil, according to the Bloomberg Billionaires Index, making him China’s 9th-richest person and one of the fastest in modern times to amass a mega-fortune.

The business, founded in 2012, has more than one billion active monthly users across eight mobile apps, including a news aggregator powered by artificial intelligence and a video-sharing platform.

His rapid wealth accumulation is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy.

It also helps explain why authorities seem to be taking a more tolerant stance toward a corporate structure favored by the country’s technology tycoons, most of whom have chosen to list their businesses overseas.

Zhang’s fortune is harder to calculate than the founders of Baidu Inc and Tencent Holdings Ltd. in part because his company isn’t yet public.

It’s also difficult because Bytedance is structured in the same way as the two tech behemoths - a complicated ownership system known as a variable interest entity.

Of the 44 Chinese tycoons on Bloomberg’s wealth index, eight are tech moguls with VIEs listed outside China.

The billionaires’ combined net worth exceeded US$150bil as of March 21, and their stakes weren’t publicly known until the companies filed with regulators ahead of going public in New York or Hong Kong.

VIEs have never been formally endorsed by the Chinese government.

But in an acknowledgment of their importance, officials will soon permit VIEs to go public in the country, allowing them to list on a new technology-focused exchange set to launch in coming months.

Bytedance is, for now, a closely held VIE with a complex structure that involves layers of holding companies. — Bloomberg