Jia Yueting, in tech bro hoodie, gets a tour of the Faraday Future FF 91 earlier this month at CES 2017 from Faraday’s Richard Kim. GIF by Tech in Asia, from company live stream.
Two months after admitting to a major cash shortage, Chinese tech entrepreneur Jia Yueting has managed to raise US$2.2 billion by selling off significant chunks of some of his businesses.
Jia, 43, is bankrolling not only Faraday Future, an electric car maker based in the US that earlier this month showed off its first Tesla-challenging car, but also his own upcoming Chinese automaker, which last summer unveiled the dramatic LeSee sedan.
Jia Yueting (left) shows off the all-electric LeSee sedan at a Beijing event in April. Photo credit: LeEco.
All that expenditure has left Jia Yueting, despite his estimated US$4.5 billion personal fortune, struggling to run the business that made him rich – LeEco, a Netflix-style site that later expanded into smart TVs and phones.
The firm was hit by a calamitous US$2.4 billion drop in valuation after Jia’s shock revelation in November.
Fresh cash
Jia raised the cash by selling off an 8.6 percent stake in his video business, 15 percent of his relatively new film production unit, Le Vision Pictures, plus 33.5 percent of LeEco’s smart TV unit, reports the South China Morning Post today, citing Chinese business paper Caixin, which obtained the details from people familiar with the deal. LeEco has not commented.
Tech in Asia has contacted LeEco for details.
Money shot: Jia Yueting (center) onstage during the launch of the Faraday Future FF 91, with Faraday’s Richard Kim (left) and Nick Sampson (right). Screengrab from live stream.
In November, Jia vowed to cut his salary to 15 cents after conceding that he’d stretched the company too rapidly and in too many directions. “We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited,” he said in a letter to employees.
Month to month, the money was never there.
The billionaire’s cash crunch led to big problems at Faraday Future in the run-up to the reveal of its first production car at CES 2017, with alleged unpaid bills and mounting lawsuits as a string of executives at the ambitious auto startup departed.
“Month to month, the money was never there. Funds were lower than what Faraday needed to cover operational costs and commitments to suppliers,” one former employee told BuzzFeed News.
The fate of Faraday’s factory in Nevada still hangs in balance with construction on the site now halted.
Converted from Chinese yuan. Rate: US$1 = RMB 6.9.
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