Qihoo 360 Has Some Skin in Innovation Works. So what?

It's not what it looks like!

TechWeb has reported that Chinese web company Qihoo 360 (NYSE:QIHU) invested $3 million in Innovation Works’ $180 million fund (1.7% of the fund). Companies making investments is a natural thing. But if Zhou Hongyi, CEO and founder of Qihoo is involved, it’s always worth taking a second look.

The brilliant and eccentric Zhou has quite a few foes in China which makes him a controversial figure in China’s tech scene. So it caused a lot of “huhs and ehhhs” when the public learned that when the early-stage incubator Innovation Works accepted Qihoo as one of its investors. Innovation Works’ boss, Kai-Fu Lee, did comment that Qihoo’s involvement is small, just one-fifth the size of Tencent’s, which is China’s biggest web company by revenue. And for the record, Innovation Works has over 70 limited partnerships.

But the timing of this announcement of Qihoo’s involvement in Innovation Works coincides with today’s CitronFraud.com “movement” against the very vocal US analyst that often attacks US-listed Chinese tech stock. Among the many business leaders who are participating in CitronFraud is Zhou. Ah, the politics…

It’s fun to watch the argument go back and forth, but for entrepreneurs, none of this should matter. Even if you have a problem with Qihoo, that shouldn’t steer you away from Innovation Works given that Qihoo’s investment is relatively small (just 1.7 percent of IW’s 180 million fund) and that if you’re not a big Zhou Hongyi fan, IW can offer more than 70 other limited partners to help your startup out. For a startup, an investment from IW should be good news, and that includes investment from Zhong Hongyi…as long as you can stay out of his way in the halls!