A surprising number of the top tech startups in China were founded by former employees of the online news service of Chinese internet company NetEase. These include YY (online interactive entertainment), Momo (mobile social networking), Snowball Finance (financial social media), Chunyu (mobile healthcare) and Jingguanyu (online education). All the founders or CEOs of these startups were once chief editor or deputy editor-in-chief at NetEase News.

There are, of course, also many good tech startups founded by former employees of other big Chinese internet companies such as Alibaba and Tencent, but few of them have expanded beyond their former employers’ core business (e-commerce with Alibaba and social/gaming with Tencent). By contrast, those founded by NetEase alumni have little to do with the core functions of NetEase, such as e-mail, online news and gaming.

YY started as a voice chat service for game players and has since transformed into an interactive video platform. The sectors the platform now covers include music, gaming, education and dating. The majority of its revenues come from virtual item sales. So far it’s the only company of its kind in China or even around the world. YY went public on the NASDAQ in late 2012 and now is trading at a US$3.5 billion market cap.

Chunyu Doctor is a mobile healthcare app enabling users to interact with doctor, with the platform paying doctors to answer questions. Doctors can list their offerings while the platform gets a revenue share. Founded in 2011, Chunyu raised Series C funding earlier this year.

Financial social media Xueqiu (or ‘Snowball’) is one of the most popular social media for financial professionals and stock investors. It has raised three rounds of funding totalling over US$53 million.

Momo is the new star in China’s social networking market. Co-founder and CEO Tang Yan worked at NetEase from 2003 to 2011, when he left his post of editor-in-chief at NetEase’s news service. Four other co-founders of Momo also came from NetEase. Tang’s wife, now director and the president of Momo’s US operations, once worked at NetEase too.

Momo co-founders include Li Yong, former editor-in-chief and vice president at NetEase, who also founded online education startup Beijing Jingguanyu Technology. The company developed Fenbi.com, a social platform, and recently shifted focus to Yuantiku, an online database and solution for exam questions. It has raised three rounds of funding.

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Local media jokingly call NetEase “the best startup incubator”, but NetEase doesn’t seem to be amused. NetEase has showed no interest in the startups founded by its former employees. NetEase alumni don’t find their former employer proud of what they’ve achieved, either.

Momo is expected to be listed in the U.S. tomorrow. NetEase appears unhappy about that, and today issued  a statement accusing Tang Yan of breaching his employment contract. It claims Tang founded Momo when still working at NetEase and hired his wife’s advertising company, causing a conflict of interest. (Tang’s wife co-founded an advertising company after leaving NetEase).

According to Momo’s IPO filing updated two weeks ago, Tang last month received a letter from a law firm on behalf of Wangzhiyi Information Technology (Beijing), a company affiliated with Netease, which addressed the issues mentioned above, requesting Tang apologize in writing. Tang had not done so before NetEase’s statement.

It’s unknown whether NetEase will take further legal action, but it is considered odd by many in China’s tech industry that a former employer should litigate one day before a former employee’s company goes to IPO.

 

Editing by Mike Cormack (@bucketoftongues)