|Mark Zuckerberg, founder and CEO, shows off the new messaging system in Facebook. (Photo credit: Wikipedia)|
The discussions, at a private dinner when Zuckerberg visited Beijing in October, were never formalized, three of those people said, as the two CEOs weighed the political and commercial implications of Facebook - which has been banned in China since 2009 - buying into the Chinese tech star now valued at $45 billion.
One individual with direct knowledge of Xiaomi's fundraising said the mooted Facebook investment was "not huge", but the talks underscore how ties between U.S. and Chinese companies have deepened as China's tech industry matures.
A Facebook investment in Xiaomi would have raised the international profile of the popular handset maker dubbed "China's Apple" by its fans and linked it to a U.S. social networking phenomenon with more than 1.3 billion users.
Facebook, for its part, has long harbored ambitions to expand into the world's most populous country, potentially with partners. One of the individuals said Facebook and Xiaomi began discussing a possible investment in mid-2014.
Xiaomi's Lei was partly put off by the potential for political fallout at home of selling a stake to Facebook while the U.S. social network is still banned in China, two of the people said, adding Xiaomi also feared a tie-up with Facebook could threaten its relationship with Google Inc, a crucial business partner. Xiaomi's phones are built on Google's Android operating system.
Xiaomi ultimately announced last month it raised $1.1 billion from investors including Hong Kong-based tech fund All Stars Investment; DST Global, a private equity firm that has invested in Facebook and Alibaba Group; Singapore sovereign wealth fund GIC; Chinese fund Hopu Management; and Alibaba founder Jack Ma's Yunfeng Capital.
The fundraising valued Beijing-based Xiaomi at $45 billion just three years after it sold its first smartphone. The company had revenue of close to $12 billion in 2014.