Alibaba Buys Into An Israeli Tech Startup, Tencent, GGV and Fosun Do Deals In The U.S., EBay Founder Does Mynamar
[Silicon Dragon Digest, week of May 30, 2016]
UNITED STATES +
No surprise to see China and India leading global trends in Mary Meeker’s recently released 2016 Internet Trends Report. Internet use in India—now the second-largest market behind China—has hit 277 million users, surpassing the U.S. The Kleiner Perkins partner also highlighted the mobile trend from within China, noting that 71% of time spent on mobile is divided among Tencent, Alibaba and Baidu brands. Moreover, she points out that 31% of Chinese WeChat users make purchases from retailers through the chat app, and it’s not at all uncommon to see high usage for China’s smartphone-based payment solutions across the board. (See this related telling tweet from GGV Managing Partner Glenn Solomon, comparing mobile payments in China versus the U.S.)
Turning to highly popular car-hailing apps, Meeker’s report notes that of the 6.3 billion on-demand rides requested around the world in the first quarter of 2016, about 70% were requested in China.
Against this backdrop of a highly digitized China, Meeker’s compilation shows that while Amazon operates in China, it has never managed to grow beyond a minor player – like many American tech brands.
Microsoft has unveiled Microsoft Ventures, focusing on Series A and later investments in North America and Israel. The new fund will oversee older investments and hone in on both Israel and North America.
This week, Xiaomi and Microsoft announced a cross-license and patent-transfer collaboration. Later this year, Xiaomi’s smartphones will begin shipping with Microsoft’s Office apps and Microsoft-owned Skype. At the same time, Xiaomi will receive patents from Microsoft. The deal between two struggling smartphone brands is important for Xiaomi’s continued ambitions of becoming a global consumer brand. It also reflects the growing importance Chinese companies are now putting on intellectual property.
Not to miss a beat, Didi Chuxing has said that it is raising another round of funding that is to be bigger than Uber’s fresh raise of $3.5 billion from Saudi Arabia’s Public Investment Fund. Both companies assert that driving strategic partnerships and winning users tops their list of priorities. Ride-hailing giant Didi Chuxing claims it books 14 million rides a day, a figure four times as large as combined bookings in the U.S. by Didi rival Uber and Didi partner Lyft. (But just how much funding do car-hailing apps need?)
Meanwhile, Uber’s decision to take money from an oppressive regime has caused outrage among many Saudi women, who see the investment as an endorsement of the country’s ban on female drivers. The company’s decision to name Yasir Al Rumayyan, manager of Saudi Arabia’s sovereign wealth fund, comprises what some say are questionable business tactics.
Udemy, a San Francisco-based marketplace for online educational courses, has raised $60 million in new VC funding from South African media company Naspers, bringing the startup’s total funding to $173 million. Udemy is localizing its content, claiming to have 40,000 courses available in 80 languages, with two-thirds of students based outside the U.S. Within the past year, the edtech startup has launched localized versions of its technical degree program in India and China.
Tencent and GGV are among the return investors in the $18 million new funding round of San Mateo, CA-based Tile, which makes a Bluetooth tracking device and app that enables users to find valuable items such as their keys or phone. Bessemer Venture Partners led the round, and earlier backers Khosla Ventures and Tandem participated.
NetEase Capital, the venture arm of NASDAQ-listed Chinese internet company NetEase, has put $2.5 million into San Francisco-based mobile marketing infrastructure startup Tenjin. Angel investors Herman Yang and Waikit Lau also invested.
China-U.S. cross-border VC firm Fosun Kinzon Capital has led the $20 million Series A funding round of uSens, a San Jose, CA-based company that develops hand-and-head tracking technologies for augmented and virtual reality.
Los Angeles-based Tang Media Partners, a China-U.S. media investment firm, has acquired a majority stake in Hollywood film and TV studio IM Global from India’s Reliance Group. Financial details of the detail remain undisclosed. In addition, IM Global and Tang Media Partners have partnered with China’s Tencent to launch a TV production investment fund. Tang Media Partners’ list of heavyweight backers includes Tencent, Sequoia Capital, CMC Capital Partners, and Chinese production house Huayi Brothers.
Lightspeed China Partners, the Chinese affiliated organization of U.S. venture firm Lightspeed China Partners, has begun fundraising for its first RMB fund, in an effort to create greater flexibility in backing early-stage Chinese startups. The firm has previously invested purely in U.S. dollars, financing over 60 companies in China, with 70% in Series A rounds and 90% as a lead investor.
Sequoia Capital China and DCM both own stakes (19 percent and 24 percent, respectively) in China Online Education Group, a Beijing-based online education platform focused in English language proficiency that plans to trade on the NYSE. The company has reported $24 million in revenue for 2015, with a net loss of $50.5 million.
U.S. law firm Shearman & Sterling is an advisor to NYSE-listed Chinese e-commerce firm Dangdang Inc. in its roughly $556 million going-private transaction. The company, known as China Dangdang, is a leading B2C e-commerce site in China, offering a range of products including books, media and apparel, in addition to operating a marketplace that allows third party merchants to sell their products.
CHINA CROSS-BORDER, NON-U.S.
Alibaba is investing in Tel Aviv-based Twiggle, a startup that aims to improve product searches on e-commerce websites. Alibaba joins South African conglomerate Naspers in a round that brings Twiggle’s total funding to about $20 million. The joint investment is unusual given that Naspers owns 34% of Alibaba rival Tencent, and reflects strong interest in advancing e-commerce search.
Some $1 billion of e-commerce giant Alibaba Group’s shares have changed hands via a sale by Japan’s SoftBank Group to Singapore’s sovereign wealth fund GIC Private and state investor Temasek Holdings. Temasek is an existing investor in Alibaba. SoftBank has declared intentions to sell additional shares, but has said that it will remain as Alibaba’s largest shareholder.
Ventech and PE fund Vision Knight Capital have led the Series C funding of Blued, a Chinese gay social networking mobile app. Founded in 2012, Blued had more than 27 million registered users from over 190 countries as of February, with overseas users accounting for more than one-fifth of total users. The company is reportedly valued at a figure exceeding $300 million.
Tencent, IDG Capital Partners and DT Capital Partners have together invested nearly $20 million in social networking crowdfunding platform Qingsongchou. The startup, which means “raise money easily” in Chinese, had previously raised its Series A from IDG. It claims to have 60 million registered users, with over 600,000 projects funded.
GGV Managing Partner Jenny Lee contends that China’s biggest advantage in next-generation technology is its number of global patents and intellectual property registrations in addition to ample government funding and support. Lee, who recently also spoke at Silicon Dragon’s first-ever Salon in Hong Kong, also highlighted advances in China’s space technology, 4D printing and drones.
Droom, a Gurgaon-based online marketplace for used cars, has raised an undisclosed amount of Series B funding from Singapore’s Beenet and Japan’s Digital Garage, along with return backers Lightbox and Beenos Partners. The round, estimated to be between $25 million and $30 million, values the startup at more than $200 million.
Chandigarh-based on demand auto-rickshaw aggregator Jugnoo has acquired fellow Indian startup SubKuchFresh for an undisclosed amount, to strength its recently launched grocery delivery service. SubKuchFresh is an online fruits and vegetables marketplace with ties to more than 100 farmers.
Micromax Informatics, a Sequoia-backed Indian company known for low-cost phones and rapid new-model launches, is evaluating the entry of several overseas markets including China. “If we have a vision of being in the top five [international smartphone seller], we can’t be ignoring the China market,” said Vikas Jain, one of Micromax’s four founders. One of the challenges in launching new markets will be replicating the expansive distribution network the company has built in India.
Japanese messaging app operator Line is expected to launch a road show for its planned $2 billion to $3 billion IPO in New York and Tokyo on June 10. Once completed, the Line IPO would be the biggest IPO globally so far this year.
Whill, a Tokyo-born startup focused on building better wheelchairs and mobility devices, has raised $17.5 million in Series B funding led by Eight Road Ventures, with participation from Mirai Creation Investment and Golden Asia Fund II. Founded in Tokyo four years ago, Whill is now headquartered in San Francisco.
Lalamove, a Hong Kong-based provider of on-demand logistics solutions, has raised $10 million in new VC funding led by MindWorks. Fellow return backers Crystal Stream (China), AppWorks (Taiwan), and Aria Group (Hong Kong) invested alongside new investor Asia Plus (Thailand). The startup plans to use the new funds to strengthen its position in existing markets Hong Kong, Singapore, Bangkok, Taipei, Guangzhou and Shenzhen, as well as expand in more markets in Southeast Asia. In China, Lalamove has made its service available inside Tencent-owned WeChat.
Singapore-based Jungle Ventures, which launched a $100 million fund last year, has rolled out a new initiative focused on seed-stage investments in Southeast Asia. The new fund, named SeedPlus, will back roughly half a dozen companies a year and work closely with them to scale in Southeast Asia, even going so far as to provide office space in Singapore to house its portfolio companies and enable partners to work face-to-face with them.
SOUTHEAST ASIA, REGIONAL COMMENTARY
Facebook cofounder Eduardo Saverin, of B Capital Group, has said that there are still plenty of opportunities for VC investment in Southeast Asia, despite increased funding in the region. Watch the WSJ video here.
In the same interview, Saverin went on to say that Southeast Asia is “arguably the fastest-growing internet market in the world.” The numbers back Saverin up. In the first quarter of 2016, funding of Singapore companies rose to $199 million from $53.1 million a year earlier, according to AVCJ Research, while Indonesian investments more than doubled to $18.9 million in the first quarter from $8 million a year earlier.
Singapore-based Golden Gate Ventures, which focuses on companies building out consumer internet products and services for Southeast Asia, is the region’s most prolific investor as measured by number of deals participated in in the last five quarters. The firm has participated in 16 funding rounds since April of last year. Coming in second is Wavemaker Partners in the U.S., with 15 deals.
Signals, an Israeli big data and business intelligence platform, has raised $10 million in Series B funding led by Israel’s Qumra Capital, with participation from existing investors Sequoia Capital and TPY Capital. The company plans to expand its teams in Israel, Switzerland and New York.
EarlySense, a Ramat Gan, Israel-based company that makes continuous monitoring technology that supports remote patient monitoring, has raised $25 million in new funding. Israel’s largest bank, Bank Hapoalim, led the round, and was joined by return backers including Pitango Venture Capital and JK&B Capital.
OTHER FRONTIER MARKETS
Myanmar-based tech hub Phandeeyar has closed $2 million in follow-on investment from Omidyar Network, a global philanthropic investment firm founded by eBay founder Pierre Omidyar. The funding is to support the tech hub’s entrepreneurship program, Makerspace Initiative, and social innovation and civic tech projects in the newly democratic nation.
Saudi Arabia-based startup Nomadd, which is developing a smart and ecological desert solar panel cleaning system, has raised $1 million in Series A funding from a domestic fund, King Abdullah University’s Kaust Innovation Fund.
Kevin Efrusy, a partner at Accel Partners who has invested personally and through the firm in Brazil, discusses the impact of Brazil’s politics on tech investments, the country’s startup and VC ecosystem, and frameworks for investing in the region in this TechCrunch interview here.
UK-listed PE firm Actis has closed its third Africa-focused real estate fund, with more than $500 million in capital commitments. Notably, Actis had previously set up a $1.9 billion renewable energy business in Africa, in an attempt to meet the continent’s growing demand for electricity.
- By Silicon Dragon contributor Ying-Ying Lu