WeWork’s $4.4B Draw From Softbank For Asia Underscores Region’s Startup Strengths

DEALS
Nanjing LuFresh from pulling in $500 million from Softbank and Hony Capital just a month ago to expand into China, office sharing outfit WeWork has snared $4.4 billion in new investment from SoftBank Group and its investment-hungry SoftBank Vision Fund to grow in Japan, Korea and Southeast Asia. The huge deal underscores the rapid growth of tech startups in the region and their need for flexible office space, but it’s a very crowded area already. Read Forbes: Hot WeWork

Sequoia Capital China has led a $200 million financing of VIPKid, a China-based online education company that matches Chinese students with North American teachers. The deal values VIPKid in the unicorn sphere, at more than $1.5 billion. Joining the Series D round were Tencent, Yunfeng Capital, Matrix Partners China and Zhen Fund.

 DCM Ventures has led a $31.8 million, Series B investment in a business-to-business oil trading platform 51zhaoyou.com, based in Shanghai.  Joining the round were SIG, GGV Capital, Yunqi Partners, the Uber-like truck logistics start-up Huochebang, Sky9 Capital and Chuangban Investment.

Warburg Pincus has led a $19 million, second round in GaiaWorks, a Suzhou-based workforce management solutions provider, and was joined by Matrix Partners China and Genesis Capital.

Maihaoche, an automotive e-commerce platform located in Hangzhou, has raised $29 million in Series B funding led by Welight Venture Capital and its founder, Wu Xiaoguang, a former Tencent EVP. Participating were Northern Light Venture Capital and the South Korean venture capital firm LB Investment.

In the emerging sector of insurance tech, Baozhunniu, a customized insurance products provider, has bagged $14 million in Series B funding led by venture firm Marathon Venture Partners. Other investors in the Chinese startup include Matrix Partners China, Xinyi Capital, Zhongguancun Dahe Capital, and GGV venture partner Denise Peng, a former COO of Qunar.

Sequoia Capital China, reached out to fund a fast-growing AI-powered data analytics startup in Sydney named Hyper Anna. The $16 million investment was joined by seed investors Reinventure and AirTree Ventures.

The China team of Singapore’s Vertex Ventures has led a Series B round in Julive, a three-year-old, China-based online-to-offline real estate agency. Earlier backer Source Code Capital was also in on the deal.

Data protection startup Druva, which originated in India and is now in Silicon Valley, has drawn $80 million in funding from Riverwood Capital with Sequoia Capital India and Nexus Venture, taking its total pool past $200 million as it steps up R&D.

M&A
Baidu’s deal to sell its meal ordering and delivery service  Xiaodu for $800 million to Alibaba-backed Ele.me further consolidates the online Chinese catering market.

In an indication of China’s booming startup scene, 15 Chinese unicorns were anointed since the start of 2017, topped only by the U.S. with 17. Of 215 unicorns globally, China has 56 while the U.S. counts 107. For perspective, consider that China only had 8 unicorns in 2014. Now this year, VipKid, MoBike, Ofo, UrWork, Zhihu and more have joined the billion-dollar ranks.

More than one-third of tech’s 100 richest live in Asia. Alibaba’s Jack Ma leads the list for Asia’s richest tech tycoon for the third year in a row. Forbes Billionaire Tech list

Ford is revving up its electric vehicle joint venture in China, poaching Jason Luo, the former CEO of auto parts maker Key Safety Systems, to lead the charge in the world’s largest auto market.

American powerhouse brand Airbnb is aiming to quadruple its China tech team to more than 100 in Beijing in the next 12 months to target millennials.

Alipay is partnering with Yelp to tap outbound Chinese tourists and their restaurant bookings in four key U.S. markets with plans to add more.

VIEWPOINT
Western companies often come under pressure to make concessions in technology transfer or services in exchange for access to China’s market only to be blocked by investment restrictions, procurement mandates, or other barriers to trade. China is pulling ahead in the innovation game because it is following a strategy to build a high-tech economy through serious, consistent investments over a long period of time.
Jim Lewis, senior VP for the Center for Strategic and International Studies, examines what American companies are up against in China, the limits of commercial diplomacy, and how the U.S. should focus on hastening the creation of more intellectual property. Against the backdrop of an USTR investigation of China IP and tech innovation, Lewis contends that trade policy without innovation is only half of the equation.
Viewpoint by Jim Lewis.

Silicon Dragon digest edited by Rebecca Fannin with contributions from Shuonan Chen