China Scores Well With 11 VCs on Forbes Ranking Of Top 100 Startup Investors
China is increasingly prominent in the annual Forbes ranking of top 100 venture capitalists. This year’s list shows 11 VCs in China, up from 10 last year. More tellingly, the new ranking includes 11 U.S.-based VCs who are doing deals in Asia, up from seven a year ago. See tally from 2015.
China VC newcomers on the list are JP Gan (#38) of Qiming Venture Partners, Allen Zhu (#65) of GSR Ventures and Bob Xu (#94) of ZhenFund. See full tally. New among the rankings from the U.S. who are investing in Asia are Joe Lonsdale (#100) of 8VC with his investment in China-focused e-commerce company Wish. Dave McClure (#96) of 500 Startups joins the list this year with new funds for Vietnam and India.
Regulars in the rankings from China are Neil Shen (#7) of Sequoia Capital China, Hans Tung (#21) of GGV Capital, Kui Zhou (#61) of Sequoia Capital China, Jenny Lee (#40) of GGV Capital, Quan Zhou (#44) of IDG Accel, Hurst Lin (#50) of DCM, Steven Ji (#62) of Sequoia Capital China and Richard Liu (#90) of Morningside Ventures. Read Rebecca Fannin’s Silicon Dragon post at Forbes.
In the increasingly crowded unicorn club, Asia currently boasts 41 startups valued at $1 billion or above, compared with 92 from the U.S. and 155 in total globally, according to the latest tracking from CB Insights. China leads the Asia tally, with 27 (topped by $46 billion valuation for Xiaomi), 7 from India (led by $15 billion Flipkart), 3 from South Korea (led by $5 billion Coupang), 2 from Singapore ($1.5 billion GrabTaxi and $1 billion InMobi, also in India), 1 from Thailand ($1.25 billion Rocket Internet-invested Lazada), and 1 from Japan ($1 billion ecommerce site Mercari).
With unicorns under fire for seemingly impossible startup valuations, talk is that a crisis is coming in the technology ecosystem. Mike Trigg of cloud service Hightail asserted in a TechCrunch post that the market correction happening today is actually healthy, “akin to burning out the underbrush so the healthiest trees can grow.”
Trigg focuses on the macro-economic impacts on the larger tech market largely within a Silicon Valley-focused context, with examples such as Groupon, Dropbox, and Zynga. His analysis applies in a global context as well, however. Regardless of market adjustments, Chinese and Indian technology companies that survive their own economic reckonings will continue to transform the global economy alongside their U.S. and global peers.
Adding European perspective, Mattias Ljunman of London-based investment firm Atomico argues in TechCrunch that Europe has laid its own tech ecosystem foundations and is following a separate and steadier investment cycle that is not as susceptible to a U.S. tech downturn. Silicon Dragon covered London’s startup scene and the U.K.’s future as a hub for investment here in Forbes.
Bucking the uncertainty in the Chinese economy, Sequoia Capital China is seeking to raise by early April up to $1.5 billion for two funds to invest in Chinese startups: $500 million for venture and $850 million to $900 million for growth companies. The total amount far exceeds Sequoia’s prior two funds: $625 million in 2015 for growth and $450 million in 2014 for venture. The firm co-founded in 2005 by Neil Shen has made homerun bets on well-known names such as mobile utility firm Qihoo 360, consumer drone global leader DJI, and e-commerce site Vipshop. In other news, Sequoia led a Series C round of financing for Molbase, a chemicals e-commerce platform based in Shanghai that provides a relationship-based distribution approach catering to both Chinese and international clients. Existing investors including Innovation Works, Fosun Kinzon Capital and Vangoo Capital participated in the financing.
Chinese Internet star Jiang Yilei, who uses the moniker Papi Jiang, has raised nearly $2 million from domestic VCs at a valuation of $15 million. Investors include Zhenfund, Lighthouse Capital, Xingtu Capital, and popular WeChat media Luogic Show (Luoji Siwei). The investments are notable for channeling funds typically earmarked for tech startups to an individual’s brand.
Jiang is one of China’s most popular social media celebrities, with 8 million followers on Weibo alone. In her videos, which she began posting six months ago, Jiang mocks everyday life and satirizes topics such as relationships and social issues. One four-minute video, posted in February, reached 100,000 views within two minutes of going live.
In an illustration of Chinese publishers using their financial power to go global, Chinese game publisher Youzu Interactive has acquired German game developer Bigpoint for $90 million. Bigpoint, founded in 2002, has seven offices including Berlin, Seoul and San Francisco. Youzu was founded in 2009 and is a leading publisher of online, mobile and multiplayer online videogames in the U.S. and China, including League of Angels and Knight’s Fable.
In yet another cross-border deal, China’s Renren has put $4 million into OneRent, a platform for the residential real estate management industry. Launched in 2016, OneRent is based in San Jose, CA and operates in the Bay Area and Seattle. The startup manages a fast-growing portfolio of more than $500 million in properties. E-commerce player turned venture investor Renren has previously invested early on in real estate loan site LendingHome, property investment site Fundrise, and marketplace loan company SoFi.
Uber CEO Travis Kalanick has confirmed that the San Francisco-based company is bankrolling huge losses in China — to the tune of $1 billion a year – but is not leaving the highly innovative Chinese market any time soon. Uber has been drawing capital from profitable locations in other markets globally to fund its Chinese efforts. In China, the ride-hailing app is competing with local rival Didi Kuaidi, which is valued at $16.5 million and backed by Alibaba and Tencent. Despite the intense competition in China, Uber is going ahead with its plans to be in 100 Chinese cities by the end of the year.
XMC, a memory chip maker owned by the Chinese government, is building the first Chinese-owned plant to produce widely used flash and computer memory chips in Wuhan. The move reflects China’s commitment to investing $24 billion toward building a world-class semiconductor industry, promoting a shift from low-end manufacturing to more-advanced sectors. Last year, XMC partnered with U.S. flash-memory maker Spansion Inc. to co-develop next-generation chip technologies.
More than 650 million people in China use Internet search company Baidu’s services, including 300 million who use its map services each month. This amounts to a 70 percent of overall market share in China for Baidu map, which boasts an incredible amount of data. Baidu’s labs are researching ways to mine this anonymous data for insights on social trends and behavior, including potentially predicting and preempting deadly crowd gatherings, as well as highlighting areas that should be avoided because of overcrowding. The potential for predictions have led to concerns that the data collected by Baidu might provide a way for the government to monitor social unrest. MIT Technology Review provides insights into questions of trade-offs between community safety, individual privacy and government control in a recent article.
Horizon Ventures, an investment group of Hong Kong business magnate Li Ka-Shing, has invested $15 million in P2P German insurance startup Friendsurance. Previous investors in the company include VantageFund, e.ventures, German Startups Group, and the European Regional Development Fund. Founded in 2010, Friendsurance lets customers create individual insurance networks to lower their annual premiums. Friendsurance currently has 70 insurance partners and 80 employees.
Sequoia Capital India and Belgian investment firm Sofina have invested $75 million in BYJU, a Bangalore-based educational app for Indian schoolchildren. The funding brings BYJU’s total funding to $90 million. Founded in 2011, BYJU boasts 2.5 million downloads to date, as well as 120,000 paid annual subscribes for its course content. The startup claims that its animated video lessons and online tests keep the average student engaged for 40 minutes a day.
Transportation app Ola has acquired Qarth, a startup with a mobile payments app named X-Pay, in an undisclosed transaction. X-Pay integrates with 26 banks in India. This is the first acquisition by Ola that extends its business beyond transportation.
Uber filed a lawsuit against Ola’s parent company in India, accusing its rival of creating tens of thousands of accounts and using them to place fake orders and disrupt Uber’s business. Ola has called these claims “frivolous and false.” Uber’s fight with India’s Ola is reminiscent of its battle with rival Lyft in the U.S.
Google Capital has led an investment in its fourth Indian startup, Girnar Software, which runs several auto portals in India including market leader CarDekho.com and CarBay.com, the latter of which operates in 25 countries globally. Earlier backer Hillhouse Capital participated in the round. Girnar had previously raised at least $80 million.
UAE’s Abraaj Group has led a $150 million funding round of Bangalore-based grocery delivery service BigBasket along with International Finance Corp and Sands Capital. Existing investors Bessemer Venture Partners, Helion Advisors, Zodius Capital and Ascent Capital participated in the deal. BigBasket is looking to expand its e-commerce grocery sale offerings into smaller cities, at a time when online grocery delivery in India is heating up. Its rival startup Grofers, which connects customers with local stores, raised $120 million from Japan’s Softbank last year. Amazon, which has been investing heavily in India recently, launched a grocery delivery pilot in Bangalore last year.
Japanese Internet company Rakuten’s subsidiary Ebates has acquired Shopular, a mobile product discovery app anchored in Silicon Valley. Shopular had previously raised $13.6 million from investors including Sequoia Capital. Through the acquisition, cash back shopping startup Ebates seeks to strengthen its online leading position by offering shoppers relevant deals and coupons directly on their mobile phones using Shopular’s technology.
Gobi Partners has partnered with Malaysia Venture Capital Management Berhard (MAVCAP), the government-backed large venture capital firm, to launch a $14.5 million fund dedicated to seed-stage companies in Southeast Asia. The fund aims to make at least 25 deals over the next three years, with a focus on Malaysia, Indonesia and Singapore while taking an opportunistic approach to other markets. The new fund is slated to have an average deal size of $500,000, and is to be managed out of Gobi’s Kuala Lumpur office. Five deals have been completed, among them Nuren Group, Malaysia’s leading wedding and maternity products e-commerce site, and RecomN, a Malaysia and Indonesia-based on-demand platform.
Golden Gate Ventures has led the initial financing of ServisHero, a local provider of on-demand services via a mobile app. Cradle Seed Ventures, a fund affiliated with Malaysia’s government, participated in the deal. The startup boasts over 50,000 downloads more than 3,000 service providers on its platform, in sectors such as home repairs, cleaning, fitness, driving and even accounting.
Spotify has confirmed plans to go live in Indonesia by the end of March, kick starting its Asia expansion plans once again. Indonesia is becoming a popular entry market as the world’s fourth most populous country with 250 million residents and a large smartphone base with sales that are projected to grow by 20 percent this year. Though Spotify has previously leaked ambitions for other countries in Asia, including Japan and India, Indonesia is the only country with roll-out plans so far.
LendInvest has completed a $25 million equity investment from Atomico, the technology venture capital firm founded by Skype co-founder Niklas Zennström, following a $33 million, Series A investment by Chinese private equity firms in June 2015. The new funds will be used to extend LendInvest’s technology lead in online property finance in the UK. Launched in 2013, the startup was the first to bring P2P lending to the UK mortgage market, and has lent nearly $800 million to finance 2,100 properties. LendInvest co-founder and CEO Christian Faes detailed the company’s strategy at Silicon Dragon’s 2016 London event in February.
– Silicon Dragon weekly digest by contributor Ying-Ying Lu