Fund Alliance Forms For China VR, ZTE Sets Up Fund, Accel & Bertelsmann Do India Deals

[Silicon Dragon Digest, Week of June 27, 2016]

Sequoia Capital, Matrix Partners, 500 Startups, and HTC are among dozens of investors that have formed a Virtual Reality Venture Capital Alliance, with plans to invest $10 billion in the virtual reality (VR) and augmented reality (AR) sectors globally. The Alliance is to meet six times a year in Beijing and San Francisco, aiming to invest in a range of technologies across hardware, content and technology. VR is forecast to be a $30 billion market by 2020.

Rui Ma and Edith Yeung of 500 Startups are among the Asia-centric investors recognized in John Rampton’s list of “Silicon Valley’s Most Well-Known Investors of 2016.” See the full list here.

China has become a market for Bitcoin unlike anything in the West, accounting for 42 percent of all Bitcoin transactions this year. A handful of Chinese companies have assumed majority control of the Bitcoin network, through smart investments and farms of computer servers scattered around the country. This concentration of ownership goes against plans for the network at its conception, and raises worries about Bitcoin’s independence and decentralization, which was supposed to give the technology freedom from government crackdowns and interventions.
An American delegation to China, including executives from leading Bitcoin startup Coinbase, came up with a software proposal, called Bitcoin Classic, that would fundamentally change the Bitcoin software to make Bitcoin bigger. The Chinese side rejected these proposals. Read more about Bitcoin’s evolution and history, as well as recent initiatives by its proponents, in this New York Times piece.

A primary trend within this year’s media and entertainment M&A activity revolves around Chinese investment in the U.S. During the first quarter of 2016, almost half of all U.S.-targeted M&A transactions from foreign investors came from China, with media and entertainment a significant driver of that figure. In addition to acquisitions, a number of investments in U.S. film studios stood out: for example Perfect World Pictures’ $500 million investment in Universal Pictures’ upcoming films, and Film Carnival’s $500 million investment in Dick Cook Studios.
These transactions reflect China’s ongoing interest in gaining insight into how Hollywood works. The purchasing entities seek to ramp up their own production capabilities and speed up their ability to compete with current global content creators. Read more about the significant role of China in recent M&A activities in media, here.

Alibaba has acquired Wandoujia, one of China’s most prominent Android app stores, for an undisclosed amount, which Chinese media has estimated at $200 million. Though significant, the speculated value pales against the $1.9 billion that Baidu spent on 91 Wireless, China’s top Android app store, three years ago. The deal is also interesting for being significantly less than Wandoujia’s $1 billion valuation in January 2014, following increased competition from carrier-run app stores and reports of internal conflict.
The acquisition is in line with Alibaba’s previously displayed interest in app and other media that can help expand its e-commerce business. Wandoujia joins UCWeb as part of Alibaba’s mobile-focused portfolio.

Tsinghua Holdings, a state-owned enterprise founded in 2003 by Beijing’s Tsinghua University, is to invest at least $7.6 billion in research over five years, and set up a fund to commercialize scientific discoveries. The Tsinghua group will set up 1000 business incubators in China by 2021 and another 59 in countries including the U.S., the U.K., and Germany. Tsinghua Holdings plans to focus on familiar industries including integrated circuits, and explore industries such as environmental protection, new energy and materials.

Lightspeed China Partners has closed Lightspeed China Partners III, with $260 million in committed capital. Based in Shanghai and Beijing, the firm has invested in more than 60 early stage companies in China through Lightspeed China Partners I and II. Notable investments include online vacation rental service provider, Tujia, and Trusted Doctors, a mobile network for top-quality doctors and their patients.

Chinese telecom equipment maker ZTE Corp is to set up a $180 million fund to invest in TMT startups. ZTE is to control 25 percent of the fund, with other investors owning 75 percent.

Greylock Partners, New Enterprise Associates and Matrix Partners China are among the investors in Chinese business data analytics platform GrowingIO’s $20 million Series A. The company provides a SaaS platform that allows managers and engineers at Internet companies to collect and analyze business data in real time.

Chinese smartphone maker Xiaomi is seeing a sales slump, with a slowed growth of 3% in 2015, to total $12.5 billion. As a rising power in a country eager to prove that its consumer-oriented products can compete globally, CEO Lei Jun has said that “Xiaomi’s mission is to change the world’s view of Chinese products.” The startup’s $45 billion valuation was based on the company’s promise that it could build an ecosystem—a network of products, services, and recurring revenues, much like Apple’s. Read about the company’s efforts to sell hardware products, monetize apps and games, and create smart homes in Fortune’s latest piece on Xiaomi’s growth and struggles.

Sequoia Capital and Luoji Siwei (the Logic Show) are among the investors in a $25 million Series A financing for audio-based knowledge sharing platform Fenda. Vision Plus Capital and Wang Sicong, the only son of the chairman of Dalian Wanda Group, also invested in the platform, which is less than two months old. The product allows users to ask questions of other users, while additional users can pay RMB1 to eavesdrop and listen to the answers. This fee is split among the questioner, answerer and Fenda.

The Cyberspace Administration of China has taken another step in recently asking mobile app developers and distributors to do their part in maintaining the Great Firewall. The vast information now being created on apps, and the disparate ways in which it’s shared, has made monitoring and controlling the flow of information harder. The new rules require each app store to verify users’ identity, placing the burden of storage and censorship on app makers and sellers.

Amazon Web Services has launched its first region in India, Amazon’s sixth in APAC. The new Mumbai region is to offer access to all of AWS’s core services, along with two availability zones. Notably, Microsoft Azure already offers three data center locations in India, while Digital Ocean, a cloud and hosting provider, also recently launched a data center in Bangalore.

Accel Partners is among the investors in the $8 million Series A funding of FabHotels, a year-old, Gurgaon-based budget hotel aggregator. RB Investments also participated. India’s budget hotels space is a market dominated by Softbank-backed OYO Rooms, a startup that has raised $125 million in funding.

Bertelsmann India has led the $32 million ($20 million in equity and $12 million in debt) funding round of Lendingkart, a Mumbai-based startup that provides instant and flexible financing solutions to small and mid-size business borrowers. Darrin Capital Management and earlier backers Mayfield India, Saama Capital and India Quotient participated.

SD Ventures has put an undisclosed amount of funding into PressPlay TV, a Sequoia-backed company and one of the fastest growing startups in India. It is India’s leading video discovery platform from across over 100 of India’s top content creators including Bollywood, fashion, food, travel, comedy, news, and more.

VC investments in India have shrunk both in value and volume in the first half of this year. The number of venture deals fell by 35% to 183, and the total value of funds fell to $1 billion from $2.85 billion in 2015. Consumer internet services, which received the majority of the funding in boom years, have shifted to building more sustainable businesses at lower cost, instead of spending aggressively to acquire customers.

Messaging app Line has set a price for an IPO on the Tokyo and New York Stock exchanges next month. At a price range of $26.50 to $31.50 per share, the IPO could raise up to $1.09 billion. Last month, the startup reported 218 million monthly active users globally, with 152 million in its top four markets in Asia, including Japan, Thailand, and Taiwan.

JAFCO has led the $20 million Series A funding round of Quoine, a Singapore-based bitcoin trading platform. According to a real-time ranking of bitcoin exchanges by cryptocurrency portal Coinhill, Quoine is 7th, following six Chinese exchanges.

 Justin Hall of Golden Gate Ventures speaks about the firm’s fundraising efforts and take on Southeast Asia’s investment climate, in an interview with the Phnom Penh Post, here.

One of two winners of Silicon Dragon’s inaugural pitch competition event in New York City, Biocellection, was selected to ring the closing bell at Nasdaq on Friday, July 1. Watch CEO Miranda Wang’s winning pitch.

Matt Wilkerson, CEO of Paragon One, was one of several founders invited to pitch to a group of Chinese angel investors at FoundersSpace in San Francisco. Paragon One provides the soft skills coaching and mentorship for international students from China to find U.S.-based jobs with multinational companies.

– By @SiliconDragon Writer Ying-Ying Lu (@ginyginy)

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