China Tops US In Unicorns, NLVC & SAIF Raise New Funds

Digest: Funds, Deals, VC, Tech
July 31, 2017 weekly

 Northern Light Venture Capital is raising a $30 million, fifth fund to invest in innovative technology startups, focusing on the U.S. and China. The firm’s founding managing director Feng Deng is taking the helm at the new fund along with venture partner Yan Ke.

One of the more active tech investors in the region, SAIF Partners has quickly closed a $350 million fund focused on growing VC and growth capital opportunities in India. This follows Sequoia Capital India topping off its fourth India fund at $125 million.

M&A: Mergers and acquisitions involving American companies in China dropped 32% to $523 million in the six months to June 30, 2017, down from $771 million in the same period last year, amid rising trade tensions.  Reuters
Meanwhile, China’s pharma giant is eyeing U.S. drug distributor Cardinal Health as it puts its $1.5 billion China business up for sale Reuters Cardinal’s upcoming exit comes ahead of Chinese drug distribution reform that could slow the company’s growth.

VC/UNICORNS: Unsurprisingly, the U.S. and China continue to dominate the global venture capital market, at $35.9 billion and $30.2 billion in 2016. But look for these two leaders to shift positions. Over a five-year span, the U.S. had the slowest-growth VC market, up 12 percent, compared with China at an increase of 52 percent, according to a blog by Redpoint partner Tom Tunguz.
It goes to figure that unicorns would follows the same pattern. Looking at a total of 32 unicorn companies valued above $5 billion as of July 2017, the U.S. and China have the most number of unicorns by far, with the U.S. at 13 and China at 14.
Other markets in Asia pale in comparison. India checks in with $2.2 billion in venture and three unicorns.

DEALS
Ahead of its future IPO possibly within China, cloud computing company QingCloud has raised a $160 million Series D in China with investors including China Merchants Securities and CICC Jiatai Fund joining prior backers Lightspeed China Partners and Bluerun Ventures. 

Mercedes-Benz parent Daimler and a host of Chinese investors including Sequoia Capital China, Hillhouse Capital and Sinovation Ventures have invested $46 million, Series B, for Chinese self-driving software startup Momenta.   The deal was led by NIO Capital, a fund from Chinese electric vehicle maker NIO.

Indian digital health platform 1mg has raised $15 million in a strategic deal led by HBM Healthcare Investments with existing investors Maverick Capital, Sequoia India, Omidyar Network and Kae Capital.

Adding to its investees in India, Tencent has backed Indian online education service Byju at a reported valuation of $800 million in a bid to help the startup grow through acquisition.

TECH TRENDS
SELF DRIVING CARS:  More cross-border collaboration is coming as Microsoft teams up with Baidu to power self-driving cars Geekwire

SHARING ECONOMY:  China’s sharing economy is massive, reaching 600 million people SCMP   Smartphone power banks, umbrellas, basketballs and cigarette lighters are being shared as China again shows a knack for leaping ahead with technology adoption. Meanwhile, a Didi and SoftBank partnership to invest $2 billion in Grab, Southeast Asia’s vehicle-sharing service that competes with Uber, keeps the sharing economy going regionally.

CLOUD Asia’s cloud computing market is now finally growing, albeit slowly, with two unicorns (DT Dream and QingCloud among them) versus 35 unicorns in this space in the U.S.  No exits yet in Asia in this sector yet, however.  WSJ

AI: Alibaba has opened unmanned and cashless stores with AI in Hangzhou YouTube China has already begin to develop crime-predicting AI in stores that warns police to intervene when a potential crime threatens. FT

AR/VR: Dealmakers invested more than $800 million in the second quarter of 2017, rounding out over $2 billion in this field over the past 12 months, according to Digi Capital.

E-COMMERCE: A new battle ground has shaped up in Southeast Asia as Alibaba-backed e-commerce player Lazada competes with Amazon Go, which recently launched its Prime Now two-hour delivery service in Singapore’s consumer-centric e-commerce market. The Street  China online retail totaled $461 billion in the first half of 2017, a 33% increase and accounting for more than 18% of total retail sales.  TechNode

IoT: China Telecom, China United Network and China Mobile, three leading telecom carriers in China are increasing their “IoT” tech for consumers in everything from smart homes to smart parking China Daily American tech companies are likewise investing aggressively in IoT nationally. Forbes

BLOCKCHAIN: The SEC’s recent warning to put ICOs (initial coin offerings) under increased scrutiny has Asian investors pumped up. The hot blockchain-based investing trend, in which participants invest their money and receive digital tokens in return, could shift to the region where there’s more openness to blockchain experimentation CoinTelegraph

GEOGRAPHIC TRENDS
INDIA
American tech firms are censoring their own services to avoid offending users in India BuzzFeed Meanwhile, other US tech companies including Airbnb and Uber are looking to use Aadhaar, India’s controversial biometric identity system, to verify the identities of its drivers and hosts BuzzFeed Still, India is a draw. Consider LinkedIn Lite’s new Android app. TechCrunch

 While China-anchored Xiaomi is looking to grow aggressively in India Gadgets, local competitors are rising. Jio, the mobile entrant in India that has already disrupted the telco space with its low-priced 4G service, is now offering ‘free’ 4G phones that aim to bring more people online. Times of India The phone has a deposit of around $30, which is refunded after three years.

 SOUTHEAST ASIA
Chinese brands have invaded Indonesia’s fast-growing smartphone market, now accounting for a 31% market share, up from 23% a year ago, while Samsung’s leading share has slipped to 47 percent.  TechCrunch

AFRICA
China is everywhere in Africa’s rising tech industry, starting from nearly two decades ago when Chinese telecommunications giants ZTE and Huawei expanded into the continent CNBC

 Noteworthy

New aerial photos offer a first glimpse of Beijing’s epic new airport.

One day after Apple removed VPNs from its app store in China, tutorials about on how to register elsewhere are making the rounds. NYT

In China, upscale customers are receiving designer good purchases at their doorstep by white gloves delivery service   NYT

How tech giants Apple, Facebook and Google are building spectacular symbols of their immense power. The Guardian

with curating and reporting by Shuonan Chen, edited by Rebecca Fannin