‘Startup Funding Roundup’, the weekly report prepared by The Passage team provides detailed information about venture capital financing, fundraising, investments and acquisitions in China.
Last week (October 8 to 14), a total of 71 investments and acquisitions took place in China, representing a sharp decline compared to 108 between September 24 and 30.
Chinese investors changed their tastes after Chinese National Day - SaaS (Software as a service), which was the champion between September 24 to 30, was defeated by healthcare. The 10 investments in healthcare accounted for 14% of the entire funds raised last week. The former champion shared the second position with education, garnering 13% of the investments. (See details in Table-1).
Early-stage fundraising saw slight decrease—15 Series A, 14 Angel, and 2 Seed. Strategic investments also declined to 11, and acquisitions to 10. (See details in Table-2).
Although Chinese investment market shrunk somewhat last week, giants such as BAT - Baidu (百度), Tencent (腾讯), and Alibaba (阿里巴巴) - seemed zealous in funding with different focuses. Let’s take a closer look at those significant investments.
Baidu’s preference: healthcare company Jianyibao and music platform NetEase Cloud Music
On October 11, Chinese drug safety service platform Jianyibao (健易宝) announced that it raised an undisclosed amount in Series A round from BV - Baidu Ventures (百度风投), Baidu’s venture capital arm specializing in early-stage investments. Details of the round were not revealed.
On October 12, NetEase Cloud Music (网易云音乐), a popular online music streaming platform developed and owned by Chinese internet company NetEase (网易), confirmed that that it secured a new round of funding from Baidu, General Atlantic, and Boyu Capital (博裕资本). The exact amount of funds was not disclosed.
NetEase Cloud Music revealed that the financing would boost synergy between Baidu and NetEase. The proceeds of the round would be primarily used for “supporting original musicians and engaging in regular outreach for both upstream and downstream partners in the music industry”, the company said.
Alibaba’s taste: Chinese LiDAR specialist Robosense
RoboSense (速腾聚创), a Chinese autonomous driving LiDAR perception solution provider, closed an over CNY 300 million (USD 45 million) financing round on October 11.
Investors included Cainiao Smart Logistics Network (菜鸟网络), the logistics arm of the Alibaba, SAIC Motor Group (尚颀资本), the investment unit of Shanghai Automotive Industry Corporation (上汽集团), and an electric vehicle company BAIC Group (北汽集团).
RoboSense said that it intends to use the funds to increase its market share and autonomous vehicle technologies, such as solid-state LiDAR and AI sensing algorithms to accelerate product development.
Tencent’s inclination: Brazilian FinTech company Nubank
Unlike Baidu and Alibaba, Tencent eyed global market and invested in the Brazilian financial services startup Nubank.
On October 9, Nubank secured USD 180 million in the latest funding round from Tencent. The financing would value Nubank at USD 4 billion, making it “one of the most highly valued privately held startups in Latin America”, American online news platform TechCrunch reported.
The media company also suggested that for Tencent, with its USD 90 million direct investment and another USD 90 million investment in the secondary market, it has created a connection with Nubank.
For Nubank, Tencent’s investment showed the addition of a strategic partner whose financial services and transaction platform is unparalleled by anything in Western countries, co-founders of the firm David Velez and Cristina Junqueira said.
Star investments in other sectors
Besides large companies, several important investments occurred in various sectors last week. For example, in healthcare sector, on October 9, Deep Intelligent Pharma (深度智耀), a Beijing-based AI healthcare startup, received USD 15 million in a Series B round from Sequoia Capital China (红杉中国). The fresh capital would be used for research and development of its AI-driven drug development technology, the venture reported.
In real estate sector, on October 10, Chinese short-term rental startup Xiaozhu.com (小猪短租) completed a nearly USD 300 million Series F funding round, jointly led by Yunfeng Capital (云锋基金) and Advantech Capital (尚珹资本), and followed by GIC, Joy Capital (愉悦资本), Morningside Venture Capital (晨兴资本), and Capital Today (今日资本). Xiaozhu said that it would use the funds to launch a smart service and security system.
Following is the detailed highlights.
Analysis in Brief: Why healthcare would be a thriving market in China?
China’s healthcare market has been one of the most attractive in the world for both domestic and foreign investors in recent years. China has surpassed Japan to become the world’s second-largest healthcare market since 2013 and it continues to flourish.
The information aggregator China Briefing revealed that China’s healthcare market reached CNY 5,670.3 billion (USD 853.7 billion), an increase of 12% in local currency since 2015. By 2030, China’s healthcare market is expected to be worth USD 2.4 trillion.
Joseph Jimenez, former CEO of healthcare giant Novartisbelieves, “More than 143 million Chinese residents were over the age of 65 in 2017, which accounted for 10% of the population. 20 years later, that proportion is predicted to double. The aging demography has put a huge stress on the country’s healthcare system. To deal with the problem, the government approved a blueprint in 2016 with the goal of building a salubrious China by establishing an integrated healthcare system, and encouraging investments in the sector.” He explained.