Every month we handpick 40 financing cases that reveal the hottest trends in startup and tech industry in China. In July, the sharing economy still proved to be investors’ favorite scene, with companies such as car rental startup, Wukong Zuche, and bike-sharing startup, ofo, securing investment from venture capital firms at an unprecedented rate. Meanwhile, the AI industry continued to attract large amounts of funding from investors. For example, SenseTime, grabbed the single largest financing round in China’s AI industry.
Top 3 investment cases
Among the 40 cases we reported this month, ofo, SenseTime, and Wukong Zuche secured the highest investments. This month, bike-sharing giant, ofo, raised the largest amount of funding in the bike-sharing industry, while SenseTime and Wukong Zuche also raised large amounts. Ofo has conquered China’s first- and second-tier cities, and is exploring opportunities overseas. Many AI startups are also branching out, trying to find opportunities in specialized areas such as data analysis and facial and voice recognition, among others. The car rental industry continues to attract funding in large part because it follows the trends of the sharing economy as well as those of environmental sustainability. The three largest financing packages amounted to a total of USD 1.18 billion of investments. Let’s take a closer look:
- Bike-sharing giant ofo receives USD 700 million for Series E led by Alibaba
Ofo’s Series E is the largest known funding round for a bike-sharing company. Ofo is a bike-sharing startup that launched in 2015 in Beijing. It provides users with bicycle rental services in China and is exploring opportunities in other countries, aiming to meet customers’ short-distance travel demands. Ofo’s bike rental service charges one RMB per hour and requires a deposit of RMB 199. Currently, there are 6.5 million ofo bicycles available in 150 cities, with more than 37 million registered users, which account for 65% of the market share.
- AI technical service provider SenseTime receives USD 410 million for Series B
Founded in Beijing in 2014, SenseTime is an AI technical service provider that equips its partners with artificial intelligence applications and big data analysis services that utilize deep learning capabilities. It mainly develops AI technology in facial recognition, text, and vehicle and image recognition. Currently, it has partnerships with more than 400 companies, providing them with AI technical services. According to information on its website, its face recognition technology has an error rate below 1/100,000.
- Car rental platform Wukong Zuche receives USD 74M for Series B
Wukong Zuche is a car rental platform that integrates its car rental services into the tourism sector. It provides a unique product by integrating tens of thousand of small- and medium-sized taxi companies across China, helping them expand their services from offline to online and improving their user experience. Its service, which allows users to rent a car at one place and return it at another, also implements tourism services such as local tours.
Top 3 watchable investors
Among 40 financing cases in July, about 50 investors invested in startups and provided other resources–sharing their user base and market influence. We saw some big investors eyeing the hottest sectors–Alibaba, for instance, investing in ofo–while others, like IDG Capital and Zhen Fund, followed their long-term investment strategy.
Alibaba
Alibaba, part of tech giant group, BAT, with Tencent and Baidu, owns China’s two largest e-commerce platforms, Taobao and Tmall. Alibaba has pumped massive capital into different Chinese tech sectors to reshape tech trends. In the ofo Series E financing round, Alibaba invested USD 700M, overtaking Tencent’s USD 600M investment in ofo’s rival, Mobike. The two tech giants have boasted huge market potential in China’s sharing economy, supporting startups with capital as well as market influence to help startups expand their user basement.
IDG Capital
IDG Capital focuses on Chinese technology investments since the early 1990s. IDG previously invested in Baidu, Xiaomi, and Meitu. It prefers to invest in advanced technologies and business models serving vast consumers, including internet-related technologies, healthcare, and travel services. It invested in AI company SenseTime’s USD 410 M Series B financing round this month, which proved to be the largest single financing round in China’s AI industry.
ZhenFund
ZhenFund is a Beijing-based seed fund founded by New Oriental co-founders, Bob Xu and Victor Wang. ZhenFund was established in 2011 in collaboration with Sequoia Capital China with the aim of promoting innovation among Chinese youth.
It invested frequently this month in startups including UrWork and FlowerPlus. ZhenFund’s investment preferences target the IOT, mobile internet, gaming, O2O, and education sectors.
Top Trends
Bike-sharing continues to attract the most attention from investors. Besides ofo, X-bike, HelloBike, MingBike received funding amounting to over USD 800 million in July.
Though ofo and Mobike have conquered China’s first- and second-tier cities, there are chances left for smaller players such as HelloBike, which grabbed funding to expand its business to other Chinese cities. Another major player, X-bike, mainly targets university campuses to boost its bike rental service.
Why has the bike-sharing industry captured so much attention from startups and venture capital firms? The answer lies in the consistent demand of users in big cities with high-frequency usage. According to ofo, its bike rental business covers hundreds of millions of users with more than six million bikes in over 100 cities. It receives an average of 25 million orders daily, with millions of daily active users renting ofo bikes more than 3 times per day.
AI technology and car rental services have also attracted attention this month. SenseTime and Momenta grabbed an investment of over USD 120 million. Because its technology will be the infrastructure for companies in the future, AI is proving to be the most pervasive area after the internet. Its technologies include big data, deep learning, and smart recognition.
More and more car rental services have emerged as well, as more users want to rent a car to travel. Three companies secured billions of USD, including Wukong Zuche, Bage, and BJEV.
The process of expanding the car rental market will be halted because of environmental concerns. One problem that car rental startups face is the problem of how to exploit opportunities among fierce competition. Wukong Zuche just focuses on car rental services for long-distance travel, which seems to be a good path to earning a market share.
Let’s see what the next big tech trend in China is next month…
(Top photo from 58pic.com)
