Tech investment trends in China in March: Car industry welcomes innovation

Car trading and live streaming led tech investment trends in China this month, with the sharing economy industry also welcoming some important investment cases. Looking at the massive Chinese automobile trading market, each related participant in the field seeks to create innovations that grant it a share of the huge pie. Such innovations include boosting efficiency, creating a transparent trading environment for buyers and sellers, and so on. Even Alibaba, Tencent, Baidu, and other tech giants have an eye on this market and are participating through investment in potential startups, thus enlarging their influence. Tencent, for instance, completed various investment cases this month, and also contributed efforts and resources to independently lead the R&D of self-driving technology. Baidu, on the other hand, was given the green light to test its self-driving cars on public roads in Beijing on March 23. All the while, competition between players in the industry grows more and more intense.

Top 3 investment cases

Among the 40 cases we reported on this month, CARS, DouyuTV and CHJ Automotive secured the highest amounts of funding. China has the world’s largest car market, yet there still remains tremendous growth potential in various fields, such as financial services, self-driving, and more. Car trading platform CARS received USD 818 million in Series-C funding led by Tencent, funding that will be allocated towards enlarging the tech giant’s influence in the used car trading industry. Tencent continues to favor opportunities in used car online trading services as well as synergies of combining online and offline services for the automobile industry. It aims to significantly improve the efficiency of traditional car sales and service industries with its participation via investment, technical expertise, and other means of support.

China’s leading live-streaming platform DouyuTV received USD 632M in investment for Series E from Tencent, helping the company to conquer two thirds of China’s e-sports market. Over the past three years, DouyuTV has maintained stable revenue. Live streaming continues to be a hot area in entertainment technologies partly because entrance barriers for the majority of customers have been dramatically reduced. Since almost every netizen in China own a smartphone, it has become much easier for users to spend their spare time consuming a great number of forms of entertainment on their mobile devices. Meanwhile, e-sports are gaining more and more popularity amongst young customers who pay more attention and contribute more efforts to e-sports events. In fact, more and more young netizens start their “netzen careers” from gaming. Tencent also contributes a great deal of attention to capturing these young netizens.

The third highest amount of funding raised this month went to CHJ Automotive, which secured USD 473 million in funding from Matrix Partners China for a Series-B financing round. The newly raised funds will be used to help the company cover a larger EV (electric vehicle) market across China. EV itself has huge potential, as the technology is not only supported by the governments of many regions but is also surely the future of the automotive industry, especially in the realm of self-driving cars.   

Car trading platform CARS receives USD 818M for Series C led by Tencent

CARS, formerly known as Guazi, completed a brand upgrade following a merger with the new car e-commerce platform, Maodou. The newly expanded platform now offers used car and new car trading services as well as car appraisal, vehicle financial services, and insurance.

So far CARS’s used car trading businesses cover over 200 cities in 30 provinces across China, and had a recorded total transaction value of more than RMB 100 million (USD 14 million) in 2017. Additionally, the platform offers installment payment solutions for customers purchasing new vehicles in over 33 major domestic cities and has partnered with 24 automobile factories covering more than 70 mainstream models.

Previously, CARS raised nearly USD 600 million in total for its Series-B funding. It also attracted more than USD 400 million in Series-B funding in June 2017 and USD 180 million in Series B+ funding in October, with participation from many investors including DST Global, Capital Today, Bank of China Group Investment Ltd, Sequoia Capital China, and H Capital.

This month, CARS secured USD 818 million in Series-C funding led by Tencent with participation from new investors including ICBC International, Yunfeng Capital, FountainVest Partners, GIC, IDG Capital, and Taihe Capita. The newly raised capital will be used to strengthen its leading position in the used car trading industry.

China’s leading live streaming platform DouyuTV receives USD 632M for Series E from Tencent

DouyuTV, a Wuhan-based live-streaming platform provides gaming, e-sports, and other entertainment media offerings like cooking and fashion. Currently, DouyuTV’s live streaming services are available on both PCs and mobile gadgets. The platform has 13 million active monthly users.

Douyu has previously raised as much as USD 158 million in a Series-D funding round in November led by CMBI International Capital Corporation, and, before that, USD 226 million in a round led by Phoenix Capital Asset Management and Tencent in 2016.

This latest financing round was led by existing investor Tencent. The investment will go towards accelerating DouyuTV’s IPO.

EV startup CHJ Automotive receives USD 473M for Series B led by Matrix Partners China

CHJ Automotive, a Beijing-based EV maker, offers intelligent mobility experiences based on city-oriented IoT technology, self-driving EVs, among other services.

CHJ Automotive now has a team of more than 1000 members dedicated to EV research and development, as well as upscaling supply chains. The company is targeting mass production of the coming generation of efficient EVs in hopes of securing a larger EV market share. Its intelligent research team has more than 300 members focused on the development and upgrading of the company’s self-driving system, as well as on a range of related intelligent autonomous services.

This month, CHJ Automobile secured USD 473 million in funding in a Series-B financing round led by Matrix Partners China. The company will partner with Chinese ride-hailing giant Didi Chuxing to customize production of electric cars for use in the ride-sharing industry.

Three investors to watch

Hundreds of investors took part in the aforementioned investment cases. Eyeing the hottest sectors were major investors like GSR Ventures, Crescent Point, and Source Code Capital. Here’s what you need to know about each:

Crescent Point

Crescent Point is a China and Southeast Asia-focused private equity and deep-value investment firm, aiming to deliver attractive risk-adjusted returns for investors and to add value to partners in order to create category-leading companies across sectors and geographies.

Crescent Point’s unique focus on China and Southeast Asia make it stand out on a global basis. Crescent Point is particularly active in six core consumer sectors: FMCG (fast-moving consumer goods), sportswear & footwear, health, tourism, auto, and consumer enabling services.

This month, Crescent Point led Maihaoche’s USD 50 million financing round. Maihaoche is a B2B car-trading service platform that provides car dealers with supply chain services that facilitate automobile circulation. The capital will be used to improve the company’s operational efficiency, as well as to upgrade its system with big data and other technologies.

GSR Ventures

GSR Ventures is a venture capital firm focused on early-stage technology companies. The company backs entrepreneurs with global ambitions – entrepreneurs building large, disruptive businesses that have the potential to dominate multi-billion dollar markets. It was also the first institutional investors in DiDi Chuxing, Ele.me, Inke, ofo, Qunar, Shanghai DZH, and Xiaohongshu.

GSR Ventures currently manages about USD 2 billion in a combination of USD and RMB-denominated funds.

This month, GSR Ventures invested in Aldwx’s Series-A financing round with USD 9.5 million in funding. Aldwx is a WeChat Mini Program data analysis platform that helps its partners optimize Mini Programs-oriented business on WeChat, China’s leading messenger app. The company plans to use the funds to upgrade its products, expand its team, as well as invest in market expansion plans.

Source Code Capital

Source Code Capital is an emerging VC in China with over USD 750 million and RMB 3 billion AUM (assets under management). Source Code’s mission is to efficiently combine industrial capital and financial capital, thereby jointly propel innovative companies forward.

Source Code Capital has focused its investments on three themes: “internet +”, “AI-enabled” and “global +”. Existing portfolio companies include Qudian (Qufenqi), Yongqianbao, Meituan, Lianjia, and so on.

Source Code Capital participated in Edianzu’s USD 32 million Series-C financing round. Edianzu is an online computer rental startup that provides IT, office desktop, and equipment rental services for small and medium-sized enterprises. Edianzu will use the funds to better ensure its services cover more cities across China.

Top Trends

This month, car trading and live streaming led investment trends in China.

Car trading is an evergreen business in China and other regions. With the drive of economic development and consumption, more and more people own cars, resulting in a continuously expanding market. Not only car trading but numerous auto-related industries will also benefit, such as financial, insurance, aftermarket services, and so on. Enterprises can seek opportunities to improve efficiency with the circulation of used cars, providing enhanced trading services, and so on. Moreover, consumers have better realized the importance of protecting the environment, as well as saving energy, so the EV industry will likely catch on more and more thanks to support from the government as well as investors.

Live streaming also led tech financing trends in this month. Live streaming empowers users with a new means of interaction in the virtual world. Improved efficiency in modern society promises us more spare time. Spending extra spare time on entertainment remains a popular choice, which helps explain why live streaming has secured such a sizeable development opportunity. Meanwhile, the current battle between live streaming players tends to focus on the content, meaning we’ll likely continue to see more unique or enriched content aimed at attracting more users.

 

Top photo from unsplash.com

Kaikai Shi
Kaikai Shi

Kaikai Shi runs the Tech Financing columns for us. He holds a bachelor's degree in Biotechnology at Zhejiang University. His interests are in new technology and reading. Kai believes that new technology will change the world we live in, and is trying to engage himself in this process. Write to him: kai[at]alltechasia.com

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