Tencent
Auto Added by WPeMatico
China is funding the future of American biotech
Silicon Valley is in the midst of a health craze, and it is being driven by “Eastern” medicine.
It’s been a record year for US medical investing, but investors in Beijing and Shanghai are now increasingly leading the largest deals for US life science and biotech companies. In fact, Chinese venture firms have invested more this year into life science and biotech in the US than they have back home, providing financing for over 300 US-based companies, per Pitchbook. That’s the story at Viela Bio, a Maryland-based company exploring treatments for inflammation and autoimmune diseases, which raised a $250 million Series A led by three Chinese firms.
Chinese capital’s newfound appetite also flows into the mainland. Business is booming for Chinese medical startups, who are also seeing the strongest year of venture investment ever, with over one hundred companies receiving $4 billion in investment.
As Chinese investors continue to shift their strategies towards life science and biotech, China is emphatically positioning itself to be a leader in medical investing with a growing influence on the world’s future major health institutions.
Chinese VCs seek healthy returns
We like to talk about things we can interact with or be entertained by. And so as nine-figure checks flow in and out of China with stunning regularity, we fixate on the internet giants, the gaming leaders or the latest media platform backed by Tencent or Alibaba.
However, if we follow the money, it’s clear that the top venture firms in China have actually been turning their focus towards the country’s deficient health system.
A clear leader in China’s strategy shift has been Sequoia Capital China, one of the country’s most heralded venture firms tied to multiple billion-dollar IPOs just this year.
Historically, Sequoia didn’t have much interest in the medical sector. Health was one of the firm’s smallest investment categories, and it participated in only three health-related deals from 2015-16, making up just 4% of its total investing activity.
Recently, however, life sciences have piqued Sequoia’s fascination, confirms a spokesperson with the firm. Sequoia dove into six health-related deals in 2017 and has already participated in 14 in 2018 so far. The firm now sits among the most active health investors in China and the medical sector has become its second biggest investment area, with life science and biotech companies accounting for nearly 30% of its investing activity in recent years.
Health-related investment data for 2015-18 compiled from Pitchbook, Crunchbase, and SEC Edgar
There’s no shortage of areas in need of transformation within Chinese medical care, and a wide range of strategies are being employed by China’s VCs. While some investors hope to address influenza, others are focused on innovative treatments for hypertension, diabetes and other chronic diseases.
For instance, according to the Chinese Journal of Cancer, in 2015, 36% of world’s lung cancer diagnoses came from China, yet the country’s cancer survival rate was 17% below the global average. Sequoia has set its sights on tackling China’s high rate of cancer and its low survival rate, with roughly 70% of its deals in the past two years focusing on cancer detection and treatment.
That is driven in part by investments like the firm’s $90 million Series A investment into Shanghai-based JW Therapeutics, a company developing innovative immunotherapy cancer treatments. The company is a quintessential example of how Chinese VCs are building the country’s next set of health startups using their international footprints and learnings from across the globe.
Founded as a joint-venture offshoot between US-based Juno Therapeutics and China’s WuXi AppTec, JW benefits from Juno’s experience as a top developer of cancer immunotherapy drugs, as well as WuXi’s expertise as one of the world’s leading contract research organizations, focusing on all aspects of the drug R&D and development cycle.
Specifically, JW is focused on the next-generation of cell-based immunotherapy cancer treatments using chimeric antigen receptor T-cell (CAR-T) technologies. (Yeah…I know…) For the WebMD warriors and the rest of us with a medical background that stopped at tenth-grade chemistry, CAR-T essentially looks to attack cancer cells by utilizing the body’s own immune system.
Past waves of biotech startups often focused on other immunologic treatments that used genetically-modified antibodies created in animals. The antibodies would effectively act as “police,” identifying and attaching to “bad guy” targets in order to turn off or quiet down malignant cells. CAR-T looks instead to modify the body’s native immune cells to attack and kill the bad guys directly.
Chinese VCs are investing in a wide range of innovative life science and biotech startups. (Photo by Eugeneonline via Getty Images)
The international and interdisciplinary pedigree of China’s new medical leaders not only applies to the organizations themselves but also to those running the show.
At the helm of JW sits James Li. In a past life, the co-founder and CEO held stints as an executive heading up operations in China for the world’s biggest biopharmaceutical companies including Amgen and Merck. Li was also once a partner at the Silicon Valley brand-name investor, Kleiner Perkins.
JW embodies the benefits that can come from importing insights and expertise, a practice that will come to define the companies leading the medical future as the country’s smartest capital increasingly finds its way overseas.
GV and Founders Fund look to keep the Valley competitive
Despite heavy investment by China’s leading VCs, Silicon Valley is doubling down in the US health sector. (AFP PHOTO / POOL / JASON LEE)
Innovation in medicine transcends borders. Sickness and death are unfortunately universal, and groundbreaking discoveries in one country can save lives in the rest.
The boom in China’s life science industry has left valuations lofty and cross-border investment and import regulations in China have improved.
As such, Chinese venture firms are now increasingly searching for innovation abroad, looking to capitalize on expanding opportunities in the more mature US medical industry that can offer innovative technologies and advanced processes that can be brought back to the East.
In April, Qiming Venture Partners, another Chinese venture titan, closed a $120 million fund focused on early-stage US healthcare. Qiming has been ramping up its participation in the medical space, investing in 24 companies over the 2017-18 period.
New firms diving into the space hasn’t frightened the Bay Area’s notable investors, who have doubled down in the US medical space alongside their Chinese counterparts.
Partner directories for America’s most influential firms are increasingly populated with former doctors and medically-versed VCs who can find the best medical startups and have a growing influence on the flow of venture dollars in the US.
At the top of the list is Krishna Yeshwant, the GV (formerly Google Ventures) general partner leading the firm’s aggressive push into the medical industry.
Krishna Yeshwant (GV) at TechCrunch Disrupt NY 2017
A doctor by trade, Yeshwant’s interest runs the gamut of the medical spectrum, leading investments focusing on anything from real-time patient care insights to antibody and therapeutic technologies for cancer and neurodegenerative disorders.
Per data from Pitchbook and Crunchbase, Krishna has been GV’s most active partner over the past two years, participating in deals that total over a billion dollars in aggregate funding.
Backed by the efforts of Yeshwant and select others, the medical industry has become one of the most prominent investment areas for Google’s venture capital arm, driving roughly 30% of its investments in 2017 compared to just under 15% in 2015.
GV’s affinity for medical-investing has found renewed life, but life science is also part of the firm’s DNA. Like many brand-name Valley investors, GV founder Bill Maris has long held a passion for the health startups. After leaving GV in 2016, Maris launched his own fund, Section 32, focused specifically on biotech, healthcare and life sciences.
In the same vein, life science and health investing has been part of the lifeblood for some major US funds including Founders Fund, which has consistently dedicated over 25% of its deployed capital to the space since at least 2015.
The tides may be changing, however, as the recent expansion of oversight for the Committee on Foreign Investment in the United States (CFIUS) may severely impact the flow of Chinese capital into areas of the US health sector.
Under its extended purview, CFIUS will review – and possibly block – any investment or transaction involving a foreign entity related to the production, design or testing of technology that falls under a list of 27 critical industries, including biotech research and development.
The true implications of the expanded rules will depend on how aggressively and how often CFIUS exercises its power. But a lengthy review process and the threat of regulatory blocks may significantly increase the burden on Chinese investors, effectively shutting off the Chinese money spigot.
Regardless of CFIUS, while China’s active presence in the US health markets hasn’t deterred Valley mainstays, with a severely broken health system and an improved investment environment backed by government support, China’s commitment to medical innovation is only getting stronger.
VCs target a disastrous health system
Deficiencies in China’s health sector has historically led to troublesome outcomes. Now the government is jump-starting investment through supportive policy. (Photo by Alexander Tessmer / EyeEm via Getty Images)
They say successful startups identify real problems that need solving. Marred with inefficiencies, poor results, and compounding consumer frustration, China’s health industry has many.
Outside of a wealthy few, citizens are forced to make often lengthy treks to overcrowded and understaffed hospitals in urban centers. Reception areas exist only in concept, as any open space is quickly filled by hordes of the concerned, sick, and fearful settling in for wait times that can last multiple days.
If and when patients are finally seen, they are frequently met by overworked or inexperienced medical staff, rushing to get people in and out in hopes of servicing the endless line behind them.
Historically, when patients were diagnosed, treatment options were limited and ineffective, as import laws and affordability issues made many globally approved drugs unavailable.
As one would assume, poor detection and treatment have led to problematic outcomes. Heart disease, stroke, diabetes and chronic lung disease accounts for 80% of deaths in China, according to a recent report from the World Bank.
Recurring issues of misconduct, deception and dishonesty have amplified the population’s mounting frustration.
After past cases of widespread sickness caused by improperly handled vaccinations, China’s vaccine crisis reached a breaking point earlier this year. It was revealed that 250,000 children had been given defective and fallacious rabies vaccinations, a fact that inspectors had discovered months prior and swept under the rug.
Fracturing public trust around medical treatment has serious, potentially destabilizing effects. And with deficiencies permeating nearly all aspects of China’s health and medical infrastructure, there is a gaping set of opportunities for disruptive change.
In response to these issues, China’s government placed more emphasis on the search for medical innovation by rolling out policies that improve the chances of success for health startups, while reducing costs and risk for investors.
Billions of public investment flooded into the life science sector, and easier approval processes for patents, research grants, and generic drugs, suddenly made the prospect of building a life science or biotech company in China less daunting.
For Chinese venture capitalists, on top of financial incentives and a higher-growth local medical sector, loosening of drug import laws opened up opportunities to improve China’s medical system through innovation abroad.
Liquidity has also improved due to swelling global interest in healthcare. Plus, the Hong Kong Stock Exchange recently announced changes to allow the listing of pre-revenue biotech companies.
The changes implemented across China’s major institutions have effectively provided Chinese health investors with a much broader opportunity set, faster growth companies, faster liquidity, and increased certainty, all at lower cost.
However, while the structural and regulatory changes in China’s healthcare system has led to more medical startups with more growth, it hasn’t necessarily driven quality.
US and Western investors haven’t taken the same cross-border approach as their peers in Beijing. From talking with those in the industry, the laxity of the Chinese system, and others, have made many US investors weary of investing in life science companies overseas.
And with the Valley similarly stepping up its focus on startups that sprout from the strong American university system, bubbling valuations have started to raise concern.
But with China dedicating more and more billions across the globe, the country is determined to patch the massive holes in its medical system and establish itself as the next leader in international health innovation.
Powered by WPeMatico
Old media giants turn to VC for their next act
The Web 1.0 and Web 2.0 eras weren’t kind to the world’s largest media conglomerates, throwing their business models into question, creating whole new categories of content consumption, and bringing online competition to subscription and ad pricing. Many of the media giants from the 1990s and early 2000s remain market leaders with multi-billion dollar valuations, however, and have become active investors in startups as a tactic to help themselves evolve.
Of the traditional media companies that have committed to corporate venturing, there are two distinct strategies: those whose investing seems to be about replacing the historic classifieds section of newspapers and diversifying into a range of consumer-facing marketplaces, and those whose investing is concentrated on capturing an early glimpse (and early equity stake) in startups reshaping media.
Replacing Classifieds, Investing in Marketplaces
Mathias Doepfner, CEO of Axel Springer. The company’s startup accelerator is one of the most active in Europe. (Photo by Michele Tantussi/Getty Images)
Given the first crisis newspaper groups faced from tech startups in the 1990s and early 2000s was the rise of online classifieds sites (like Craigslist) and transactional marketplaces (like eBay and Amazon), the disruption of their lucrative classified ads revenue stream drove their attention to e-commerce.
Aside from Hearst, the major US newspaper and magazine chains – like Gannett, News Corp, Meredith Corp / Time Inc, and Digital First Media – haven’t made many investments in startups. Perhaps the financial straits of most US newspaper companies have left little cash for VC investments that won’t pay off for years in the future.
But in Northern and Central Europe, where news readership and even print publishing remain healthy by comparison, the leading media groups have been aggressively investing in marketplace and e-commerce startups across the continent over the last decade.
Europe’s leading publisher, Axel Springer has made itself an established player in the European startup scene. Axel Springer’s Digital Ventures team has backed marketplaces from Caroobi (for cars) to Airbnb, and their Berlin-based accelerator (run in partnership with Plug & Play) has invested in over 100 young startups, like digital bank N26, boat rental marketplace Zizoo, and influencer-brand marketplace blogfoster. In a move more strategic to its business, the 15,000-employee group made a large investment in augmented reality unicorn Magic Leap this past February as well, forming a partnership to leverage its content IP in the process.
Meanwhile, Norway’s Schibsted, Sweden’s Bonnier, and Germany’s Hubert Burda Media (best know to many in tech for their annual DLD conference in Munich) and Holtzbrinck Publishing are each globally active, multi-billion dollar publishers who operate active early- or growth-stage VC portfolios composed mainly of e-commerce brands and marketplaces.
The most iconic corporate venture investment by a newspaper conglomerate (or any company for that matter) is without question the $32M check written into 3-year-old Chinese social web startup Tencent in 2001 by the South African publishing group Naspers (founded in 1915). Tencent, now valued around $400B, is Asia’s largest and most powerful digital media company and Naspers’ 31% stake was worth roughly $175B in March 2018 when it sold $10B in shares.
As a result, Naspers has transformed into a holding company that incubates, acquires, and invests in online marketplace businesses around the globe (though it still maintains a relatively small publishing unit).
The challenge for traditional media companies investing in startups beyond the realm of media is that even if wildly successful, those investments neither give them a distinct advantage in media itself nor make their business model like that of a tech company by way of osmosis. These investments can be flashy distractions to make management and shareholders call the company innovative while it fails to actually re-envision its core operations. Investing in Airbnb or BaubleBar doesn’t address the key challenges or opportunities a traditional publishing group faces.
Therefore the best case scenario in this strategy seems to be that these companies find enough financial success that they just transition out of the content game and become holding companies for other types of consumer-facing brands the way Naspers has. But even then the path seems uncertain: despite all its other activities, Naspers’ market cap is less than the value of its Tencent shares…it’s not clear that the best case scenario necessarily transforms the core organization.
Investing in the Next Generation of Media
Thomas Rabe, CEO of German media group Bertelsmann. Bertelsmann is unique in treating startup investments as a dedicated division of the conglomerate. (TOBIAS SCHWARZ/AFP/Getty Images)
The other track for “old media” giants has been to focus on venture capital as a means to uncover the future of the media business so the old guard can learn from the new generation of media entrepreneurs and react to market changes sooner than competitors. Intriguingly, it is consistent that the conglomerates who have taken this strategy are ones whose operations in television, radio, data, and telecom outweigh any involvement in newspapers.
Bertelsmann, Hearst, and 21st Century Fox have been the most aggressive corporate venture investors in startups working to shape the future of media, whether it be through streaming video services, crowdsourced storytelling platforms, or augmented reality.
With annual revenue over €17B, Bertelsmann is one of the largest media companies in the world, spanning television production and broadcasting (RTL Group), book publishing (Penguin Random House), newspapers, magazine publishing (Grüner + Jahr), and education. Unlike of media companies though, it treats venture investments in media startups as a key division of its company rather than as a side project.
The company’s core Bertelsmann Digital Media Investments (BDMI) invests across the US and Europe in companies like Audible, Mic, The Athletic, and Wondery (and in funds like Greycroft and SV Angel) but there are also the 3 regionally-focused funds investing in China, India, and Brazil plus the education-focused University Ventures fund it anchors in NYC. Collectively, Bertelsmann teams made 40 new startup investments in 2017 and generated €141M in venture returns, according to their 2017 Annual Report.
The investment arm of Hearst, one of America’s largest publishers with $10.8B in 2017 revenue, has likewise been a major backer of BuzzFeed, Pandora, Hootesuite, and Roku not to mention Chinese language app LingoChamp, live entertainment brand Drone Racing League, VR capture startup 8i, and dozens of other media-related startups. Hearst’s ownership in these ventures makes strategic sense: they provide market insights relevant to the core businesses, offer immediate partnership opportunities, and would be strategic acquisition targets that evolve the company’s position in a changing market.
21st Century Fox and Sky Plc (in which 21st Century Fox owns a 39% stake and is trying to acquire outright) have both made a whole slate of startup investments across the media sector in the last few years. In addition to its $100M investment in live-streaming platform Caffeine (announced on September 5) and similarly massive investment in WndrCo’s NewTV venture led by Meg Whitman, Fox has invested repeatedly in sports-centric OTT service fuboTV, hit newsletter brand TheSkimm, VR studio WITHIN, and fantasy sports app Draftkings with Sky often co-investing or building meaningful stakes in international startups like iflix (a leading streaming video service in Southeast Asia and the Middle East).
Since traditional media giants own extensive intellectual property of hit shows, films, and often exclusive rights to popular live events – not to mention established distribution channels to tens or hundreds of millions of people – there are immediate partnerships that can be signed to benefit both a startup and the incumbent. The incumbents often re-invest repeatedly to build their ownership and deepen the alignment between the companies, which rarely happens when media companies invest in marketplace startups.
Tencent’s always-be-evolving model
The new crop of digital media giants that includes Netflix, Snap, VICE, and BuzzFeed aren’t doing much if any strategic investing. Instead they’re keeping focused on growth of their core product offering. The notable exception is China’s Tencent.
In addition to dominating China’s booming messaging app sector with WeChat and QQ, owning 75% market share of music streaming in China, and being the world’s leading games publisher through its own studios (Riot Games, Supercell, etc.) and its minority stakes in Activision Blizzard, Epic Games, and others, Tencent has taken a strategy of investing often and early in promising digital media startups…and it has its tentacles in everything.
Based on Crunchbase data, Tencent has done over 300 investments in startups. It is likely the most active venture investor in China, where most of its portfolio is concentrated, but also backs Western media startups like SoundHound, Wattpad, Spotify, Smule, and Wonder Workshop.
Tencent can give distribution to these upstarts through its vast portfolio of digital properties and it can keep tabs on what new content formats or business models are gaining traction. It operates from a mindset of perpetually evolving, and trying to snatch up startups whose products could be key assets in the future of content creation, distribution, or monetization. This approach is one both old media giants and the next gen of unicorn media startups should consider.
The pace of innovation is moving so fast, and so many new doors are opening up – from subscription streaming and esports to voice interfaces and augmented reality – that corporate venture as a core strategy can unlock opportunities for the organization to evolve early, before it ends up being categorized as “old media”.
Powered by WPeMatico
Tencent to tighten age verification checks for gamers amid government crackdown
Chinese Internet giant Tencent has announced it’s bringing in a new system of age checks to its video games which will be linked to a national public security database — in an effort to reliably identify minors so it can limit how long children can play its games.
The new real name-based registration system will initially be mandated for new players of its popular Honour of Kings fantasy multiplayer role-playing battle game.
It will be introduced around September 15, according to Reuters.
Tencent said the planned ID verification system — which Bloomberg couches as equivalent to a police ID check — is the first of its kind in the Chinese gaming industry, and claimed it will enable it to accurately identify underaged players and impose existing play time restrictions.
Last July Tencent said it would impose a playtime maximum of one hour per day for children up to aged 12, and a maximum of two hours a day for those between 13 and 18. But if kids can get around age checks such limits are meaningless.
“Through these measures, Tencent hopes to continue to better guide underaged players to game sensibly,” it said in a statement on its official WeChat account about the beefed up checks. It also said it plans to gradually expand the requirement to its other games.
In total Tencent’s gaming portfolio is reported to have more than 500 million players in China.
The move comes amid a crackdown by the Chinese government on video gaming over fears of health problems and addiction among children.
Late last month a statement posted on the Education Ministry website said new curbs were needed to counter worsening myopia among minors.
Ministers have long said they want to limit the amount of time kids can play games — although achieving that outcome is clearly a major challenge, given the popularity of video games and the proliferation of devices from which they can be accessed.
Tencent’s move to link age verification to a public security database does seem to represent a significant new step towards the government achieving its goal of also controlling kids’ digital activity. And investors reacted negatively to the announcement — pushing Tencent’s shares down more than 3%.
Shares in the company also dived around 3% last week when the government announced its latest gaming crackdown.
Reuters notes that shares in two other major Chinese game developers, China Youzu Interactive and Perfect World, also dropped 5.5% and 3.6%, respectively, as investors digested the regulatory risk.
Last year the Chinese government also tightened general Internet regulations, doubling down on its long standing real-name registration rules.
Powered by WPeMatico
Airwallex raises $80M for its international payment service for businesses
Airwallex, a three-year-old fintech startup focused on international payments for SMEs and businesses, is putting itself on the map after it raised an $80 million Series B round.
Based out of Melbourne, but with six offices in Asia and other parts of the world, Airwallex’s new funding round is the second-largest financing deal for an Australian startup in history. The round was led by existing investors Tencent, the $500 billion Chinese internet giant, and Sequoia China. Other participants included China’s Hillhouse, Horizons Ventures — the fund from Hong Kong’s richest man, Li Ka-Shing — Indonesia-based Central Capital Ventura (BCA) and Australia’s Square Peg, a firm from Paul Bassat, who took recruitment firm Seek to IPO and is one of Australia’s highest-profile founders.
The financing takes Airwallex to $102 million raised. Tencent led a $13 million Series A in May 2017, while Square Peg added $6 million more via a Series A+ in December. Mastercard is also a backer; the finance giant uses Airwallex to handle its “Send” product, while Tencent uses the service to power an overseas remittance service for its WeChat app.
Airwallex handles cross-border transactions for companies that do business in multiple countries using international currencies. So it’s not unlike a TransferWise-style service for SMEs that lack the capital to develop a sophisticated (and expensive) international banking system of their own.
The service uses wholesale FX rates to route overseas payments back to a client’s domestic bank and is capable of processing “thousands of transactions per second,” according to the company. A use case example might include helping a China-based seller return money earned in the U.S. or Europe via Amazon or other e-commerce services, or route sales revenue back directly from their own website.
Airwallex CEO Jack Zhang (far right) onstage at TechCrunch Shenzhen in 2017
China is a key market for Airwallex — which was started by four Australian-Chinese founders — as well as the wider Asian region, and in particular Australia, Hong Kong and Southeast Asia. With this new capital, Airwallex co-founder and CEO Jack Zhang said the company will increase its focus on Hong Kong and Southeast Asia, whilst also extending its business in Europe (where it has a London-based office) and pushing into North America.
Product R&D is shared across Melbourne and Shanghai, while Hong Kong accounts for business development, compliance and more, Zhang explained. However, Airwallex’s locations in London and San Francisco are likely to account for most of the upcoming headcount growth planned following this funding. Right now, Airwallex has around 100 staff, according to Zhang.
The company is also aiming to expand its product range.
The firm is in the process of applying for a virtual banking license in Hong Kong, a third-party payment license in mainland China and a cross-border Chinese yuan license. One goal, Zhang revealed, is to offer working capital loans to SMEs to help them scale their businesses to the next level. Airwallex is working with an undisclosed partner to underwrite deals in the future. Zhang explained that the company sees a gap in the market since banks don’t have access to critical data on clients for loan assessments.
More generally, he’s bullish for the future, despite Brexit and the ongoing trade war between the U.S. and China.
“The trade war gives the Chinese yuan a lot of vitality, and we’ve seen more demand in the market. China’s belt road initiative has really taken off, too, and we’re seeing the impact in many, many of our payment corridors,” he explained. “Business has been booming, especially as traditional offline SMEs start to move online and go from domestic to global.”
“We want to be the backbone to support these new opportunities for businesses,” Zhang added.
Powered by WPeMatico
J.J. Abrams and Tencent combine to form Bad Robot Games
Bad Robot, the media production company headed by famed nostalgia-lord J.J. Abrams, is expanding into the games industry with help from Chinese tech conglomerate Tencent. The company will lend its expertise in film to partner developers at both the indie and AAA level.
“I’m a massive games fan, and increasingly envious of the amazing tools developers get to work with, and the worlds they get to play in,” explained Abrams in the partnership’s announcement. “Now we are doubling down on our commitment to the space with a unique co-development approach to game making that allows us to focus on what we do best, and hopefully be a meaningful multiplier to our developer partners.”
Designers, visual artists and writers from Bad Robot will collaborate with developers, aiming at all game markets: PC, console and mobile.
Tencent will presumably provide funding and clout, in exchange for commercial rights to distribution of resulting titles. That probably limits the new company from doing what Abrams is perhaps most famous for, rejuvenating aging franchises with a modern aesthetic and a great deal of lens flare. Many popular AAA franchises — think Call of Duty and Uncharted — are deeply tied to publishers in multi-year or perpetual exclusivity arrangements.
Abrams himself won’t be the head of the new endeavor; the reins will instead belong to Dave Baranoff, who has done the gaming and interactive content for Bad Robot for the last decade. This isn’t his first foray into the “real” games industry — he and Bad Robot are currently working with Epic and ChAIR on a mysterious title called Spyjinx. But it is presumably the start of something rather bigger than a one-off partnership or movie promotion.
Tim Keenan, who created the amazing Duskers, will be the creative director, which is a good sign.
No further announcements, such as a first project or development partner, were made — just the formation of the company. We may hear more during E3, though, so stay tuned.
Powered by WPeMatico
Latin America’s Movile is quietly building a mobile empire
By 2020, Brazilian mobile giant, Movile, wants to improve the lives of more than one billion people through its apps. The company began its mission in 1998 selling gaming, news and SMS messaging services to mobile operators in Brazil. After receiving its first investment from South African-based global investor Naspers 10 years ago, Movile grew into one of the largest and most successful mobile companies in Latin America, with more than 150 million monthly active users of its apps and estimated revenues over $240 million.
Movile’s app, PlayKids, propelled the company to the global stage. A platform that offers educational products and content for children, PlayKids in 2014 reached more than 6 million downloads within a year of launching, and 5 million active users per month.
From there, Movile turned its attention to an unprecedented strategy of mergers and acquisitions in Latin America. The company’s expansion strategy included investments in more than 20 other mobile companies, such as iFood and Sympla, two of the most prominent players in Latin America’s mobile space today.
Here’s a look at how Movile went from local success story in Brazil to one of the largest mobile companies in Latin America — and its next steps for mobile success worldwide.
The PlayKids launching pad
By 2012, Movile was the largest mobile services company in Brazil. With more than 150 employees, the company established its core offerings in mobile payments, mobile commerce and other B2B mobile solutions. Movile’s teams successfully opened offices in Mexico, Colombia, Argentina and Venezuela, which they achieved through the acquisition of another mobile company with a similar business model, CycleLogic. But it wasn’t until the launch of PlayKids in 2013 that one of Movile’s creations landed in the hands of millions of users around the world.
By June 2014, PlayKids had users in more than 30 countries and was one of the top-grossing children’s apps of all time. The success of PlayKids allowed Movile to build key relationships with tech firms in Silicon Valley, including Apple and Google, for the distribution of the company’s apps, and Facebook for marketing them.
Also by this time, Movile had more than 700 employees working from 11 offices in six countries, and began the next chapter in their story: ramping up their investments in other mobile companies. Movile used this strategy not only to continue its expansion across the region, but also to fend off any foreign competition eyeing Latin America’s increasingly lucrative mobile market. By 2014-2015, Latin America was the fastest-growing smartphone market in the world with 109.5 million smartphone units sold in the region.
Becoming Latin America’s mobile powerhouse
2014 marked a big year for Movile. The company invested $1.6 million into online food delivery startup iFood in the past, but an additional $2.6 million investment in 2014 led to the purchase of an iFood competitor, Central Delivery. Movile’s investments in iFood and its buy-out of the competition took the iFood app from 25,000 orders per month to more than one million orders per month.
Movile’s goal was simple: take a fast-moving startup and help it grow beyond what the founding team ever thought possible.
The insights and data that Movile gathered during its strategic venture capital investments in iFood were critical. During this time, Movile built the foundation for its investments that followed shortly after, and learned how to make them a success. With each new investment, Movile’s goal was simple: take a fast-moving startup and help it grow beyond what the founding team ever thought possible by infusing cash, human capital and any technical resources or expertise that the startup could possibly need.
Movile quickly solidified its M&A strategy, its processes and its position as a leader in Latin America’s mobile market. To continue financing its growth through acquisitions, Movile raised another $55 million from Innova Capital, Jorge Paulo Lemann and FINEP in its Series D round in 2014. This new round of financing led to even more acquisitions, including the acquisition of Rapiddo, ChefTime and FreshTime. It also allowed the company to make additional investments in LBS Local, the owners of Apontador, MapLink, Cinepapaya and TruckPad.
Bundling an empire
In 2015, after a handful of investments in food-related startups, Movile’s appetite for the food and delivery space continued to grow. Naspers and Innova Capital infused another $40 million (Series E) into Movile in 2016. Movile then boosted its iFood and Just EAT platforms with another $50 million. With access to all of Movile’s resources, iFood quickly rose as a leader in online food delivery in Latin America, with 6.2 million monthly orders and a growing presence in multiple countries, including Brazil, Mexico, Colombia and Argentina.
Movile’s venture capital model became so successful that iFood replicated the same model themselves. iFood took part in more than 10 mergers and acquisitions, including the acquisition of SpoonRocket, a San Francisco-based online food delivery service. iFood acquired SpoonRocket’s technology to help it expand its reach across Latin America.
In 2016, Movile’s Rappido app acquired on-demand courier service 99Motos, and then Movile made investments in Sympla (a DIY-ticketing platform for events), while raising another $40 million (Series F) from Naspers and Innova Capital. By 2017, Movile raised an additional $53 million (Series G) from Naspers and Innova Capital, bringing Naspers’ share of Movile to 70 percent.
On the road to one billion
With no shortage of cash, Movile now has plans to put more than half of its latest $53 million Naspers investment into Rapiddo Marketplace. Movile believes they can transform the Rapiddo Marketplace into a one-stop-shop for a variety of consumer transactions ranging from food delivery and event tickets to refilling mobile credit and hailing rides. Included in this ambitious plan is a payments platform similar to PayPal called Zoop, which handles all digital payments and makes the Rapiddo Marketplace a single platform that can integrate many — if not all — of Movile’s other applications.
If a path does not yet exist, Movile will simply build, acquire or bundle its way to make it happen.
Movile’s mission is no easy feat; however, if the company is to achieve its goal of touching the lives of one billion people through its apps, there may never be a better time. Movile’s all-in-one mobile platform concept is reminiscent of China’s Tencent, which established a number of successful paid services based on its applications. Tencent is currently worth half a trillion dollars and rising, with investments from Naspers and earnings of almost $22 billion last year.
Tencent allows merchants in China to sell their products and receive payments through WeChat, China’s largest mobile messaging app used by more than one billion people. Using an application with widespread adoption and popularity, Tencent is able to continuously add layers and layers of services, precisely what Movile plans to do now with its mobile companies in Latin America.
Movile believes it can be just as successful as Tencent because the Latin American mobile market strikes a number of similarities with Southeast Asian countries. On the other hand, skeptics believe that since Latin America lacks a WeChat-like application to unify the region, it will be difficult to achieve the same level of success. But if we’ve learned anything from Movile, it’s that if a path does not yet exist, Movile will simply build, acquire or bundle its way to make it happen.
Wavy, Movile’s latest endeavor, could achieve this. The business, which bundles Movile’s 400+ content partner companies, 100 million active user base and 40 Latin American mobile carrier businesses, is already one of the largest global players in this space based on sheer numbers alone. The Wavy portfolio incorporates a wide range of products, including educational content and apps, B2B messaging services such as chatbots, SMS, RCS and voice messaging, as well as partnerships with companies in the gaming, bots and apps space.
The race is on among global mobile platform providers and device manufacturers to become the first to offer a total mobile user experience. However, there are very few companies that will ever be able to replicate the range of products and services Movile has developed, making it one of the most remarkable mobile success stories of our time — and one that’s not over yet.
Powered by WPeMatico
Chinese robotics company UBTECH gets $820 million in funding
Shenzhen-based home robotics company UBTECH announced this week that it has closed a massive $820 million Series C. The round, led by Tencent and a whole slew of other investors, follows a $100 million Series B and $20 million Series C.
The bipedal robotics maker certainly isn’t a household name here in the States — though the company’s taken a few baby steps over here, including a walking Stormtrooper robot released alongside The Last Jedi. It also debuted a “robotic butler” with a tablet face back at CES in January that seemed more proof of concept than shipping product — though UBTECH has promised a broad 2019 release date.
CEO James Zhou has promised the company will use this huge backing to accelerate its vision of bringing robots into the home.
“As technology evolves to include more voice and touch capabilities, people need new devices that communicate and interact more naturally and intuitively at home, at school and at work,” he said in a release tied to the announcement. “While trends in robots and robotics are developing, no company has yet stepped forward with the resources, vision and products ecosystem to transform robot fantasy and fiction into robot reality. UBTECH is bringing this reality to life by expanding the possibilities for innovation.”
The company says the funding will go into R&D, hires and expanding its global footprint. UBTECH is one of a number of companies pushing home robotics beyond the Roomba, including a rumored upcoming device from Amazon. The technology has been a tough nut to crack in the preceding decades, but an $820 million investment certainly couldn’t hurt.
Powered by WPeMatico
Chinese authorities dish out $5M in fines for developers of PUBG hack software
There has long been speculation and evidence of cheating software for PlayerUnknown’s Battlegrounds (PUBG), but action is being taken to stamp it out. The makers of the smash-hit game have confirmed that they have worked with authorities in China who have dished out over $5 million in fines to at least 15 people caught developing hacks that help players cheat.
PUBG, in case you missed it, is one of the top-grossing games in the world this year. A shoot-up battle royale game that sees players battle to survive to the end, PUBG grossed $700 million in revenue via PC sales last year and that’s only increased in 2018 as the title landed on mobile. It’s particularly big in China where internet giant Tencent is the publishing partner.
That Tencent link might have proved useful, as Bluehole — the company behind PUBG — revealed in a statement that Chinese authorities have helped it clamp down on hacking programs, handing out the huge number of fines in the process:
Here’s some translated information from the local authorities we worked with on this case:
“15 major suspects including “OMG”, “FL”, “火狐”, “须弥” and “炎黄” were arrested for developing hack programs, hosting marketplaces for hack programs, and brokering transactions. Currently the suspects have been fined approximately 30mil RNB ($5.1mil USD). Other suspects related to this case are still being investigated.
While the programs were being developed in China and there were users there too, it isn’t clear whether that reach extended to gamers in the U.S. and other countries.
Beyond just cheating, there is also a significant risk for those who use the hacked software.
Bluehole said it found evidence that the programs were used by their developers to infect host PCs in order to “control users’ PC, scan their data, and extract information illegally.” Some, it is said, used Trojan Horse software to steal user information — that could mean information from when they shop online (like credit card numbers), the content of emails, and more.
Powered by WPeMatico
Chinese government admits collection of deleted WeChat messages
Chinese authorities revealed over the weekend that they have the capability of retrieving deleted messages from the almost universally used WeChat app. The admission doesn’t come as a surprise to many, but it’s rare for this type of questionable data collection tactic to be acknowledged publicly.
As noted by the South China Morning Post, an anti-corruption commission in Hefei province posted Saturday to social media that it has “retrieved a series of deleted WeChat conversations from a subject” as part of an investigation.
The post was deleted Sunday, but not before many had seen it and understood the ramifications. Tencent, which operates the WeChat service used by nearly a billion people (including myself), explained in a statement that “WeChat does not store any chat histories — they are only stored on users’ phones and computers.”
The technical details of this storage were not disclosed, but it seems clear from the commission’s post that they are accessible in some way to interested authorities, as many have suspected for years. The app does, of course, comply with other government requirements, such as censoring certain topics.
There are still plenty of questions, the answers to which would help explain user vulnerability: Are messages effectively encrypted at rest? Does retrieval require the user’s password and login, or can it be forced with a “master key” or backdoor? Can users permanently and totally delete messages on the WeChat platform at all?
Fears over Chinese government access to data held or handled by Chinese companies has led to a global backlash against those companies, including some countries (including the U.S.) banning Chinese-made devices and services from sensitive applications or official use altogether.
Powered by WPeMatico
Tencent and education startup Age of Learning bring popular English-learning app ABCmouse to China
Tencent is teaming up with Los Angeles-based education company Age of Learning to launch an English education program for kids in China. ABCmouse, Age of Learning’s flagship product, has been localized and will be available as a website and an iOS and Android app in China, with Tencent handling product development, marketing, sales and customer support.
The new partnership extends Tencent’s involvement in ed-tech, which already includes a strategic investment in VIPKID, an online video tutoring platform that connects Chinese kids with English teachers and competes with QKids and Dada ABC. ABCmouse, on the other hand, uses videos, books and online activities like games, songs and stories to help kids study English.
The Chinese version of ABCmouse includes integration with Tencent’s ubiqutioius messenger and online services platform WeChat, which now has more than one billion users, and its instant messaging service QQ, with 783 million monthly active users. This makes it easier for parents to sign up and pay for ABCmouse, because they can use their WeChat or QQ account and payment information. It also allows families to share kids’ English-learning progress on their news feeds or in chats. For example, Chen says parents can send video or audio recordings of their children practicing English to grandparents, who can then buy gift subscriptions with one click.
Though you probably haven’t heard of it unless you have young kids or work with elementary school-age children, Age of Learning has built a significant presence in online education since it was founded in 2007, thanks mainly to the popularity of ABCmouse in schools, public libraries and Head Start programs. Two years ago, Age of Learning hit unicorn status after raising $150 million at a $1 billion valuation from Iconiq Capital.
Jerry Chen, Age of Learning’s president of Greater China, says there are more than 110 million kids between the ages of three to eight in China and the online English language learning market there is “a several billion dollar market that’s growing rapidly.” He points to a recent study by Chinese research agency Yiou Intelligence that says total spending on online English learning programs for children will be 29.41 billion RMB, or about $4.67 billion, this year, and is projected to reach 79.17 billion, or $12.6 billion, by 2022.
The localization of ABCmouse will extend to the design of its eponymous cartoon rodent, who has a more stylized appearance in China. Lessons include animations featuring an English teacher and students in an international school classroom and begin with listening comprehension and speaking before moving onto phonics, reading and writing. Tencent-Age of Learning products will also include speech recognition tools to help kids hone their English pronunciation.
In an email, Jason Chen, Tencent’s general manager of online education, said that the company “reviewed several companies through an extensive research process, and it became clear that ABCmouse had the most engaging and effective online English self-learning curriculum and content for children. Age of Learning puts learning first, and that commitment to educational excellence made them a perfect fit for our online English language learning business.”
Powered by WPeMatico