Category: Economy

Number of Chinese unicorns surged to 202 in Q1 2019

Hurun Research Institute, the firm which creates China’s wealthiest individual lists has released its country-wide unicorn index for the first quarter of 2019 on May 7.

The new report titled “Hurun Greater China Unicorn Index 2019 Q1” mentions that China added 21 new unicorns in the first quarter, that is twice as many unicorns as in Q4 2018.

Among these 21 new unicorns, fashion clothing ecommerce Shein, apartment management platform Danke Apartment, IoT solutions provider Tuya Smart, autonomous driving startup Pony.ai, and media company XinChao are leading with over US$10 billion valuations.

The report also notes that the unicorns mostly derived from both AI and logistics fields, such as autonomous driving startup Pony.ai and B2B logistics startup Lalamove.

Hurun, the Chairman and Chief Investigator of the institution noted that “the number of unicorns in China has surprising exceeded 200, which is almost ten times that of India. At this time, China should be the first place in the world in terms of the number of unicorns.”

Hurun

Rupert Hoogewerf, a.k.a Hurun – Chairman and Chief Investigator of Hurun Report

Of course, this wouldn’t have been so successful without capital funding from investors. In terms of unicorns breeders, Sequoia Capital has been the most successful with 53 unicorns in its portfolio. This is followed by Tencent and IDG, with each having invested in 31 and 25 unicorns respectively.

In terms of exits, the Hong Kong Stock Exchange and Nasdaq board have also witnessed the most listings of China’s unicorns in the first quarter of this year.

A total of five unicorns listed successfully on the list, including Maoyan Entertainment, Futu Securities, CStone Pharmaceuticals, Tiger Broker, and Weimob.

China now has 202 unicorns

Hurun Greater China Unicorn Index

Hurun Greater China Unicorn Quarterly Index from 2018

The biggest news after all, is that China now has a total of 202 unicorns. Among the startups, the total valuation of internet services companies topped the list with over 1.6 trillion yuan (about US$232 billion).

From the 202 Chinese unicorns, 42 are involved in the internet services sector, including ecommerce giant Alibaba’s Ant Financial with a US$1+ trillion valuation, Bytendance with a US$500+ billion valuation, and Didi with US$300+ billion valuation.

But aside from the Unicorn Index, the startup has also published its first Hurun China Future Unicorns 2019 Q1 listing another 70 high-growth enterprises from emerging industries.

These seventy potential unicorns are most likely to be valued at US$1 billion in the next three years, with 66 percent of the startups coming from Beijing and Shanghai.

In 2018, Hurun reported that a new unicorn was minted approximately every 3.8 days in China, making for a total of 97 new startups worth US$1 billion.

Though everything is looking to be on a good start with the results from the Q1 2019 report, Hurun said not to be overly optimistic as he estimates that 20% of current unicorns could eventually fail.

Also, Hurun’s methods of calculating unicorns aren’t exactly undisputed. By contrast, China Money Network’s calculations noted the number of new unicorns in 2018 at just 25.

A March Credit Suisse report also warned that despite the prominence of tech unicorns in China, the percent of firms in advanced fields including AI, big data, and robotics still well lagged behind US figures.

India welcomes two new unicorns before mid-2019

The venture ecosystem in India is off to a great start in 2019.

It’s not even mid-way into the year, and the country has already seen the addition of two internet startups achieving the much-coveted unicorn status, with another reportedly close to the billion dollar valuation milestone.

Just this Monday, BigBasket has secured a US$150 million Series F financing round led by Mirae Asset-Naver Asia Growth Fund, CDC Group, and Alibaba.

Chinese giant Alibaba is an existing backer, which had also led the Series E round in BigBasket last year. It remains the largest investor in the company, owning up to 30 percent stake.

Meanwhile, April also saw India’s first gaming unicorn Dream11. The startup reached a valuation exceeding US$1 billion, after a secondary investment by London and Hong Kong-based asset manager Steadview Capital.

“These developments proof that investment activity and the pace of growth has picked up in the Indian startup space,” said the vice president of consultancy Everest Group Yugal Joshi to Quartz India.

India’s Startups are Coming of Age

The rise of BigBasket and Dream11 are the continuous reflection of evolution in Indian internet business, following the footsteps of existing Indian unicorns like Flipkart and Ola.

“The companies that we are talking about, be it BigBasket or Dream 11, are not overnight stars,” said Sanchit Vir Gogia, the founder and CEO of Greyhound research.

2019 Unicorns in India

These startups have been working their way up quietly for some time. Eight-year-old BigBasket, for example, has been investing in the supply chain, logistics and technology for long to reach where it is now.

The online grocer sells more than 20,000 products ranging from groceries and pet foods, operating in 25 Indian cities.

“BigBasket offers a transformational and convenient experience to its consumers, which makes it a preferred grocery platform,” said Ashish Dave, the head of India Investments for Mirae Asset Global Investments.

Meanwhile, Dream11 which was co-founded by University of Pennsylvania alumni Harsh Jain and his friend Bhavit Sheth in 2008 has also been experimenting with the product-market fit before it found success.

The startup adopts a data-driven culture and strategy to reach its current 50 million registered users, which it claims is the tip of the iceberg in a market with more than 850 million cricket viewers on television.

Their success with cracking their segments was what boost global investors confidence, enough to give birth to both success stories… and the trend is likely to continue.

Eyes on India Maturing E-commerce Market

Investors see India, now at a US$2000 gross domestic product per thousand people, set for consumer-spending led acceleration in the online economy.

The country offers large opportunities for startups and ventures that bridge offline needs with online access-based supply chains.

BigBasket

Startups like BigBasket is answering exactly this, as it is reengineering the supply chain to allow for faster delivery to resellers and to reduce the time from farm to customers.

With its new funding, the company is ready to contend with competitors on multiple fronts, from the micro-delivery ventures like dairy-focused Milkbasket to food delivery venture Swiggy.

It will also be looking to expand its operations and scaling up its supply chain capabilities, against bigger competitors like Amazon and Walmart which is expanding in India.

“We have a unique opportunity to build one of the largest grocery businesses in the country in the country and we expect the capital raised in this round to continue to enable us to do just that,” VS Sudhakar, co-founder of BigBasket said.

According to analytics firm Tracxn, India’s retail market is valued at more than US$900 billion and is increasingly attracting the attention of VC funds and more than 882 operational players since 2014.

More Unicorns to Come

2018 was an eventful year for the India startups ecosystem. India added eight unicorns in 2018 alone, as compared with the nine unicorns in a span of 6 years from 2011 to 2017.

It is most likely 2019 will follow suit, as we begin seeing the host of promising startups crossing the US$1 billion valuation mark. Besides Dream11 and BigMarket, some of the investors’ top pick according to Fortune India include:

  • Online ticketing site BookMyShow
  • Health and fitness startup curefit
  • Ecommerce-focused delivery provider Delhivery
  • Eyewear retailer Lenskart
  • Digital payments company MobiKwik
  • Surface transport firm Rivigo
  • Online discount brokerage firm Zerodha

However, most likely it’s not going to be a joyride for these startups. Because with the gigantic successes in India, internet ventures today may be pressed for profits more than earlier years.

Indonesian Government launches NextICorn Foundation to breed more unicorns

This week, Indonesian IT Minister Rudiantara has launched the NextICorn (short for Next Indonesian Unicorns Foundation) as part of an effort to boost the country’s growing digital ecosystem.

The foundation is intended to establish long-term cooperation between the government and key ecosystem stakeholders in Indonesia, which is expected to assist and accommodate the development of the country’s startup companies moving forward.

Besides connecting startups with venture capitalists, the NextICorn Foundation would also offer support related to business models and technology implementation.

“The NextICorn Foundation represents the government’s commitment to the sustainable development of a digital ecosystem,” Rudiantara explained.

He said the government had the obligation to facilitate the country’s startups to grow and achieve the much-coveted unicorn, or even the decacorn status

This news came after ride-hailing app Go-Jek became Indonesia’s first decacorn when its valuation hit US$10 billion, according to the CB Insights research institution.

4 out of 10 SEA Unicorns

Southeast Asia has produced a total of 10 unicorns to date, of which 4 are from Indonesia. These homegrown unicorns include Go-Jek, Traveloka, Tokopedia, and Bukalapak,

Of the four, Go-Jek is the lead unicorn and one of the most talked about startups in Southeast Asia, especially recently with its newly achieved decacorn status.

The four unicorns have also attracted many big-name investors into the country. Tokopedia has backing from Alibaba and Softbank Group, Traveloka’s investors include Expedia and JD.com, while Bukalapak investors include Singapore’s GREE Ventures.

In fact, Indonesia owes a huge part of the growth of its digital economy to these local startups.

Not only have they brought upon a positive impact on the national economy through the provision of employment, but the startups have also contributed largely in terms of economic growth.

The ride-hailing app, for example, has contributed US$3.13 billion to Indonesia in just 4 to 5 year according to Minister Rudiantra.

Indonesian startups are also innovating and creating new business models. For instance, ride-hailing firm Go-Jek is more than just an Uber clone. They have Go-Med (medicine delivery); Go-Play (akin to Netflix) and Go-Clean (housekeeping services), while Traveloka now earns more from shopping vouchers than it does from trip bookings.

Disrupting and Improving the Way of Life

Indonesian startups

Looking at these unicorns, they are all examples of how rapid development in digital technology has not only disrupted businesses but improving Indonesian lives

Go-Jek, the country’s first decacorn has changed everything from online transportation to food delivery. Go-Jek has now become the go-to app for people when they are hungry or looking to travel.

20 New Unicorns by 2025

With such hype and optimism, Indonesia is very likely to see more unicorns in the next couple of years, but before that let’s look forward to one this year.

The communications minister has also told media reports last year that it is expecting 5 unicorns in 2019.

He also added that the most promising sectors are expected to be educational, healthcare, and fintech.

Really, with a supportive climate and Indonesia’s internet company growing at a healthy rate, it looks as if the country is moving towards high-scale startups or even more unicorns in the near future.

FROM MADE IN CHINA TO SELLING IN CHINA: THE INNOVATIONS THAT TRANSFORMED CHINA INTO THE PLATFORM FOR ECOMMERCE

It’s all in the past. The days when China was associated with sweatshops and cheaply manufactured labels. Although journalists are still reporting cases of child labor and unsatisfactory workplaces in China, the three words – Made in China no longer represents the country

The negative connotations which represent the exploitation of its high population demographics and low-wage advantage have brought forth the country rapid development and now the country is sitting on the laurels of high growth.

Though we may still laugh at the labels of misspelled or wrongly translated English, it no longer bears the same weight. China now represents one of the largest ecommerce markets, rivaling the United States.

In fact, Emarketer.com evaluated the total retail sales of different countries and discovered that both United States and China’s online business take one-fifth of the world’s digital sales share.

And despite the fact how American giants like eBay and Amazon technically built the ecommerce industry, the Chinese ecommerce players are gradually taking over.

E-COMMERCE IN CHINA IS A HUGE BUSINESS

China ecommerce brand

Source: amnaymag.com

Over the past five years, e-commerce growth in China has exploded – accounting for an average of 43 percent growth, with online sales now representing one-fifth of the total retail. This is just products. Consumers are also increasingly buying experiences and services online.

The development of ecommerce also extends to export as statistics from JD.com shows that Chinese-made products, including popular smartphones like XiaoMi, sports equipment like Li-Ning, and household appliances like Midea are sold to more than 200 countries and regions in the world.

In fact, according to a report by China’s Ministry of Commerce, the export transaction for China’s cross-border ecommerce has reached an amount of 2.75 trillion yuan, that is about US$415.3 billion in just the first half of 2017.

Chinese electronics giant Hisense also disclosed that 520,000 of its televisions were sold out in less than 24 hours during Black Friday in the United States.

Although this growth is partly attributed to China’s population size and the rise of urban middle class. A key characteristic to this strong ecommerce market in China is still due to the innovations are seen in Chinese ecommerce startups.

LIVESTREAM CAMPAIGNS AND BRANDING PLATFORM

Tmall, livestream in China

Source: jingdaily.com

While Amazon may have invented our online shopping addiction. China is where it is taken to the next level. Take China’s online retail giant Alibaba and its online platform Tmall for example.

Tmall is a virtual shopping mall and every brand has an official store page, complete with videos and interactive content. There is usually a standard format, but the page can be customized to fit every retailer’s unique needs.

Cosmetic brands, for instance, can livestream their makeup tutorials along with their products.This makes shopping online as engaging as shopping in person while educating users about their product without the need to leave the comfort of their home.

This serves not just as a point-of-sale, but also a key branding platform through real-time engagement and an extra layer of interaction.

EXPANDING TO PHYSICAL STORES

alibaba more mall

Source: China Plus

While ecommerce sales are on the rise, majority been pouring are still made in real life, Knowing this, Alibaba and its smaller rival JD.com despite making about 80 percent of ecommerce sale, have both been pouring billions into physical retail.

In the last two years, Alibaba has spent billions of dollar in establishing a physical footprint that includes a grocery store chain, a luxury shopping center, as well as their own branded mall in Jack Ma’s hometown of Hangzhou. Recently, Alibaba has even made a single US$29 billion investment in hypermart operator Sun Art.

REVOLUTIONIZING OFFLINE RETAIL

The thing is Chinese ecommerce are not just expanding to physical retails but rather revolutionizing the way it works. In last year’s Taobao Maker Festival, Alibaba featured two new technologies to disrupt the offline retail space.

First, it was embracing the new retail strategy where big data technology connects and optimizes offline outlets and online stores to enhance customer experience. Second, the ecommerce giant released an experimental cashierless store called Tao Cafe and smart speaker Tmall Genie.

Competitor JD.com also sees the future growth is offline given their release of Take, a new technology tool for physical retailers. By combining online shopping trends with sensors in-store, the tech aims to provide better insights into offline shopping behavior.

REINVENTING CULTURE THRU 11.11

11.11

Source: alizila.com

While there’s Black Friday and Cyber Monday in the United States, China has Single’s Day, otherwise known as the Double 11 shopping festival with big deals and promotions. The founder of the holiday was Tmall’s CEO Daniel Zhang, as a way to make single people less lonely.

But soon the holiday has blossomed into the world’s largest single shopping date exponentially. For comparison, Alibaba’s 2017 total sale was RMB 162.8 billion, which translate to roughly US$25.3 billion, and is more than Cyber Monday and Black Friday combined.

Another significance for Double 11 is not just its sales, but rather the date has morphed into an important multi-day shopping festival complete with a live stream gala event featuring Jack Ma dancing to Michael Jackson, an interactive runway show, and a new retail dream. It’s not just another day of sales.

CO-BRANDED PARTNERSHIPS

Mattel,, Alibaba

Source: cnbc.com

A newer trend that has crept up in China is the symbiotic partnerships between e-commerce platforms and brands in terms of distribution and design.

Especially on big shopping occasions, it is not uncommon for e-commerce platforms to set up pop-up shops in high traffic locations — usually with brands that do not have physical locations of their own. The goal is to provide a hands-on shopping experience and then purchase online.

For example, the collaboration between Beats by Dre and Tmall has popped up that lets users experience the power of the new Beats noise-canceling headphones by simulating what they would feel like on an airplane. There is no cash register in the store, just tablets to place your order via Tmall and have them delivered to your home.

Another example of partnership is in the form of exchanging data for intellectual property. Mattel, whose brands include Barbie and Hot Wheels has inked a deal with Alibaba, to exchanging browsing behavior to inform new product designs, as well as selling its products to Chinese consumers on Tmall.

ECOMMERCE SITES FOR EXPLORATION

Ultimately, the design of ecommerce sites in China has made their shoppers treat e-commerce platforms as more than just another purchase platform, they do not just visit it during sales day.

Chinese consumers head on to ecommerce site for exploration and discovery, it’s just like going to the mall but just at the comfort of your home. At times, they even go online just to see what’s new or trending, not just when there’s a need to purchase.

In the years ahead, with the innovative streak presented by China’s ecommerce platforms, it is most likely that one day a change of dynasty will arrive.

MVCA joins ASEAN Venture Council to bolster growth in regional VC industry

Malaysia Venture Capital and Private Equity Association (MVCA) has joined forces with ASEAN Venture Council (AVC) to become part of a larger regional network.

The agreement was signed between MVCA Chairman Shahril Anwar Mohd Yunos and AVC representative Dr. Jeffrey Chi at the ASEAN Venture Summit in Kuala Lumpur yesterday.

Following the deal, AVC will now consist of 4 participating VC associations on board. That is apart from MVCA, this includes Asosiasi Modal Ventura Untuk Startup Indonesia (Amvesindo), Thai Venture Capital Association, and Singapore Venture Capital & Private Equity Association.

Through linking the four national bodies together, AVC is intended to facilitate greater knowledge sharing and collaboration among venture capital firms and early-stage businesses throughout the region, in addition to closing more deals.

On top of that, Malaysia’s participation also comes at a time when their regional venture investments have more than doubled from US$1.3 billion in 2015 to more than US$3 billion in 2016.

Speaking of the deal, MVCA Chairman Shahril Anwar Mohd Yunos said, “the inclusion of MVCA will open up communications with Limited Partners, General Partners, and entrepreneurs across respective countries and provide an effective platform for fundraising, investment syndication, and exit opportunities.”

Established in September 2016, ASEAN Venture Council was initially set up by the Singapore Venture Capital and Private Equity Association with the purpose of creating a coalition to bolster inter-country relations.

It is intended to drive the development of the venture capital industry in a more concerted effort across the region leveraging on each other’s strengths and capabilities – particularly in the areas of events, advocacy, research, education, and deal flow.

Jefri Sirait, the Chairman of Amvesindo explained that “the growth of AVC translates to wider coverage and opportunities for potential deal flows.”

With the addition of MVCA as a new member country, this will strengthen the collaboration between national associations as they leverage on each other’s individual capabilities, synergies, and best practices, which in turn will support the regional entrepreneurial and financial ecosystem across the ASEAN region.

By Vivian Foo, Next Unicorn

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