Welcome back,
This week the focus is on China, where data shows that venture capital spending has shifted from backing entrepreneurs and general startups towards companies and tech that supports the national agenda.
That means chipsets, AI and more. That makes sense to some extent given the US-China tech war has left firms like Huawei needing domestic component partners while OpenAI has devoured capital from all, and opened a major focus for VCs. Still, it wasn’t so long ago that I remember going to China and meeting founders enamoured with the idea of moving to Silicon Valley, and VCs gushing about Chinese founders.
All that and more is waiting for you in this week’s roundup—have a great week!
Jon
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China has reached the end of its ‘entrepreneurship for everyone’ investment era and the new dawn is to back technology that follows the agenda set out by the state, according to a recent article from Nikkei.
General venture capital has dried but areas including drones, AI, chips and more have taken the lion’s share of the capital given out by funds:
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VC and PE investment in China fell 38.7% YoY in the first half of 2024, to 196.7B yuan ($28B), according to research company Zero2IPO. Money raised by fund managers also dropped 22.6%
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By comparison, VC and PE in the US fell just 3% to $418.5B during the same period—fund managers raised 3.3% more
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The decline in startup funding has raised concerns that China is falling behind the US in cutting-edge technologies. Chinese AI startups have landed some of the biggest funding rounds in the country this year, including Moonshot AI’s $1 billion round and a $400 million splash by Zhipu AI, according to Zero2IPO. But the scale pales in comparison to its US rival, OpenAI, which earlier this month raised $6.6B from investors including Microsoft and SoftBank Group
Hong Kong could be set for its largest IPO of the year with Horizon Robotics, an autonomous driving software and hardware provider, which plans to raise as much as $800M at a valuation of $6B.
The company is backed by auto giant BYD and battery firm CATL, while it has a joint venture with Volkswagen. Its IPO is said to be drawing interest from the likes of Alibaba and Baidu, both of which are deep in autonomous driving and AI technologies. Nine-year-old Horizon was founded by a former Baidu engineer.
India previously shelved a plan to limit imports of laptops, tablets and PCs from overseas, but now it looks like the proposal is back in play—and it could come into force next year.
Backlash against the move from companies and US lobbying saw the changes, which could hugely disrupt India’s IT hardware industry, valued at $8-10 billion, cancelled last year .
One Championship, the MMA fighting firm focused on the Asian market, reportedly raised $50M from investors that include Qatar Investment Authority. The round values the startup at $1.35B, the same valuation that it got in 2022 when it raised via QIA and Guggenheim Investments.
There’s been plenty written about One Championship’s business health and business model, including our story at The Ken in 2020 and Bloody Elbow, which previously reported that One’s runway would expire by Q3 2024 (aka now) and that it had struggled to win over QIA with this proposed new round.
No doubt, the company wll be bullish after landing this round and valuation, but it looks like there’s plenty more work to do.
Shein has brought on Barclays Plc and UBS Group AG as bookrunners for its possible IPO, which could value the online fashion giant at around £50B ($65B). If it goes ahead, it could be one of London’s biggest listings in recent years, with the float potentially happening as soon as next year, according to insiders. link
IBM is investigating misconduct allegations against its China head, who is accused of accepting gifts from business partners, leaking confidential information, and violating expense policies link
Apple reportedly collaborated with Chinese automaker BYD in secret from 2017 to develop long-range lithium iron phosphate batteries for its now-cancelled car project, which laid the foundation for current technology, according to sources. The partnership aimed to create safer, longer-range batteries than those available in electric vehicles at the time link
BYD is dominating the global race for affordable EVs, flooding markets with its cars, while the US works hard to block the brand’s rise link
New security analysis by Citizen Lab reveals critical vulnerabilities in WeChat’s MMTLS encryption protocol, raising concerns about the platform’s ability to protect user data and communications from surveillance and cyber threats link
Chinese autonomous driving start-up Pony.ai partnered Alibaba’s Amap to expand its robotaxi services as competition intensifies in China’s driverless taxi market link
Pony.ai also filed for a US IPO that could raise up to $300M link
Chinese authorities have accused a foreign company of illegal mapping under the cover of intelligent driving research, prompting denials from several smart driving and EV firms, including Tesla, Mobileye, Geely, Didi Chuxing, and Navinfo link
Chinese AI companies are slashing costs to stay competitive despite facing US chip restrictions and tighter budgets than their Western rivals—startups like 01.ai and DeepSeek have cut prices by using smaller data sets and hiring affordable, skilled engineers link
US Customs has halted some drone imports from Chinese manufacturer DJI, according to the company link
DJI has sued the US Department of Defense for designating it as a Chinese military company—it claims it had tried unsuccessfully to engage with the department for over 16 months link
ByteDance is expanding its digital book publishing venture, 8th Note Press, into print, with plans to sell in physical bookstores—it partnership with independent publisher Zando, it plans to release 10 to 15 books per year from early 2025 link
The Chinese cyber association has called for review of Intel products sold in China link
In response, Intel’s China unit said it has always prioritised product safety and quality link
Byju’s is now “worth zero” according to founder Byju Raveendran—he admitted he overestimated the growth potential of his edtech company, but remains hopeful of rescuing it from insolvency link
Three U.S.-based education-software companies, bought by India’s now-bankrupt Byju’s for $820 million, will be sold to repay lenders, according to a court-appointed trustee—Neuron Fuel., Epic! Creations and Tangible Play have uncertain valuations and may not all attract bids link
Meanwhile, Indian edtech company Eruditus secured $150M in a Series F round that values it at $3B and was led by TPG link
Zepto could be on for yet another raise—this time $100M from domestic investors at a valuation of around $5B. The company plans to go public next year and it has already raised $1B over the last six months, all of which apparently still remains in its bank untouched link
India’s largest airline, IndiGo, has received approval from the markets regulator to launch a venture capital fund aimed at boosting the travel and aviation market—IndiGo Ventures will focus on pre-series A, series A, and series B rounds. We previously saw AirAsia launch a fund, RedBeat Ventures, in 2019, but it never did much—will this one be different? link
Table Space, an Indian managed workspace provider, is targeting a valuation of $2.5B or more for an IPO planned for next year link
India will allocate spectrum for satellite services administratively, rejecting telecom operators’ lobbying efforts and aligning with recent comments by Elon Musk link
Lendingkart is negotiating a new investment from Fullerton Financial Holdings that would cut its valuation to $100M from a $350M valuation as of four years ago—this deal could see Fullerton take a majority share in the lending startup link
Accel is in advanced talks to lead a $30-40 million funding round in Truemeds, an 6-year-old online pharmacy offering affordable generic alternatives to expensive branded drugs—the valuation would be around $330M link
India’s central bank has order Flipkart co-founder Sachin Bansal’s fintech venture Navi to halt loans link
Google licenced its AI model to Indian firms for early detection of diabetic blindness link
Southeast Asia’s quarterly funding total dropped below $1B for the first time since 2019—DealStreetAsia data showed 134 deals raising $979 million. This year itself is looking like a quiet one for the region: the $3.26B raised this year is half of what was raised in 2020 link
However:
While equity funding lagged, debt financing rose, with deal value up 62% to $1 billion. Late-stage funding suffered the most, dropping 73.6% to $850 million, as investors grew cautious of high-risk, capital-intensive ventures.
Warner Bros Discovery will launch its Max streaming service in new Asian markets on November 19—they include Hong Kong, Taiwan, Indonesia, Thailand, and the Philippines link
Khazanah, Malaysia’s sovereign wealth fund, is rolling out initiatives to support local venture capital funds and attract international managers, aiming to become a VC hub by 2030 link
Thailand’s semiconductor industry is expanding into advanced processes, with its first front-end fab set to begin operations by 2027—the Thailand Board of Investment has approved FT1’s 11.5B baht ($345M) project, that’s a joint venture between PTT and Hana Microelectronics link
Thailand’s Siam Commercial Bank introduced a stablecoin service for international payments link
Singapore’s biggest bank DBS introduced ‘Token Services’ to enable blockchain-based banking for institutional customers link
Euroclear, a major securities settlement house based in Belgium, entered Asia after buying a “strategic stake” in Marketnode, a Singapore-based operator specialising in blockchain for financial market infrastructure link
GCash, the most popular payment app in the Philippines has a side bet: online gambling, according to a Rest Of World report that found online gaming to have grown following the adoption of mobile payments following Covid, with women said to be particularly prone to picking up the habit—features like easy borrowing and credit have fueled the situation link
South Korea will prepare stronger measures in a bid to prevent overseas leaks of business secrets amid intensifying competition for advanced technologies link
Samsung has delayed receiving ASML chipmaking equipment for its upcoming Texas factory due to a lack of major customers, according to three sources. The company has also postponed orders to other suppliers for the $17 billion Taylor project, causing some suppliers to seek other clients and send staff home. link
Bandai Namco is cutting its workforce after cancelling several titles due to weak demand, sources say. The Tokyo-based publisher is apparently using a common Japanese tactic of pressuring employees to resign by assigning them to rooms with no work. Since April, about 200 of the 1,300 staff at Bandai Namco Studios have been moved to these rooms, with nearly 100 resigning so far, sources added link
There’s a rare battle between private enquiry giants as KKR and Bain compete for a deal to buy Japan’s Fuji Soft which would be worth at least $4B link
The US is pressuring Japan to introduce stronger curbs on sales to Chinese chip making companies link
Best known for cameras and lenses, Nikon said a global reordering of the chip supply chain is buoying exports of its semiconductor equipment as it tries to pivot away from reliance on sales to China and the US link
HP has reportedly sharply curtailed its Taiwan team’s role in procurement decisions and added related positions in Singapore as part of a major supply chain reshuffle aimed at minimising geopolitical risks link
Taiwanese companies are raising the most funds in nearly two decades as chipmakers expand to meet rising AI demand—additional share sales abroad have reached $2.9B this year, the highest since 2007, according to Bloomberg link
The US Commerce Department is investigating if TSMC made AI or smartphone chips for Huawei, which would violate US export rules link
TSMC says it is a law abiding company, after report of US probe link
The company’s third-quarter profit handily beat forecasts on AI boom—pushing its stock price to a new high link
However, Nvidia’s partnership with TSMC is reportedly showing signs of strain after its new AI chip, Blackwell—which had been praised by tech leaders—is said to have failed tests in high-voltage data centre environments link
North Korean IT workers, hired under fake identities at U.S. and U.K. companies, are now attempting to extort employers after gaining access to sensitive information, according to a report from Secureworks link
Telegram will open an office in Kazakhstan as it aims to make its messaging service more regulatory compliance following the arrest of founder Pavel Durov in the summer link
