Issue 29 | March 19, 2018

A Big Deal: Qu Toutiao Raises $200M, Plans US IPO
Qu Toutiao (“Fun Headlines” in Chinese), a news aggregation app launched in June 2016, raised $200 million in Series B funding from investors including Tencent and Xiaomi this week, and is considering listing in the US as soon as this year at a $3 billion valuation, according to Bloomberg.

Qu Toutiao is now one of the top five news apps in China with over 10 million daily active users. Qu Toutiao’s user interface (right) looks similar Toutiao (left):

Despite the similarity, Qu Toutiao says the degree to which its user base overlaps with Toutiao and Tencent News is less than 20%. Most of Qu Toutiao’s users are women (70%) in lower-tier cities. Toutiao’s user base is more male-dominated, and mostly in first- and second-tier cities.

Qu Toutiao also features a virtual rewards system that drives user engagement: Users receive a virtual coin when they spend time and engage with the app, which can be converted into money for purchasing on Qu Toutiao’s online store.

Note: Bytedance, which owns Toutiao, is a GGV portfolio company.

A Idol: Li Ka-Shing Retires

The 90-year-old Li Ka-Shing, Asia’s second-richest person whose massive conglomerates have dominated the Hong Kong economy for decades, has announced his retirement, marking the end of an era for the region’s business community.

Knicknamed Superman, Li Ka-Shing is revered as one of the most influential businessmen in Asia. His legendary career has become a household rags-to-riches story in China: Born in the Chinese province of Guangdong, Li started a plastic factory in Hong Kong at age 21 with $6,500 in savings and loans from relatives. Now, Li is estimated to be the world’s 23rd richest person by Forbes with $35.1 billion in net worth.

Li is handing over the reins over his business empire, which includes retail, telecommunications, and real estate, to his eldest son, Victor Li.

A Buzzword: “Classical Investor”

All non-crypto investors in China have been labeled “classical investors” (古典投资人) on social media recently. As crypto craze has taken over China’s tech community, a camp of classical—even classicist—investors that refuse to get into the action has also emerged.

Chief among these crypto non-believers is Allen Zhu (Zhu Xiaohu) of GSR Ventures, who has proclaimed on his WeChat timeline that “Calling ICOs a Ponzi scheme is an insult to Ponzi schemes.”

A Number: 
60 million – the number of paying subscribers of iQiyi, one of the largest online video platforms in China. The average user spends 1.7 hours per day on iQiyi.

In comparison, Netflix has 54.7 million domestic US subscribers (and 62.8 million international subscribers).

iQiyi has filed to go public on the Nasdaq to raise up to $2.7 billion. Baidu owns 69.6% of the Netflix-like video platform and will continue to be its controlling shareholder upon completion of the offering. The iQiyi F-1 is a great read.

996 Podcast: Miranda Qu of Xiaohongshu on Powering E-Commerce with Community
Miranda Qu is the co-founder of Xiaohongshu (“Little Red Book” in Chinese), the world’s the largest lifestyle platform that integrates community and content with e-commerce. Over 75 million users spend a total of over RMB 100 million per month on the app to buy fashion, cosmetics, and lifestyle products from both overseas and domestic brands.

Xiaohongshu is a pioneer in integrating content, commerce, and community – the “3 Cs” that GGV managing partner Hans Tung thinks today’s e-commerce platforms must possess in order to stand out in “the age of Alibaba and Amazon.”

In this episode, Miranda discusses how she met her cofounder Charlwin Mao in a shopping mall in Boston, Xiaohongshu’s journey from a “Lonely Planet for overseas shopping” to one of China’s most popular e-commerce platforms, and why young Chinese consumers increasingly prefer domestic brands over foreign ones.