Issue 39 | June 11, 2018

A Big Deal: Ant Financial Raises $14B in World’s Largest-Ever Fundraising

Ant Financial has raised $14 billion in a series C, the world’s largest private funding round ever, at a reported valuation of $150 billion. Ant, which was spun out from Alibaba in 2011, owns and operates Alipay, China’s largest online and mobile payments network, and has been instrumental in transforming China into a largely cashless society.

The financing included a US dollar tranche backed by Singapore’s sovereign wealth fund GIC, Warburg Pincus, Canada Pension Plan Investment Board, Silver Lake, and Temasek Holdings. A RMB component of the funding was supported mainly by existing shareholders. The funding makes Ant the world’s most valuable fintech company.

Here is a great read from Bloomberg on “why China’s payment apps give US bankers nightmares.” In large part due to Alipay, the vast majority of Chinese consumer purchases happen on mobile cheaply and easily without bank involvement. US financial firms could lose up to $90 billions a year in payment processing fees if American consumers embrace third-party apps en masse the way Chinese consumers have adopted Alipay and WeChat Pay.

Note: GGV Capital was an early investor in Alibaba in 2003.
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A Big Deal: Xiaohongshu Raises $300M Round Led By Alibaba
Chinese social e-commerce startup Xiaohongshu (“Little Red Book” in Chinese, a.k.a. RED) has raised a $300 million series D round led by Alibaba at an estimated $3 billion valuation.

This makes Xiaohongshu one of the few companies to have received significant funding from both Tencent and Alibaba (another example is Didi Chuxing, also a GGV portfolio company). Xiaohongshu is a pioneer in integrating content, commerce, and community—the “3 Cs” that today’s e-commerce platforms must possess in order to stand out in the age of Alibaba and Amazon.

For more on Xiaohongshu, listen to our interview with Co-Founder Miranda Qu on the 996 Podcast, available on Apple Podcasts, Overcast, Spotify, SoundCloud, XimalayaFM, or wherever else you listen to podcasts.

For more on how Chinese startups should think about managing their relationships with the tech giants, read our blog post Chinese Startups Should Consider Tencent and Alibaba Their Allies, Not Enemies.

Note: Xiaohongshu is a GGV portfolio company; Hans Tung, managing partner of GGV Capital, is on the company’s board.
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A Big Deal: JollyChic Raises Series C, Becomes Unicorn
Chinese e-commerce platform JollyChic has raised an undisclosed amount rumored to be in the hundreds of million in a series C round from Sequoia Capital and Legend Capital at a valuation of $1 billion.

Founded in 2012, Hangzhou-based JollyChic specializes in selling Chinese goods to Middle Eastern countries. It is the top-ranking shopping app in many countries in the region, including UAE and Saudi Arabia (where it is ranked No. 1 among all Android apps).

JollyChic has over 35 million registered users and says its gross merchandise volume has tripled for five consecutive years. The company sells to 34 countries and has has over 2,500 employees spread across offices in Shenzhen, Guangzhou, Hong Kong, Silicon Valley, Saudia Arabia, Dubai, UAE and Jordan.
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A Big Deal: Kuaishou Acquires Acfun
Kuaishou, the company behind one of the most popular short video apps in China, has acquired the online video platform Acfun. Launched in 2007, Acfun—nicknamed “A-site” (A站)—was one of China’s top animation and video-streaming sites, targeting Gen-Z users born after 1990.

Kuaishou, which is backed by Tencent, said Acfun’s brand, operations and management will remain independent after the takeover, while Kuaishou will provide support in capital, technology, and resources.

While its archrival Bilibili (NASDAQ: BILI), nicknamed “B-site” (B站) in China, launched a $400 million IPO in New York in March, Acfun has struggled over the past year and saw its daily active users plummet to 100,000 in January from around 700,000 in mid-2017. There have been rumors that the company was financially strained and was forced to lay off employees. In February, the Acfun website went down for 10 days.

By acquiring Acfun, Kuaishou could diversify its content, expand its user base, and fend off its rival Douyin, a short video app operated by the media giant ByteDance.

Note: ByteDance is a GGV portfolio company.
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A Chart: Foxconn and Apple’s Growth
Foxconn Industrial Internet, a unit of the manufacturing giant Foxconn, has become China’s most valuable domestically-listed tech company after its shares surged 44% in a trading debut in Shanghai on Friday. FII raised RMB 27.1 billion in mainland China’s largest IPO since 2015.

Its parent company, Taiwan-based Foxconn, rose to prominence as as a contract manufacturer of Apple iPhones. However, as the global smartphone market slows, Foxconn is making a push into industrial technology, such as automating other manufacturers’ processes. Foxconn recently bought 20,000 textbooks about AI for all of its employees to study, including line workers and office secretaries.

Source: Bloomberg
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996 Podcast: Jenny Lee of GGV Capital on Being a VC in China
We interviewed Jenny Lee, a managing partner at GGV Capital based in Shanghai. Jenny joined GGV in 2005 and was instrumental in setting up GGV’s presence in China. Forbes recently ranked Jenny as the world’s 16th most powerful woman in tech.

A self-professed geek who loves new technologies and products, Jenny has backed consumer Internet, SaaS, and frontier technology companies at GGV, and has helped many go public. Since 2011, Jenny has been named to the Forbes Global 100 VC Midas List of top venture capitalists, ranking as the #1 woman and #10 overall in 2015.

Jenny grew up in Singapore and was educated in the US, where she attended Cornell and Northwestern University. In this episode, we discussed how Jenny rose from a newcomer to one of the most respected VCs in China, how she set up the China presence of a US venture capital firm, how venture deals are done in China, and how US companies can better understand Chinese government interests.