Investment trends in China this month: Fresh food and online education take the lead
Among the 40 cases we reported this month, Yiguo, Dianrong, and VIPKID secured the highest investments. VIPKID secured the largest single-financing round in the online education industry, with USD 200 million for its Series D financing round. While Yiguo received USD 300 million from Tmall to expand its O2O business.
Every month we handpick 40 financing cases that reveal the hottest trends in the startup and tech industry in China. In August, many startups in online education and financial services industries secured funding, such as Zuoyebang, Micro Language, and Dianrong. The sharing economy continues to flourish and witness increased competition, particularly within the realm of ride-hailing and workspace sharing. Meanwhile, investment in both industries of AI and bike-sharing is cooling down.
Top 3 investment cases
Fresh food industry, Dianrong, a supply chain services provider, likewise secured large funding.
More and more companies in China are venturing to expand their business overseas, for it is often easy and often costs little to acquire new users; and companies can expect considerable policy subsidies at the same time. This suggests the development of tech and internet in China will continue to accelerate, ensuring we can output our technologies and services to other countries.
Fresh food e-commerce platform Yiguo receives USD 300 M for financing
Yiguo is a fresh food e-commerce platform that provides customers with a range of fresh food in most of China’s first- and second-tier cities. It manages each step of the food procurement process:cold-chain quality control, order processing, and food distribution.
Founded in 2015 in Shanghai, its services currently cover more than 200 cities nationwide. It has established 11 cold-chain logistics basements in 10 cities, including Shanghai, Hangzhou, and Chengdu. For select cities near the cold-chain logistics basements, customers can receive orders within a single day. Customers in more remote cities, however, must to wait for overnight delivery.
Peer-to-peer lending platform Dianrong receives USD 220 M for Series D
Dianrong is a peer-to-peer lending platform that provides individuals and companies with advanced financial solutions based on blockchain technology, which projects a growth range beyond other P2P competitors in China’s market.
Founded in 2012 in Shanghai, Dianrong has launched services in Hong Kong offering Asian investors opportunities to buy into U.S. consumer loans, and it is working with South Korean partners to enable customers to lend and enjoy other financial technology services in South Korea. With 71 branches in 47 cities across China, the platform aims to introduce advanced technologies to build automated offline outlets with supporting diversified services, in addition to buying and selling loans.
Online English teaching platform VIPKID receives USD 200 M for Series D led by Tencent
VIPKID is an online English teaching platform that focuses on providing 4–12 year-old children with online English education services through one-on-one online video streaming. It recruits professional English teachers from foreign countries where English is the first language and connects them with Chinese students who are willing to pay. VIPKID fills a niche that helps English teachers make a little extra money.
Founded in 2013 in Beijing, VIPKID states that it now has more than 20,000 teachers delivering lessons to 200,000 students from 32 countries. Additionally, its monthly revenue in July this year was USD 60 million, with USD 750 million in annual revenue. Currently, the company is trying to deliver Chinese teaching services to foreign students in the same mode, an endeavor that may likely prove successful as it is much easier to recruit, manage, and operate Chinese teachers in China.
Top 3 watchable investors
Among 40 financing cases in August, approximately 60 investors invested in startups and provided other resources (sharing their user base and market influence, etc.). We witnessed some major investors eyeing the hottest sectors;Tencent, Matrix Partners China, and Yunfeng Capital, for instance, invested actively this month.
Tencent is a leading provider of Internet value-added services in China, which holds Chinese social media mobile app, WeChat, integrates instant messaging, commerce and payment services. It has led English teaching platform VIPKID’s USD 200 million financing round, as well as Linklogis’s USD 29 M financing round for its financial services. Tencent recently poured money into education and financial industries, and it is now trying to integrate these services with its core product, WeChat.
Matrix Partners China
Matrix Partners China is committed to building long-term relationships with outstanding entrepreneurs and helping them build significant, industry-leading companies. Affiliated with Matrix Partners, a premier U.S. venture capital firm, Matrix Partners China was founded in 2008 to focus exclusively on investments in China.
It participated in many companies’ financing rounds, including workforce management solutions provider GaiaWorks, English teaching platform VIPKID, and others.
Established in early 2010 and named after one of its co-founders Mr. Jack Ma (Yun), Yunfeng is a private equity firm started by a group of successful entrepreneurs and influential industry leaders. It currently manages a number of US Dollar Funds, RMB Funds, as well as Special Funds. Its focus sectors include internet, technology, healthcare, media & entertainment, financial services, logistics and consumer products. Yunfeng Capital is headquartered in Shanghai, with offices in Hong Kong, Beijing, Hangzhou, and other cities across China.
It has led online short video platform Ergeng’s USD 22M Series B financing round, as well as participated in other financing rounds.
Throughout the month, billions of USD poured into O2O (Online to Offline) fresh food e-commerce, financial and education industries.
Traditional business are integrating with advanced technologies, especially begun to utilize online methods, most of these new products are known as O2O. We can now order meals, flowers, and so many other goods and services online, and then receive them offline. While fresh food is truly in-demand, we hardly purchase it online due to challenges concerning fresh delivery. As it is in-demand, enterprises and venture capitalists are paying close attention to how consumer expectations can be met. For example, Alibaba’s subsidiary branch Tmall supported Yiguo with USD 300M to integrate its fresh food e-commerce with Tmall’s online supermarket.
Meanwhile, financial services and education remain in-demand, largely because they are close to our daily life and work routine. Parents in China care more about their children’s education, especially language education. This month China’s tech giant Tencent invested USD 200M in English teaching platform VIPKID, reflecting English’s status as a common and vital language across world.
Fresh food e-commerce, financial and education will continue to attract attention from people due to they are basically in our daily life, but there is yet to be a major player that captures most of the market. As a result there are still many enterprises seeking opportunities while venture capitals are willing to support their growth. As long as they can provide an innovative solution to deal with existing problems and demands, focus on one or two points, and make a difference in their core business.
In conclusion, innovation is truly in-demand, O2O, financial and education are not new industries that emerged with the internet; they have existed for centuries along with common demands. Once there are new companies that can provide innovative ways and focus on their core business, they are more likely to acquire support from venture capitalists. For example, Yiguo focuses on the fresh food e-commerce business, and VIPKID’s core business provides 4–12 year-old children with online English education services. Fresh food and English education are large industries, they are not expected to deal with all existing demands, but one or two that they are good at.
Stay tuned to see what the next big tech trend in China is next month…
List of companies that attracted investments in August