Sequoia, Tencent and IDG are the top investors in Chinese unicorns - Rupert Hoogewerf

Rupert Hoogewerf

Sequoia, Tencent, and IDG are the top investors in Chinese unicorns, says last weeks Hurun report on 202 unicorns, start-ups valued at more than US$1 billion, in China as of the first quarter of 2019. Shanghai’s new tech board would be an attractive listing option for Chinese unicorns, said Rupert Hoogewerf, founder and chief researcher of Hurun at the South China Morning Post. The South China Morning Post:

The Hurun report lists 202 unicorns, start-ups valued at more than US$1 billion, in China as of the first quarter of 2019. Sequoia China has invested in 53 of them, Tencent has put money into 31 and IDG has invested in 25.

“China has the largest number of unicorns in the world,” said Rupert Hoogewerf, chairman and chief researcher at Hurun.

More than 70 per cent, or 146, were in sectors such as internet services, e-commerce, internet finance, health care, culture and entertainment, artificial intelligence, and logistics, according to the report. The 202 unicorns have a combined valuation of more than 5 trillion yuan (US$732 billion)...

The Hurun report found that Beijing was home to 82 unicorns, 41 per cent of the total in China, followed by Shanghai with 45, Hangzhou with 19 and Shenzhen with 16. Hangzhou is the headquarters of e-commerce giant Alibaba Group, the parent company of the South China Morning Post.

Alibaba’s financial arm Ant Financial, TikTok owner Bytedance and ride hailing giant Didi Chuxing topped the Hurun unicorn list.

Sequoia China has invested in Ant Financial, Bytedance, drone maker DJI, short video app Kuaishou, JD Logistics, and education start-up VIPKID, while Didi Chuxing, Kuaishou, JD Logistics and health platform WeDoctor are in Tencent’s portfolio.

The report also included a list of 70 “future unicorns” that have potential to become US$1 billion start-ups in the future, including gay dating app Blued, e-commerce company Club Factory and fitness app Keep.

Shanghai’s new tech board would be an attractive listing option for Chinese unicorns, said Hoogewerf. He added that while 20 per cent of unicorns might fail, and less than 10 per cent would be acquired, most would go on to a public listing.

More at the South China Morning Post.

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Sequoia: getting US-listed firms back to China - Paul Gillis

Paul Gillis

A rising number of Chinese companies, listed in the US, are returning home encouraged by rising stock prices. Bloomberg looks at Sequoia Capital China, one of the firm organizing the shift, and accounting professor Paul Gillis gives his take on the trend.

Bloomberg:

Alternative asset managers are focusing on companies they already hold and on which they also have board positions as they race to complete their due diligence, line up management and arrange buyout groups. Companies from online retailer Jumei International Holding Ltd., in which Sequoia owns a more than 15 percent stake, to online bookmaker 500.com may be the next takeover targets, according to China International Capital Corp. 

“Sequoia is a big player in entrepreneurial Chinese companies,” Paul Gillis, a professor at the Guanghua School of Management at China’s Peking University, said by e-mail. “There is a real opportunity right now for U.S. listed Chinese companies to seek higher values on the Chinese exchanges. PE firms are providing the brainpower for these privatization and relisting deals.”.. 

“I expect the majority of U.S. listed Chinese companies will do privatizations with the intent to relist in China in the next year,” Gillis said. “It’s a classic private equity opportunity.”

More in Bloomberg.

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China's Amazon is heading for trouble - Wei Gu

Wei Gu

The investment climate might be bearish, 360buy - China's Amazon - is still making a loss, but picked up a US$ 300 million round of capital and saw its value skyrocket. Reuters' Breaking News analyst Wei tells why this might go wrong for the company and its investors.

Wei Gu:

The Amazon of China defied the down-round blues. With a new investment round unveiled last week, e-commerce upstart 360buy.com, aka Jingdong Mall, saw its valuation swell by 15 percent in a year. Despite widening losses, venture capital continues to pour money into China’s crowded e-commerce space. But as players feverishly compete for market share by discounting, profits look ever more elusive. 

After snagging another $300 million from Tiger Global and Ontario Teachers Retirement Fund, 360buy is now valued at some $7.6 billion. That’s up from $6.6 billion a year ago, when Digital Sky Technologies, Sequoia Capital, Tiger and the family controlling Wal-Mart injected capital, despite speculation among VCs in China that Jingdong would struggle to raise money at a higher value. 

Trouble is, more money is likely to lead to more promotions. Heated competition and widespread discounting by new entrants pushed early comers, such as Dangdang (DANG.N), into the red. Analysts don’t expect the online bookseller to turn a profit until 2015. Jingdong’s loss is expected to widen in 2012 to $300 million as it strives to triple its sales and catch up with Alibaba’s Tmall. Online clothier Vancl’s goal to become profitable in the fourth quarter still looks a tall order.

More in Reuters' Breaking News.  

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

This week, on November 22, the China Weekly Hangout is about the future of nuclear power in China. You can register at our event page here. (Two weeks earlier we missed the change in daylight saving time in the US and had to cancel.) First part will focus on the resumption of building nuclear power stations, the second part of the chances NIMBY protests can derail this ambitious program. Planned participants: Richard Brubaker and Chris Brown.
You can access all editions here.