Since China was first rocked by the COVID-19 outbreak around Lunar New Year in January of 2020, many facets of the everyday economy experienced major disruptions. However, venture capital and fundraising in China’s dynamic startup ecosystem remained resilient, continuing to advance their strategies amidst an uncertain macroeconomic environment.
Looking back at the fundraising deals that happened during the outbreak period, we can see continued investment in robotics, education technology, supply chain logistics, and frontier technologies.
The COVID-19 pandemic has accelerated demand for autonomous solutions, and investment in the Chinese robotics sector continued throughout the outbreak period. Specifically, deals were closed in robotics verticals including hardware like robot cleaners and waiters, as well as software such as computer vision, audio recognition, and chatbot tech.
On the software side, Zhejiang-based AISpeech, specializing in voice interaction solutions, just closed an RMB 410 million (USD 58 million) Series E round led by CTC Capital. The firm counts Alibaba, Foxconn, and MediaTek as other investors, and has over 8,000 clients including Alibaba, Xiaomi, and SF.
Meanwhile, chatbox solutions provider Xiaoneng closed a Series C round worth RMB 125 million (USD 17.6 million). According to financial data provider Jingdata, China’s chatbot industry is worth RMB 15 billion (USD 2.1 billion).
In terms of hardware, ByteDance co-led an RMB 100 million (USD 14.1 million) Series B round in Narwal Robotics, a maker of autonomous cleaning robots.
Keenon Robotics, a Shanghai-based manufacturer of robot waiters, closed a Series B on March 10 for RMB 200 million (USD 28.8 million). The company dominates the service robot industry, popular in hospitality and restaurants like hot pot brand Haidilao, with a 2020 goal to provide 10,000 new robots, significantly strengthening their position in the space.
On the software side, Zhejiang-based AISpeech, specializing in voice interaction solutions, closed an RMB 410 million (USD 58 million) Series E round on April 7. The firm counts Alibaba, Foxconn, and MediaTek as other investors, and has over 8,000 clients including Alibaba, Xiaomi, and SF.
On April 3, chatbox solutions provider Xiaoneng closed a Series C round worth RMB 125 million (USD 17.6 million). According to financial data provider Jingdata, China’s chatbot industry is worth RMB 15 billion (USD 2.1 billion).
Focused more on enterprise solutions, Chinese autonomous mobile robot (AMR) company ForwardX Robotics completed an RMB 100 million (USD 14.1 million) Series B+ financing round on April 2. Headquartered in Beijing, to firm uses computer vision and AI to augment processes in the logistics and manufacturing industries.
Also, Shanghai-based Encoo, founded in 2017, hauled in a Series B financing round led by Sequoia Capital China worth RMB 211.6 million (USD 30 million) on March 16. Encoo specializes in robotic process automation (RPA), which automates a wide range of business processes, optimizing efficiency.
Education and healthcare technology
The COVID-19 pandemic has required educational institutions to quickly pivot to online instruction, as China’s online education market has experienced continuous growth in the past five years, and is expected to hit RMB 453.8 billion (USD 65.4 billion) in 2020, according to industry research firm iiMedia.
Yuanfudao stole the headlines at the end of March, setting the record for the largest fundraising deal in edtech raising RMB 7 billion (USD 1 billion) in a Series G round. The Beijing-based edtech giant operates six apps within its ecosystem and boasts 400 million users, 1.5 million of which are paid subscribers.
Meanwhile, coding education company Xiaomawang raised RMB million (USD21.2 million) in a pre-Series C to expand its course offerings and improve technologies.
Healthcare is another physical industry forced to develop online solutions due to the public health crisis. On March 20, Yizhun Intelligent, a firm using AI to improve medical imaging and diagnostics, secured a RMB 100 million (USD 14 million) series B round to continue product development and commercial expansion. Specifically, Yizhun’s technology has developed intelligent detection systems for serious ailments including lung diseases and breast cancer.
Another startup in the healthcare sector to secure funding during the outbreak period was Nuanwa Technology, a Shanghai-based firm helping health insurance companies digitize their offerings and sales channels. Nuanwa, incubated by Chinese insurance giant Zhongan Insurance since October 18, served more than ten insurance companies during the fourth quarter of 2019.
Supply chain logistics
As the COVID-19 pandemic puts stress on global supply chains, investment in Chinese companies eager to modernize logistics networks in areas including agriculture, future foods, and mapping tech, has increased.
In March, Tencent became the second-largest shareholder of Xinteng Shuzhi Network Technology Company Limited, a firm active in numerous businesses, including animal feed, pig breeding, dairy, meat processing, and distribution.
Meanwhile, Shenzhen-based artificial meat startup Starfield closed an undisclosed financing round from US-based New Crop Capital, an early investor in protein-substitute company Beyond Meat.
Rounding out a busy March for investment in the food space, Meituan led a Series B round in agricultural product distributor Wangjiahuan, which counts over 20,000 corporate and institutional clients ranging from schools and hospitals to restaurants and supermarkets.
Along the e-commerce supply chain, SF Express’s map service subsidiary SFMap closed a Series A round on March 27 worth RMB 100 million (USD 14 million). SFMap specializes in high-definition mapping powered by AI technology to enhance smart supply chain management and delivery logistics.
Additionally, B2C export e-commerce company Orderplus raised a RMB 100 million (USD 14 million) Series B investment round to expand into new markets. The firm partnerships with Chinese manufacturers and sells products abroad under many different brands, with main target markets including the United States and Europe.
During the outbreak period, Chinese companies working on frontier technologies including autonomous driving, enterprise AI, and space exploration managed to close sizeable investments.
First, Mahayoshi Son’s SoftBank is said to be nearing another USD 300 million investment in Didi Chuxing autonomous driving subsidiary, while Toyota led a financing round for Guangzhou-based Pony.ai to the tune of USD 400 million. Pony.ai, one of the leading autonomous driving startups in China despite being founded in just December 2016, now boasts a valuation of over USD 3 billion.
On the other hand, AI startup Laiye raised RMB 296 million (USD 42 million) in a Series C round closed in late February. The company uses AI to develops intelligent robots and other assistant products which have been adopted by various companies including travel platform Ctrip and on-demand service provider Meituan.
A maverick of China’s up and coming private aerospace sector, Beijing-based MinoSpace raised RMB 100 million (USD 14 million) in a Series A round in early March. More than 141 commercial aerospace companies have been registered in China by the end of 2018, crowding the sector. However, MinoSpace already launched four satellites into orbit in 2019, and will use the newly raised capital to finance the development of larger satellites.
The COVID-19 pandemic has accelerated the digitization of many traditionally offline businesses, while increased demand for robotic solutions, autonomous driving, and advanced supply chain technology indicates a shift towards an economy that delivers efficiency without the requirement of human to human contact. In addition, for industries like healthcare and education, the popularization of online solutions democratizes accessibility in these vital sectors, which have been primarily concentrated in China’s urban centers.
Due to the size of the Chinese market, scaling these digital platforms and services can be capital intensive for companies, while venture capital activity in these sectors remains crucial to the health of the startup ecosystem.