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China's salvos of regulation aimed at its tech industry have caught SoftBank Group in the crossfire, deflating the value of stocks in its Vision Fund in a trend that raises questions for its investment strategy.
US-listed Chinese tech stocks are among the most visible benchmarks for billionaire SoftBank founder and CEO Masayoshi Son's stock-picking prowess. Their performance over the past few weeks shows the same grim trajectory.
Top Chinese ride-hailing company Didi Global, which made its New York Stock Exchange in June, sank 37% between the end of that month and Wednesday's close. Logistics platform Full Truck Alliance, another Vision Fund holding, tumbled more than 50%. E-commerce leader Alibaba Group Holding, in which SoftBank invests directly, slumped 14%.
All three companies have come under Chinese government scrutiny as Beijing clamps down on US listings, which are key to SoftBank's exit strategy for tech unicorns. SoftBank Group's own Tokyo-listed shares fell 10% over the same period.
Didi and Full Truck have both come under investigation by regulators, while Alibaba has been hit by a wide-ranging tightening of regulations that has market players worried. The Vision Fund may have billions of dollars in unrealized losses on its Didi stake, observers say.
Reports on Thursday said that SoftBank plans to sell 45 million shares in US ride-hailer Uber Technologies, worth about USD 2.1 billion based on Wednesday's close. A source familiar with the situation said the decision was not related to Didi's troubles, and SoftBank sold off 38 million Uber shares in January. But some observers speculate SoftBank is looking for ways to offset China-linked losses.
China is an important market for the Japanese tech group. After SoftBank first invested in Alibaba in 2000, the value of its stake swelled to make up more than half its portfolio at one point. While this share declined to 43% at the end of this past March, the stake is still worth around USD 115 billion.
The Vision Fund, which launched in 2017, has targeted leading Chinese startups. Unlisted companies in Vision Fund portfolios include ByteDance, operator of the popular TikTok short-video platform.
While listings in general tend to make companies much more valuable, offerings in the US, which has access to a broader investor base than China, typically provide a bigger boost. But the prospect of <a href="https://asia.nikkei.com/Business/Markets/Crackdown-on-US-listings-Will-China-close-1.6tn-VIE-loophole" target="_blank" rel="noopener noreferrer">closer oversight by Beijing</a> has clouded the outlook for American listings by Chinese businesses.
SoftBank's financial strategy could be affected as well. One key indicator for the company is its loan-to-value ratio, or net interest-bearing debt divided by the value of its shareholdings. SoftBank aims to keep this below 25% in normal times and no more than 35% in times of market stress.
The figure was still low at the end of March, at 12%, but falling share prices push the ratio higher. SoftBank has borrowed against its Alibaba shares, and a decline in the value of this collateral could affect its access to capital.
SoftBank chief financial officer Yoshimitsu Goto indicated in an <a title="" href="https://asia.nikkei.com/Business/SoftBank2/SoftBank-s-investment-strategy-in-China-unchanged-CFO" target="_blank" rel="noopener noreferrer">online seminar</a> hosted by Nikkei Financial this month that the company has no intention of changing its investment strategy for the time being.
"The way of thinking about China is, in a nutshell, that we must overcome such country risks," Goto said.
<blockquote>
<h3>Read this: <a href="https://kr-asia.com/softbanks-investment-strategy-in-china-unchanged-cfo" target="_blank" rel="noopener noreferrer">SoftBank's investment strategy in China unchanged, CFO says</a></h3>
</blockquote>
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This article first appeared on <a href="https://asia.nikkei.com/Business/SoftBank2/SoftBank-confronts-renewed-China-risk-as-Didi-backfires" target="_blank" rel="nofollow noopener noreferrer" data-type="external">Nikkei Asia.</a> It’s republished here as part of 36Kr’s ongoing <a href="https://www.kr-asia.com/nikkei-teams-up-with-36kr-in-asia-tech-news-coverage/" target="_blank" rel="nofollow noopener noreferrer" data-type="external">partnership with Nikkei</a>.

SoftBank confronts renewed China risk as Didi backfires

Didi

Softbank

Investors

Private Equity

Investment

Video technology service provider Baijiayun raised hundreds of millions of yuan in a Series C financing round from VMCapital that pushed its valuation to more than RMB 3 billion (USD 465 million). The new capital will go towards R&amp;D for video and AI applications, advancing a diversified business strategy to expand Baijiayun’s product offerings, and investing in promising complementary startups.
Founded in 2017, Baijiayun provides its teleconferencing technology to more than 15,000 enterprise partners from diverse sectors. With customers like BMW, Huawei, China Mobile, and VIPKid, Baijiayun’s technology is utilized by more than 520 million end users.
Baijiayun’s solutions are flexible and allow real-time audio and video communication. They support interactive small group conferences as well as large classes with up to 100,000 participants. In addition, the company offers a suite of management and infrastructure software to simplify operations based on clients’ needs using AI and machine learning. For example, Baijiayun’s video technology can be integrated with computer vision technology to help railway maintenance operators in Shanghai detect water damage to infrastructure.
“The development of AI and big data have given cloud video technology services the opportunity to be applied in a wider range of application scenarios, while providing a more customized experience,” said Zhao Zheng, managing partner and general manager of VMCapital. “We feel Baijiayun’s focus on R&amp;D has enabled it to provide excellent products and services to customers,” Zhao added.
In recent years, the company’s business has been growing due to demand from customers in industries including e-commerce livestreaming, video game livestreaming, and telemedicine. The development of these verticals has boosted the potential market for Baijiayun’s business. “In 2021, Baijiayun’s revenue will grow by nearly 100% compared to last year, and our company has remained profitable,” said founder and CEO Li Gangjiang.
With offices and R&amp;D centers in over a dozen Chinese cities, Baijiayun has more than doubled its headcount since last year, going from 200 to 500 employees. The company has an aggressive acquisition strategy. It has acquired numerous startups in the intelligent hardware and educational software tracks. “We want to build the Chinese version of Zoom and Twilio," Li said.
<blockquote>
<h3>Read this: <a href="https://kr-asia.com/tencent-meeting-unveils-custom-solutions-for-hardware-partners-at-infocomm-china-2021" target="_blank" rel="noopener noreferrer">Tencent Meeting unveils custom solutions for hardware partners at InfoComm China 2021</a></h3>
</blockquote>
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KrASIA Connection features translated and adapted content published by 36Kr. This <a href="https://36kr.com/p/1329884111296516" target="_blank" rel="noopener noreferrer">article</a> was originally written by Peng Xiaoqiu for 36Kr.

Video call startup Baijiayun’s valuation hits RMB 3 billion following Series C financing from VMCapital

Enterprise Services

Live Streaming

Video

Israeli cybersecurity startup Riskified completed an IPO on the New York Stock Exchange, pushing the fraud prevention company's valuation over USD 4.3 billion at its peak. Riskified's share price soared on its debut from an offer price of USD 21 to USD 26 as of market close on Thursday.
Founded in 2012, the company uses machine learning and big data processing to detect fraudulent e-commerce transactions. It works with established companies like Wayfair, Finish Line, Prada, Peloton, AirEuropa, and Steve Madden. Although the bulk of Riskified's business currently comes from clients in the United States and Europe, its presence in Asia is growing rapidly. Between 2018 and 2020, Riskified's billings in the Asia Pacific region grew at a compound annual growth rate of 160%, according to the company's <a href="https://www.sec.gov/Archives/edgar/data/0001851112/000162828021013329/riskifiedf-1.htm" target="_blank" rel="noopener noreferrer">prospectus</a>.
<figure id="attachment_128482" aria-describedby="caption-attachment-128482" style="width: 946px" class="wp-caption aligncenter"><img class=" wp-image-128482" src="https://console.kr-asia.com/wp-content/uploads/2021/07/NZ6_5932-300x200.jpg" alt="" width="946" height="630" srcset="https://console.kr-asia.com/wp-content/uploads/2021/07/NZ6_5932-300x200.jpg 300w, https://console.kr-asia.com/wp-content/uploads/2021/07/NZ6_5932-1024x681.jpg 1024w, https://console.kr-asia.com/wp-content/uploads/2021/07/NZ6_5932-768x511.jpg 768w, https://console.kr-asia.com/wp-content/uploads/2021/07/NZ6_5932-1536x1022.jpg 1536w, https://console.kr-asia.com/wp-content/uploads/2021/07/NZ6_5932-2048x1363.jpg 2048w" sizes="(max-width: 946px) 100vw, 946px" /><figcaption id="caption-attachment-128482" class="wp-caption-text">Led by CEO Eido Gal (middle), Riskified raised USD 367.5 million in an IPO on the NYSE. Photo courtesy of Riskified.</figcaption></figure>
In China, Riskified helps merchants detect fraud in cross-border e-commerce, as advanced fraud detection for domestic transactions is typically not necessary due to Chinese apps' requirement for users to register with real-name verification. One of its main clients includes travel booking platform Trip.com. "In China, we've seen amazing demand from Chinese merchants selling overseas, and our core focus is to help them accept international credit cards and avoid fraud when conducting cross-border transactions. We've really seen this take off in the last two years," said Riskified's CEO and co-founder Eido Gal.
The company opened an office in Shanghai in April 2020 and is growing its presence throughout Asia in places like Singapore and Australia. "Overall, our system is very scalable across payments and geographies," Gal explained, as the company is opening additional offices in London, Mexico, and Brazil.
Riskified's ambitions are global, with an eye on Southeast Asia's rapidly developing e-commerce ecosystem shaped by companies like Lazada, Shopee, and Tokopedia. "Southeast Asia is evolving so quickly. We're seeing new forms of payments with digital wallets and cash on delivery. It's just really exciting to see the growth trajectory, even if it's starting at a relatively lower overall base," Gal said.
<blockquote>
<h3>Read this: <a href="https://kr-asia.com/chinese-seniors-flock-to-shop-on-short-video-apps" target="_blank" rel="noopener noreferrer">Chinese seniors flock to shop on short-video apps</a></h3>
</blockquote>
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Riskified's share price soars on IPO day, firm targets Asia in global expansion

Western Tech + (Japan and Korea)

Security

Keyouyuan, an enterprise resource planning (ERP) SaaS startup, secured tens of millions of yuan in an angel investment from Hangzhou Raycloud. The capital will go towards upgrading its product systems and recruiting top technical talent.
Founded in 2018 by former Alibaba employees, Keyouyun provides one-stop export services to cross-border e-commerce merchants mainly located in China and Southeast Asia. Its ERP product is the most popular in Southeast Asia in terms of user count. Rising demand for cross-border e-commerce as a result of the pandemic has led to increased interest in Keyouyun’s software tools.
The company’s software covers customer and inventory management, order processing, customer service, and logistics tracking. Cross-border e-commerce is complex, so small and medium-sized merchants rely heavily on standardized operation tools like Keyouyun’s software.
“Most cross-border e-commerce sellers are targeting global markets, introducing the complexity of multiple time zones, exchange rates, and language barriers. It is difficult for merchants to adopt and understand multiple platforms, so most sellers, even smaller ones, are willing to pay for a one-stop solution,” said founder Chen Chang, who brings extensive experience in cross-border e-commerce from his time at Anker Innovation.
Currently, Keyouyun has served more than 200,000 merchants across more than 20 global e-commerce platforms, including Shopee, Lazada, Amazon, eBay, and Shopify. The company offers a free version of its software and a premium paid option priced at around RMB 100, or USD 15.50, per month.
“Hangzhou Raycloud is optimistic about the cross-border e-commerce SaaS market. With the pandemic’s acceleration of cross-border e-commerce, sellers have more demand for software systems to improve their operations. We look forward to strengthening our cooperation with Keyouyun to provide better services to cross-border sellers,” said Tan Guanghua, chairman and CEO of Hangzhou Raycloud.
<blockquote>
<h3>Read this: <a href="https://kr-asia.com/hefeis-risky-investment-strategy-paid-off-handsomely-heres-how-the-city-did-it" target="_blank" rel="noopener noreferrer">Hefei’s risky investment strategy paid off handsomely, here’s how the city did it</a></h3>
</blockquote>
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KrASIA Connection features translated and adapted content published by 36Kr. This <a href="https://36kr.com/p/1331409290598408" target="_blank" rel="noopener noreferrer">article</a> was originally written by Wang Yutong for 36Kr.

Cross-border SaaS provider Keyouyun bags exclusive angel investment from Hangzhou Raycloud

… workers, had to shut down factories, and went bankrupt. All failed to develop production capabilities after bagging financing from Jiangsu’s government. Ventures in semiconductor firms like Nanjing Dekema, Chengdu Gexin, Shanxi Kuntong, and <a href="https://kr-asia.com/out-of-bargaining-chips-inside-hsmcs-billion-dollar-grift" target="_blank" rel="noopener noreferrer">Wuhan Hongxin</a> all ended up in bankruptcy, in at least some cases due to fraud. Billions of dollars were burned.
Hefei’s government has managed risk well. The question is: can this model be duplicated elsewhere?
The answer isn’t an immediate yes. Hefei was able to reach this point only because there were pre-existing conditions that gave it an edge. Even before BOE was brought to the city, Hefei was already one of China’s three major home appliance manufacturing zones. This gave it a head start in infrastructural improvements that were prerequisites for more advanced manufacturers. Hefei’s investments paid off because this factor mingled with its willingness to make bold bets in BOE, Nio, and ChangXin, as well as the government task force that was essential in identifying these enterprises as good fits. The presence of all these elements is what made Hefei unique.
Even so, there are consequences to weather when governments venture into this type of investment scenario. It skews resource distribution toward the picks of officials. A limited number of companies receive tax deductions, low-cost financing, prime land for factories, and infrastructural support. This can be interpreted as a sure-win endorsement that disrupts fair competition.
Yet, that isn’t about to stop Hefei’s government from augmenting its industrial supply chain for even more developments in science and tech. The city’s investment plan for 2021 includes a quantum science and technology park that will host researchers from the China University of Science and Technology, the construction for the second phase of the Chinese Academy of Sciences’ Hefei Institute of Technological Innovation and Engineering, and a frontier research center for earth science and space. It will also invest RMB 77.69 billion in 619 projects in emerging industries.
The officials involved in Hefei’s investments are setting the standard for government-led ventures. It’s a work in progress that already has an impressive track record. Will its next steps pay off?
<blockquote>
<h3>Read this: <a href="https://kr-asia.com/a-letter-from-lei-jun-starting-over-one-last-time" target="_blank" rel="noopener noreferrer">A letter from Lei Jun| Starting over one last time</a></h3>
</blockquote>
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Hefei’s risky investment strategy paid off handsomely, here’s how the city did it

Fabless IoT startup <a href="https://www.wiliot.com/" target="_blank" rel="noreferrer noopener">Wiliot</a> raised USD 200 million in a Series C funding round led by SoftBank Vision Fund 2, the company announced on Wednesday. The company’s previous investors include Amazon, Maersk, Qualcomm Ventures LLC, and Samsung Venture Investment Corp.
Founded in 2016, Wiliot’s vision is to expand the internet of things (IoT) to include everyday products, adding intelligence to plastic crates, pharmaceuticals, packaging, clothes, and other products, connecting them to the internet. The company created a platform built on Wiliot IoT Pixels and the Wiliot Cloud. Wiliot IoT Pixels are tiny, low-cost, self-powered tags that attach to any product or packaging to sense a range of physical and environmental data that is then fed into the Wiliot Cloud, where machine learning algorithms translate data into actionable insights for businesses across a range of industries.
The company says these capabilities can transform the way products—vaccine vials, food, clothes, medicine, and more—are made, distributed, sold, used, reused, and recycled by bringing real-time transparency to the supply chain and providing the ability for brands to understand inventory levels in retail channels.
“This omniscient view of the supply chain built on people’s usage allows a new paradigm called Demand Chain, which promises to slash the required capital that’s non-productively tied up in inventories. Products will be able to self-reorder based on usage, accelerating the adoption of the ‘subscription economy’ as brands transform their business models,” the company said in a statement.
Wiliot’s current applications include food, retail, and healthcare. The company has indicated that it will use the latest round of capital to grow its team and scale its channels for the forthcoming launch of a new product that will offer “next-generation performance.”
“Wiliot has created a vision for the future of AI-enabled IoT, and we are delighted that SoftBank is supporting us in making this future a reality,” said Wiliot CEO Tal Tamir. “IoT is a vision created around things, and our mission at Wiliot is to use cutting-edge hardware, AI-based sensing, and an innovative business model to implement a safer and more transparent world—one in which everything around us helps consumers use them better and helps suppliers avoid waste.”
“By inventing the first hyper-scalable, self-powered computer that uses AI to sense the world, Wiliot is positioned to bring together the digital and physical,” said Yanni Pipilis, a managing partner at SoftBank Investment Advisers. “We have always believed that with IoT and AI, people will live better and healthier lives—where any food or medicine has the ability to understand if it’s safe to use and communicate seamlessly with people. We are pleased to play a part in helping Wiliot dramatically scale the ever-expanding application of IoT globally.”
Wiliot’s HQ and research and development team is based in Israel, with business development teams in California and Germany. The company also has offices in Ukraine, Australia, and Taiwan.
<blockquote>
<h3>Read this: <a href="https://kr-asia.com/softbank-leads-usd-56-4-million-investment-in-sneaker-e-commerce-platform-soda" target="_blank" rel="noopener noreferrer">SoftBank leads USD 56.4 million investment in sneaker e-commerce platform Soda</a></h3>
</blockquote>
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The article was originally published by <a href="https://nocamels.com/2021/07/softbank-200m-round-fabless-iot-startup-wiliot/" target="_blank" rel="nofollow noopener noreferrer" data-type="external">NoCamels</a>, a leading news website covering breakthrough innovation from Israel for a global audience.

SoftBank leads USD 200 million investment round in fabless IoT startup Wiliot

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This article was originally published on <a href="https://www.menabytes.com/swvl-spac/" target="_blank" rel="nofollow noopener noreferrer" data-type="external">MENAbytes</a>.

Ride-sharing startup Swvl is going public via SPAC at a valuation of USD 1.5 billion

Ride-hailing

Mobility

Huawei Technologies will try to prove its embattled smartphone business is still alive despite the US crackdown when the Chinese tech group releases its latest flagship handset on Thursday.
The world's second biggest smartphone maker as recently as last year is slated to introduce its latest P50 smartphone in a Chinese-only, online event, a stark contrast to previous launches. Normally, the company rolls out its P-series handsets in February or March at splashy events in Barcelona or other major European cities to target global consumers.
The launch of P50, however, was delayed as Huawei struggled to secure chips and other vital electronics due to US trade restrictions on the company.
Washington originally blacklisted the company over national security concerns in 2019 and later amended its export control rules to block all unlicensed shipments of chips and components to Huawei, even from non-US suppliers if they used any American technology. The tighter rules blocked Huawei from most key chip suppliers—including Taiwan Semiconductor Manufacturing Co., MediaTek and Qualcomm—and restricted its access to the most advanced chips.
This has forced the company to rely on stockpiled inventories of chips for its recent smartphones.
The US government also banned Huawei's access to Google's Mobile Services, which include popular mobile applications like Gmail, YouTube, and Google Play. This has weighed heavily on Huawei's overseas smartphone performance since May 2019.
Top Huawei executives have acknowledged that Washington's crackdown has seriously impacted the company's smartphone business. The company has been allocating resources for developing HarmonyOS—its own version of Google's Android mobile operating system that is widely used in Samsung, Oppo, and Xiaomi handsets—in hopes of rebuilding a smartphone and internet of things ecosystem free of American technologies.
The Chinese tech giant also aggressively invested in domestic chip companies and is ramping up <a href="https://kr-asia.com/huawei-enlists-army-of-european-talent-for-battle-with-us" target="_blank" rel="noopener noreferrer">overseas hiring</a>, mainly in Europe, in an attempt to maintain its tech prowess, Nikkei Asia reported earlier.
Huawei's market share for smartphones plunged 20% in the period from April to June 2020 to seventh place in the first quarter of this year, when it held only a 4% share, according to Counterpoint Research.
In its home market, Huawei dropped to number six with an 8.3% market share. Honor—Huawei's budget smartphone line that was sold to a consortium in November last year—ranked fifth in China, IDC's preliminary data showed.
"The shipment [of components] to Huawei has been very limited this year. We ship tens of thousands a month rather than millions like in the past," a longtime Huawei supplier told Nikkei. "We now hope Honor can cement its presence and rise in the smartphone market."
According to Isaiah Research, Huawei's smartphone shipments this year could drop to around 40 million units in 2021. Last year, it still shipped 189 million units and ranked third globally, while in 2019 it shipped a record 240.6 million units, putting it second only to Samsung, IDC data showed.
"We think the outlook of Huawei's smartphone business is not so bright," said Eddie Han, an analyst with Isaiah Research. "Instead, Huawei is likely to spend more resources on building software and applications, especially on its HarmonyOS and its ecosystem partners."
"We think Huawei will turn to other non-5G products like notebook computers, TVs, wearables, internet of things, and automotive electronics," Han said.
<blockquote>
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Content incubation platform Ju, a startup that uses blockchain to verify content as authentic intellectual property (IP), raised nearly RMB 10 million, or USD 1.5 million, in an angel round from undisclosed investors.
Positioned as an incubator for original short-video content since its launch in July 2020, Ju hopes that its user base of 400,000 will grow while its 6,000 content creators churn out unique and professional works on the platform. The company employs more than 5,000 scriptwriters supplying creators with a steady stream of content ideas to post on social channels.
Ju mainly disseminates content on Douyin and provides training for creators in categories like social and family life, comedy, entertainment, history, and culture. The company wants to use blockchain to protect its IP and leverage 5G networks to enhance content creation, according to founder Ma Jianjun, who used to work for Tencent and is a serial entrepreneur. So far, Ju generates around RMB 1.5 million (USD 231,000) in monthly revenue, with a profit margin of around 30%.
Going forward, the company will look to add more film production professionals to its platform to enhance the level of its content incubation. As the company grows and the content quality from its creators improves, it wants to attract more brands for partnerships and sponsored content. Ju is currently raising its pre-Series A investment.
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KrASIA Connection features translated and adapted content published by 36Kr. This <a href="https://36kr.com/p/1329885399537920" target="_blank" rel="noopener noreferrer">article</a> was originally written by Lian Ran for 36Kr.

Creator incubator Ju lands angel round, uses blockchain to cultivate internet celebrities

Short Video