Sequoia Capital China – Product Management Confabulation

August 19, 2022

Safeheron secures $7M to make private keys safer for crypto wallets

Crypto enthusiasts promise to build a decentralized money system that allows people to freely trade without any intermediary intervention. It’s a rosy picture, but recent events of security vulnerability indicate that the decentralized world might not be working as well as the believers envision yet.

That’s why entrepreneurs, infused with venture capital, are racing to make crypto applications more secure. One of them is Singapore-based Safeheron, which recently raised $7 million in a pre-Series A funding round.

Safeheron’s goal is to make private keys safer. Private keys, critical to decentralized crypto apps, let individuals take control over their digital assets through self-custody wallets rather than leaving control to a centralized institution.

When users make a transfer from their self-custody wallet, they need to sign off on the transaction with those passphrases. Users basically become their own banks.

This arrangement comes with risks though. If hackers get hold of certain secret codes and drain the corresponding wallets, users have no way to recover their funds in the absence of a centralized party that is shouldering responsibilities.

Safeheron’s solution to buttress the security of private keys takes cues from the multi-party computation (MPC) concept, which was first introduced by a Turing Award-winning computer scientist. In the context of digital assets, MPC works by distributing the signing process between multiple computers, in contrast to the conventional way of relying on one private key to approve transactions.

Bruce Wang, chief technology officer at Safeheron, gave this analogy: “Say you have a safe. Instead of using one single original key, we are using multiple keys to open it.”

Other startups are also using MPC to enable distributed signing of crypto transactions, but Wang pointed to the fact that Safeheron is open-sourced, which gives its clients more transparency into its source codes.

“Being open-sourced is key to building trust among users,” said Yu Chen, a partner at Yunqi Partners, which co-led Safeheron’s latest round with Web3Vision.

Like several other top venture capital firms that focus on China, Yunqi is allocating capital to backing web3 projects that are built by Chinese talent and aimed at the global market.

Other investors in the round include PrimeBlock Ventures, M77 Ventures, ShataCapital, Kryptos, Antalpha Ventures, Waterdrip Capital, 7 O’clock Capital, Misa Zhu, founder of AR glasses maker Rokid, and Fan Zhang, a former co-founder of Sequoia Capital China.

Since its product launch in October, Safeheron has powered over 20 clients, which altogether have more than $100 million in cryptocurrencies under custody and have facilitated more than $4 billion worth of transactions using Safeheron’s wallet-as-a-service, according to Wang.

The young startup just onboarded a heavyweight customer, the popular Ethereum-based wallet MetaMask, which had amassed over 30 million monthly active users as of March. By adding Safeheron’s MPC capabilities, MetaMask can allow users to sign transactions using multiple devices or applications instead of just one.

Like many Singapore-based web3 entrepreneurs, Wang and his co-founders are veterans of China’s tech industry. While China has outlawed crypto trading to prevent financial speculation, the government has been supporting research efforts into the underlying blockchain technology, Yunqi’s Chen noted.

“China is working on its own digital currency, which could also make use of technologies like MPC in the future,” Wang suggested.

The sad state of crypto custody

August 16, 2022

SoftBank, Sequoia China back this ERP startup enabling China’s online exporters

Thanks to cross-border e-commerce platforms, China continues to be a major exporter of consumer goods for the world in the online shopping age. It’s not just marketplaces like Amazon and AliExpress that are enabling Chinese businesses to sell abroad. Behind the scene, a group of startups are making the software that allows exporters to more easily figure out what to sell and how to sell.

Dianxiaomi, roughly translated as ‘shop assistant’, is one of these ecommerce SaaS providers. The company just secured $110 million in a Series D funding round led by SoftBank Vision Fund II and Sequoia Capital China. Other prominent investors, including Tiger Global Management, GGV Capital, and Huaxing Growth Capital, also participated.

The financing lifts the company’s total investment to $210 million in 2022 alone.

Dianxiaomi is strategically located in Shenzhen, the capital of export-oriented ecommerce activity in China. The city that’s home to Huawei, Tencent, and DJI is also known to house the most Amazon sellers in the world.

Dianxiaomi started out with a convenient tool that allowed sellers to list their products already sold on Taobao, Alibaba’s marketplace for Chinese consumers, on Wish with “one click”, said its founder and CEO Du Jianyin, a former R&D engineer at Baidu, in an interview.

From there, Dianxiaomi went on to create a suite of enterprise resource planning (ERP) software for Chinese vendors on Wish, Amazon, eBay, AliExpress, Shopee, Lazada and the like. The target users are small and medium-sized sellers with 5,000 orders per day or less, the company told TechCrunch.

The SaaS provider itself is expanding overseas as well. It’s launched localized ERP products for sellers in Southeast Asia and Latin America, respectively. Globally, it claims to be serving 1.5 million users and has partnered with some 50 ecommerce platforms. In Southeast Asia, it has amassed 430,000 users that are selling within the booming region.

The company plans to open offices in Indonesia, Malaysia, and the U.K., where it looks to build a team of 20-100 staff to carry out customer service, operations, and other tasks in each country.

Landing in Southeast Asia is an obvious choice for many Chinese entrepreneurs, who see similar opportunities in the region as they did in their home market a decade ago.

“At its rapid growth rate, [Southeast Asia] is a bit like China from ten years ago. Second, the region is culturally similar with a big ethnically Chinese population, who can help promote the products. And third, orders from Southeast Asia have been growing at over 100% a year,” the CEO noted in the interview.

The financing for Dianxiaomi is one of the few deals that SoftBank has sealed this year in China, which for long was a major destination for the investment powerhouse. But amid a slowing economy and regulatory uncertainties, the company said last year that it would take a more “cautious” approach to backing Chinese startups.

In January, SoftBank and Sequoia Capital China injected funding into a similar venture called Shoplazza, a Canada- and Shenzhen-based company that powers direct-to-consumer brands with online store management tools.

Prime today, gone tomorrow: Chinese products get pulled from Amazon

July 25, 2022

BAI Capital targets China’s globalizing startups with fresh $700M fund

BAI Capital, the storied China-focused venture investment firm that was formerly known as Bertelsmann Asia Investments, has raised $700 million to back Chinese companies that are part of the country’s structural reform as well as those expanding overseas.

The announcement follows on the heels of the closing of several other big-ticket funds, quelling speculation that foreign capital for Chinese tech is drying up amid a slowing economy. Sequoia Capital China recently snagged $7 billion to bet on Chinese tech companies at all stages. Qiming Ventures raised $3.2 billion. And IDG Capital banked $900 million.

BAI Capital was founded in 2008 as an investment arm of German media mogul Bertelsmann and has surged to become one of the top venture players in China with a portfolio of over 200 tech companies. Its notable investments include electric vehicle upstart Nio, Southeast Asia’s popular livestreaming app Bigo, and China’s shared bike pioneer Mobike, which was acquired by Meituan.

The latest close marks the first time that BAI Capital has brought in external limited partners, including sovereign wealth funds, large insurance companies, internet giants, funds of funds, on top of capital from its parent Bertelsmann.

The new fund, according to BAI’s announcement, focuses on helping Chinese companies from retail, fintech, content, media, as well as the red-hot areas of web3 and metaverse that are expanding globally. BAI is setting up new offices in Singapore and Berlin.

At the same time, the fund will also look for domestic opportunities in deep technologies like renewable energy, autonomous driving, and software-driven industrial upgrade solutions.

Global expansion is no small feat for any startup, not to mention Chinese businesses that are at risk of getting snarled in rising geopolitical tensions. BAI Capital’s founding partner Annabelle Yu has this to say in a statement:

“BAI Capital will continue to leverage Bertelsmann’s enormous global network in media, education, and service, especially its deep influence in Europe, and join hands with more limited partners to play to BAI’s unique advantage. Against an increasingly complicated political and economic environment, we will do our best to serve entrepreneurs with global ambitions and help them achieve success amid international competition and cooperation.”

Sequoia Capital China raises $9B amid cooling tech sector

July 21, 2022

Luminar to invest in Geely-affiliated Ecarx, eyes China market

Luminar, the Florida-based lidar company that went public via SPAC in 2020, has formed a close alliance with an auto behemoth in China. It’s making a strategic investment of an undisclosed amount in Ecarx, an auto tech startup co-founded by Eric Li, founder of China’s largest private automaker Geely, Ecarx said on Thursday.

The funding will be part of the pair’s wider collaboration on automotive-grade technologies, which aims to “enable advanced safety and automated driving capabilities in the production of consumer vehicles and commercial trucks,” a plan that Luminar unveiled in May.

Luminar’s sensing technology can potentially reach millions of vehicles through the Geely/Ecarx auto empire. Ecarx is building a comprehensive platform for the future of cars, focusing on the likes of auto chips and smart vehicles. Its customers include, unsurprisingly, Geely-owned brands like Lotus and Volvo.

Shen Ziyu, Ecarx’s other co-founder and a former General Motors executive, told Reuters in March 2021 that the company had already supplied 2.5 million vehicles.

The lidar industry in China is enjoying a boom as the country’s electric car makers — which themselves have benefited from government support for renewable energy — woo picky consumers with advanced driving technology, in-car entertainment, other novel auto features.

Luminar’s tie-up with Ecarx will be critical in helping it confront domestic lidar players, from BYD-backed Robosense and Bosch-backed Hesai to Temasek-funded Innovusion and Livox, which sprang out of DJI.

“The collaboration will help Luminar to accelerate deployment of its industry-leading long-range lidar and software in the [Chinese] market and beyond through Ecar’s deep connection with Geely and the Geely ecosystem, comprising some of the world’s most reputable automotive brands,” Luminar said in May.

The same month, the American lidar maker said it had brought on Jackie Chen, a Harman veteran, to head its China business.

Ecarx’s empire is ever expanding. On Thursday, the company announced another funding boost along with the Luminar partnership. Siengine, an automotive system on chip maker it co-founded with Arm China, has completed a Series A funding round of nearly 1 billion yuan or $15 million. Sequoia Capital China led the round, with Bosch’s China venture capital arm Boyuan Capital and others participating.

Earlier this month, Li and Shen bought Chinese smartphone maker Meizu, once a Xiaomi archrival, to work towards a future of “multi-device, scenario-agnostic, and immersive” digital experience, which will no doubt include system integration between vehicles and handsets.

In May, Ecarx announced plans to go public through a merger with a blank-check firm in a $3.8 billion deal.

China’s robotaxis charged ahead in 2021

July 18, 2022

ByteDance-backed warehouse robotics startup Syrius picks up $7M

Syrius Robotics, a Chinese startup that makes autonomous robots for warehouses, just secured 50 million yuan ($7.4 million) in a Series B funding round, lifting its total raised so far to $40 million.

The four-year-old company specializes in what’s called automated mobile robots (AMR), in contrast to some of its competitors that offer automated guided vehicles (AGV). In essence, AMRs are robots that can plan routes and react to circumstances in real time and are considered more advanced than AGVs, which follow pre-determined paths.

Think of Syrius’s robots as mini autonomous driving bots that can maneuver narrow warehouse aisles and lift and put away parcels. The company sees itself more as a software than hardware firm, with proprietary algorithms that tell robots how to move indoors.

Its latest round of funding is exclusively backed by Harvest Capital, a Chinese investment firm focused on technologies applied to traditional industries. Syrius raised capital in dollars — $20 million of it — as part of its Series B back in August, with TikTok parent ByteDance as a lead investor. The startup is also funded by Sequoia Capital China.

China’s warehouse robots have become investors’ darlings in the past two years, during which the COVID-19 pandemic and its control measures have stranded millions of workers. Shenzhen-based Hai Robotics, which makes casing handling robots, announced banking $200 million in September.

Like many robotics startups from China, Syrius has ventured abroad and derives half of its revenues from overseas markets. In Japan, where robots are addressing the labor shortage issue, it runs a subsidiary and has served trading house giant Mitsubishi Corporation and logistics firm Kantsu Co. The startup also has clients in Singapore and South Korea, and is looking to expand operations in Southeast Asia, North America, and Europe.

Syrius appears to have the right founding team for its line of business. Its co-founder and CEO Jiang Chao was a leader of Project Tango, the mobile augmented reality project that Google initiated and later shut down; the other co-founder Luo Xuan worked on AMRs as a product management director at Alibaba Robotics, which should have given him much insight into the business considerations of Chinese e-commerce companies when it comes to investing in robots.

Based in Shenzhen and Beijing, Syrius employs 200 people and is profitable, it told TechCrunch, though the firm declined to disclose its revenues. Its source of income comes from selling robots, offering monthly robots-as-a-service subscriptions, and also making its Android-based operating system available to third-party robot makers, which allows the startup to expand beyond its familiar turf of e-commerce.

China roundup: Keep down internet upstarts, cultivate hard tech

July 5, 2022

Raising big money in a sour market

One easy complaint to make when it comes to venture capital is that it’s mostly not. Venture-ous, that is. It’s definitely capital.

During the last decade, for example, a huge portion of venture capital investment went into software-as-a -ervice companies, some of the least risky private technology companies out there. Sure, some fail, but the SaaS model tends to be durable, and its performance trackable to the point that anyone with a pencil can model out future growth and come to a valuation conclusion.

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Where are the venturesome gambles on space factories, superfoods and the like? Sorry — you got DocuSign instead.

But not all funds are timid, even if we find the present lack of material wagers on mega-projects disappointing. No, some funds are bucking the downturn by raising new, huge venture vehicles to invest in markets that don’t appear healthy from an outsider’s perspective. In a sense, this is actual venture capital activity, as the investors are taking their money on an adventure into parts — and market conditions — unknown.

That makes recent funds from Sequoia Capital China and a16z all the more interesting to talk about. And why their returns could be all the sweeter.

Zagging while others zig

Briefly, the news: Sequoia Capital China is raising a huge new fund. That means that the Sequoia crew is gearing up to expend a bank’s worth of cash in the country. Welcome news, assuredly, to the beleaguered Chinese technology ecosystem that has seen slowing growth and increasing layoffs. But why now? One reason could be that the Chinese tech market is just that: beleaguered.

Next up: a16z’s massive new crypto fund. Worth some $4.5 billion, it’s the company’s biggest yet, and, like the Sequoia fund, it could represent a material portion of the coming venture funding for its chosen market, namely web3.

As China’s venture capital market and technology industry suffer and the crypto industry endures rapid climate change from NFT Summer to Meltdown Winter, investors with a thesis about both areas of investment are raising new, huge funds.

Why do the opposite of the market? Because that’s — potentially, at least — where the money is.

June 14, 2022

Meta Pharmaceuticals lands $15M to make autoimmune drugs with AI, new immuno-metabolism tech

Biotech startup Meta Pharmaceuticals sets itself an ambitious goal as it secures its initial investment. The Shenzhen-based company, which sets out to develop treatments for autoimmune diseases with the help of artificial intelligence, has raised $15 million from its seed and pre-A rounds.

There is no lack of investor interest in companies applying machine learning to small-molecule drug discovery. New York-based Immunai picked up $215 million last year to create an “atlas” of the human immune system. Insilico from Hong Kong recently landed $60 million despite undergoing what the CEO dubbed a “biotech winter.”

Meta’s technology falls under the emerging field of immuno-metabolism, which studies the relationship between the historically distinct disciplines of immunology and metabolism. Drugs created using this new method are purported to regulate the immune system more effectively with fewer side effects. Originally from southwestern China, Meta’s co-founder and CEO Xu Ke graduated from Weill Cornell Medicine and conducted research at Memorial Sloan Kettering Cancer Center, one of the top cancer hospitals in the US.

Meta is merely ten months old but is built off the back of an industry incumbent. It’s a project “incubated” by AI-assisted drug discovery and development upstart Xtalpi, which was founded in 2014 and has raised nearly $800 million in funding to date from the likes of Tencent, Softbank Vision Fund, and Sequoia Capital China.

Investors from Meta’s financing rounds included Xtalpi itself, Forcefield Ventures, IMO Venture, and Tiantu Capital.

Meta and Xtalpi clearly play complementary roles to each other by working to translate new drug targets into patents and marketable products. Meta’s proposed therapeutic targets will first go to XtalPi for drug discovery or de novo drug design, which refers to computer-assisted molecular design. Once a pre-clinical candidate is identified, Meta may take over to carry out subsequent development, investigational new drug (IND) filing, and clinical trials, an Xtalpi spokesperson told TechCrunch.

Meta claims to have already discovered a series of metabolic protease targets after sifting through thousands of proteases on its AI-enabled target discovery platform.

The startup is using public data for the initial training of its target discovery technology and plans to collect samples and omics data from patients and healthy donors in collaboration with hospitals in China down the road, Xu explained to TechCrunch.

“Our pipeline has the potential to be used for treating a wide range of autoimmune problems, cancer, and age-associated diseases,” Xu said when asked about competition. “It’s still too early to share the specifics just yet or limit ourselves to one or two existing drugs and indications.”

Headquartered inside an innovation free-trade zone in Shenzhen bordering Hong Kong, Meta plans to market its drugs globally. In its infancy, the zone is one of many government-led initiatives to promote technological collaboration between Shenzhen and Hong Kong. Support for startups comes in various forms and in Meta’s case, it means tax exemption on imported lab equipment. The area is also home to Xtalpi and one of China’s largest autonomous driving startups Deeproute.ai.

XtalPi lands massive $319M SoftBank-led round C to continue its high-tech drug discovery

March 29, 2022

AR glasses maker Nreal nabs $200M funding in 12 months

China’s augmented reality startup Nreal is on a roll. The company, which hopes to bring AR to the masses by making bright-color, lightweight smart glasses, has just received $60 million in a Series C extension round, bringing its total funding in the last 12 months to a handsome $200 million.

The new investment is led by Alibaba, which has historically been a more hands-on but less active corporate investor than its archrival Tencent. The Chinese e-commerce giant has a reputation for acquiring controlling stakes in startups that can potentially be a complementary piece to its giant retail ecosystem.

Alibaba’s investment in Nreal, however, is purely financial. In theory, the two could have generated strategic synergies. One could easily imagine Alibaba hooking Nreal up with its gaming and video streaming units, or even having it develop smart glasses for its millions of food delivery riders — who recently began wearing voice-controlled helmets. But with the onset of China’s antitrust crackdown, the country’s tech behemoths have no doubt become more cautious with any investment that can be perceived as encouraging unfair competition.

Plus, Nreal, which was founded by Magic Leap veteran Chi Xu, already has a club of notable partners. Some of its strategic investors are Chinese electric vehicle upstart Nio, short video app Kuaishou — TikTok’s nemesis in China and Baidu-backed video streaming platform iQIYI. Qualcomm is not an investor but supplies cutting-edge Snapdragon processors to the hardware maker and works closely with it to build a developer ecosystem. Nreal is also backed by renowned institutional investors, including Sequoia China, Jack Ma’s Yunfeng Capital, Xiaomi founder Lei Jun’s Shunwei Capital, as well as private equity giants Hillhouse, CPE and CICC Capital.

Despite being China-based, Nreal hasn’t targeted its home market but has instead first tested the consumer appetite in six overseas countries, including Japan and the U.S. The smart glasses maker has relied on partnering with local carriers to tout its devices. In the U.S., for example, Verizon is helping to sell Nreal’s mixed reality glasses Light, which has a relatively affordable price tag of $600 and can be plugged into a 5G-compatible Android device.

With the proceeds from its latest round, Nreal will finally make a foray into China this year. The funding will also be spent on R&D and growing its ecosystem of content and apps, which will be critical to user adoption.

China watches and learns from the US in AR/VR competition

February 8, 2022

3D content collaboration startup Taichi Graphics closes $50M Series A

For years, open-source software in China was only attracting developers and was poorly understood by returns-seeking investors. But they are finally having a moment like their Western counterparts.

The latest open source project to get funded in China is Taichi Graphics, a 10-month old startup that aims to make 3D content creation easier. It operates Taitopia, a cloud-based platform for 3D graphics creation, sharing and remote collaboration, sort of like “Figma for 3D content” in its own words. Undergirding the platform is its open-source programming language Taichi, which offers a high-performance computation on spatially sparse data structures like those from 3D visual graphics.

Taichi Graphics closed a Series A investment at $50 million with lead investors Source Code Capital, GGV Capital and BAI Capital. Other participants in the round included returning investor Sequoia Capital China. TechCrunch has reached out to ask about their operation and valuation.

Taichi Graphics’ 3D content platform Taitopia allows creators to collaborate remotely. / Image: screenshot from Taichi Graphics demo video

The nascent startup joins a handful of open-source software companies founded by Chinese returnees who have studied or worked in the U.S. Rather than focusing on their home market, these founders take advantage of their experience in both worlds and build products tailored to global users at the outset. Unstructured data analytics startup Zilliz, which raised a $43 million Series B round in 2020, was founded by an Oracle veteran and had plans to operate from both China and the U.S.

Taichi Graphics itself was started by Yuanming Hu, a computer science Ph.D. from MIT, and Ye Kuang, a Google veteran. It’s gradually drumming up interest in the global developer community. The project was starred 17,700 times on GitHub as of 2021, up from 12,700 a year before, according to the company. 152 developers from a dozen countries had contributed to Taichi Graphics by 2021.

In a paper introducing Taichi in 2019, Hu and his co-authors explained why a domain-specific language was needed for 3D content computing:

3D visual computing data are often spatially sparse. To exploit such sparsity, people have developed hierarchical sparse data structures, such as multi-level sparse voxel grids, particles, and 3D hash tables. However, developing and using these high-performance sparse data structures is challenging, due to their intrinsic complexity and overhead. We propose Taichi, a new data-oriented programming language for efficiently authoring, accessing, and maintaining such data structures.

Taishi Graphics’ tools have found use cases in physical simulation, augmented reality, artificial intelligence, robotics, and special visual effects in films and games.

With the new proceeds, the startup plans to strengthen the influence of its parallel programming language and build tools targeting digital content creators. It will also continue recruiting roles in R&D, product development, monetization, strategy and design.

January 27, 2022

European, North American edtech startups see funding triple in 2021

Rhys Spence Contributor

Rhys Spence is head of research at Brighteye Ventures, a European edtech-focused fund, where he works with portfolio companies to help address priorities, with a focus on internationalization and HR.

A year of records

Firstly, European edtech VC investments tripled to $2.5 billion in 2021 from $790 million in 2020, compared to global funding growth of 34% to $20.1 billion in 2021 from $15 billion in 2020. The continent’s ecosystem is becoming more robust as well — the number of edtech deals in Europe accounted for 31% of all deals in the sector, up from 21% in 2019.

Edtech funding in Europe triped to reach $2.5 billion by late 2021.

Image Credits: Brighteye Ventures

This growth wasn’t restricted to the usual geographies: Six European markets raised more than $100 million in 2021, compared to only one in 2020. Most of these markets are in Northern Europe, so we hope, and expect, to see some major players breaking out in Southern Europe in 2022 (particularly in Spain, Portugal and Italy).