Xpeng, an electric vehicle startup run by former Alibaba executive He Xiaopeng, said Monday it has raised around $500 million in a Series C+ round to further develop models tailored to China’s tech-savvy middle-class consumers.
The announcement followed its Series C round of $400 million closed last November. A source told TechCrunch that the company’s valuation at the time had exceeded the 25 billion yuan ($3.57 billion) round raised in August 2018.
The new proceeds bring the five-year-old Chinese startup’s to-date fundings announced to $1.7 billion.
Investors in the latest round include Hong Kong-based private equity firm Aspex Management; the storied American tech hedge fund Coatue Management; China’s top private equity fund Hillhouse Capital; and Sequoia Capital China. The other existing big-name backers are Foxconn, Xiaomi, GGV Capital, Morningside Venture Capital, IDG Capital, and Primavera Capital.
Despite the sizable round, Xpeng is headed for a slew of challenges. Electric vehicle sales in China have shrunk in the wake of reduced government subsidies set in motion last year, and the COVID-19 pandemic is expected to further dampen demand as the economy weakens.
Xpeng’s Chinese rival Byton, which counts heavyweights backers like Tencent, FAW Group, and Foxconn, is already showing signs of strain as it furloughed about half of its 450 North America-based staff citing coronavirus impact. In June, the company put the brakes on production for internal reorganization.
Xpeng’s other competitors seem to have proven more resilient. In April, Nasdaq-listed Nio secured a $1 billion investment for its Chinese entity, while Li Auto ventured to file for a U.S. public listing in July.
Xpeng claims it has so far been able to withstand coronavirus challenges. In May, the company obtained a production license for its fully-owned car plant in a city near its Guangzhou headquarters, signaling its reduced dependence on manufacturing partner Haima Automobile.
Even the world’s second largest smartphone market isn’t immune to Covid-19.
Smartphone shipments in India fell 48% in the second quarter compared with the same period a year ago, the most drastic drop one of the rare growing markets has seen in a decade, research firm Canalys reported Friday evening.
About 17.3 million smartphone units shipped in Q2 2020, down from 33 million in Q2 2019, and 33.5 million in Q1 2020, the research firm said.
You can blame coronavirus for it.
New Delhi ordered a nationwide lockdown in late March to contain the spread of the virus that saw all shops across the country — save for some of those that sell grocery items and pharmacies — temporarily cease operation. Even e-commerce giants such as Amazon and Flipkart were prohibited from selling smartphones and other items classified as “non-essential” by the government.
The protracted lockdown lasted until mid-May after which the Indian government deemed that other stores and e-commerce deliveries could resume their services in much of country. New Delhi’s stringent measure explains why India’s smartphone market dipped so heavily.
“It’s been a rocky road to recovery for the smartphone market in India,” said Madhumita Chaudhary, an analyst at Canalys. “While vendors witnessed a crest in sales as soon as markets opened, production facilities struggled with staffing shortages on top of new regulations around manufacturing, resulting in lower production output.”
Smartphone shipment estimates for the Indian market through Q1 2019 to Q1 2020 (Canalys)
Despite the lockdown, Xiaomi maintained its dominance in India. The Chinese smartphone vendor, which has been the top smartphone vendor in India since late 2018, shipped 5.3 million smartphone units in the quarter that ended in June this year and commanded 30.9% of the local market, Canalys estimated.
With 3.7 million units shipment and 21.3% market share in India, Vivo retained the second spot. Samsung, which once ruled the Indian smartphone market and has made major investments in the country in recent months, settled for the third spot with 16.8% share.
Nearly every smartphone vendor has launched new handsets in India in recent weeks as they look to recover from the downtime and several more new smartphone launches are planned in the next one month.
But for some of these players the virus is not the only obstacle.
Anti-China sentiment has been gaining mindshare in India in recent months ever since more than 20 Indian soldiers were killed in a military clash in the Himalayas in June. “Boycott China” — and variations of it — has been trending on Twitter in India as a number of people posted videos destroying Chinese-made smartphones, TVs and other products. Late last month, India also banned 59 apps and services developed by Chinese firms.
Xiaomi, Vivo, Oppo, which now assumes the fourth spot in India, and other Chinese smartphone vendors command nearly 80% of the smartphone market in India.
Canalys’ Chaudhary, however, believes that these smartphone firms will be able to largely avoid the backlash as “alternatives by Samsung, Nokia, or even Apple are hardly price-competitive.”
Apple, which commands only 1% of the Indian smartphone market, was the least impacted among the top 10 vendors as iPhone shipments fell just 20% year-on-year to over 250,000 in Q2 2020, Canalys said.
Wearables have proven to be a surprisingly resilient category amid the global COVID-19-fueled shutdown. As noted earlier this month, shipment growth slowed — but didn’t stop — in Q1, even as many potential customers have far fewer steps to track. And according to new numbers from Canalys out today, smartwatches in particular continued to grow in spite of it all.
Overall, the category grew 12% year-over-year for Q1, up to 14.3 million. China, in particular, saw a big uptick in shipments — a full 66% over Q1 2019. Cellular models from Xiaomi and Apple were big hits, owing to a nationwide push for eSIM adoption. North America continued to see an increase, as well, but made up less than a third of all shipments for the first time in the firm’s reporting.
Image Credits: Canalys
Apple actually saw a 13% dip in shipments for the quarter, but remained the leader in marketshare by a significant margin, at 36.3%. Analysts believe that a shift in focus toward AirPods has been part of the slow down for the company in North America and Europe. Second place Huawei is gaining fast, too. A 113% increase in shipments put the company at 14.9% of the total market — up from 7.9 percent the year prior. Huawei continues to have a strong presence in China, and other local electronics giants Xiaomi and Oppo are expected to be strong drivers in the category moving forward.
Beyond that, the report doesn’t go into great detail with regard to what continued driving smartwatch sales as categories like smartphones sputtered along. I suspect that while consumers have been put off by an inability to meet personal activity goals, an increased interest in vital signs and other quantifiable statistics has driven some to take a closer look at such products, as they become an increasingly viable tool for day-to-day health tracking.
India’s Reliance Jio Platforms is the world’s most ambitious tech company. Founder Mukesh Ambani has made it his dream to provide every Indian with access to affordable and comprehensive telecommunications services, and Jio has so far proven successful, attracting nearly 400 million subscribers in just a few years.
What can we learn from Reliance Jio Platforms’s growth? What does the future hold for Jio and for India’s tech startup ecosystem in general?
Through a series of reports, Extra Crunch is going to investigate those questions. We previously profiled Mukesh Ambani himself, and in today’s installment, we are going to look at how Reliance Jio went from a telco upstart to the dominant tech company in four years.
Months after India’s richest man, Mukesh Ambani, launched his telecom network Reliance Jio, Sunil Mittal of Airtel — his chief rival — was struggling in public to contain his frustration.
That Ambani would try to win over subscribers by offering them free voice calling wasn’t a surprise, Mittal said at the World Economic Forum in January 2017. But making voice calls and the bulk of 4G mobile data completely free for seven months clearly “meant that they have not gotten the attention they wanted,” he said, hopeful the local regulator would soon intervene.
This wasn’t the first time Ambani and Mittal were competing directly against each other: in 2002, Ambani had launched a telecommunications company and sought to win the market by distributing free handsets.
In India, carrier lock-in is not popular as people prefer pay-as-you-go voice and data plans. But luckily for Mittal in their first go around, Ambani’s journey was cut short due to a family feud with his brother — read more about that here.
BYD Co., the Chinese auto giant backed by Warren Buffett, is rushing to make China self-sufficient in the production of electric vehicles. On Monday, the firm said in a filing it has secured 800 million yuan ($113 million) in a Series A+ round for its chipmaking arm, BYD Semiconductor.
At stake is the race to make so-called insulated gate bipolar transistors (IGBT), an integral silicon component in EVs’ power management system that’s at the core of BYD Semiconductor. The electronic switch is dubbed by industry experts the “CPU of an EV” for it reduces power loss and improves reliability. It’s the second-most expensive part of an EV after batteries, accounting for around 7-10% of the total cost according to market research.
BYD is fighting a fierce competition against Germany’s semiconductor giant Infineon Technologies AG, which produced 58% of the IGBTs used in China’s electric cars in 2019. BYD finished with an 18% share that year, noted a report from Citic Securities.
The prospects of IGBT production are bright, as the technology not only powers a booming EV industry worldwide but is also used in other high-energy applications such as air conditioners, refrigerators, and high-speed trains. The global market for IGBTs is estimated to near 10 billion yuan ($1.41 billion) in 2020 and quadruple to almost 40 billion yuan by 2025, according to the Citic report.
The outsize funding arrived just two months after Shenzhen-traded BYD hived its chip unit off into an independent company ahead of a separate public listing. Due to oversubscription from investors, the subsidiary raised the new round on the heel of its 1.9 billion yuan ($270 million) Series A closed in late May.
Parent company BYD holds a 72.3% stake in the chip arm following the two funding rounds, which have lifted the valuation of the subsidiary to 10.2 billion yuan ($1.44 billion).
As the only Chinese company that can produce IGBTs independently, the semiconductor maker has drawn heavyweight backers across the board. Its investors range from Sequoia China and state-backed CICC Capital from the Series A round, to Korean conglomerate SK Group, smartphone maker Xiaomi, Lenovo Group, ARM, China’s largest semiconductor foundry SMIC, and investment affiliates of Chinese carmakers SAIC and BAIC in the latest A+ round.
BYD started out as a manufacturer of electronics components in 1995 and has since expanded into automobiles and renewable energy. Headquartered in Shenzhen, it powers all of the city’s electric buses and taxis. It’s also ramped up expansion into overseas markets as China scales back state subsidies on electric cars.
One of the world’s best selling wearable lineups just added a new gadget to the mix.
Chinese electronics giant Xiaomi today unveiled the Mi Smart Band 5 that delivers several improvements and adds features such as a bigger screen, new wireless charging system, and women’s health mode over the company’s one-year-old Mi Smart Band 4 — while retaining its dirt-cheap price point.
The Mi Smart Band 5 features a 1.1-inch AMOLED display that is 20% larger than the one its immediate predecessor sported.
With the new band, the world’s second largest wearable vendor is also bringing a range of new animated watch faces including characters from TV series such as Spongebob Squarepants, Neon Genesis Evangelion and Detective Conan, and eight colorful straps.
Xiaomi says the new smart band is powered by an improved processor — the name of which it did not specify — to enable tracking of menstrual cycles for the first time, and support additional features such as stress assessment that will tell the wearer when it’s a good time to relax.
The Mi Smart Band 5, compatible with iPhones as well as Android handsets, also monitors the wearer’s sleep cycle more efficiently now, adding support for REM sleep as well as evaluating deep and light sleep sessions. The company claimed its heart rate monitoring is now 50% more precise.
One of the biggest improvements in the new band is its new charging system. This is a refreshing change as previous models in Xiaomi’s Mi Smart Band lineup have received complaints from users who described having to get the tracker out of the strap as a clumsy process. Now the company says its new magnetic charging dock automatically snaps onto the bottom of the band. Charging the band once delivers up to 14-days of continuous usage.
Like the Mi Smart Band 4, the Band 5 supports company’s homegrown digital voice assistant XiaoAI that a user can trigger by swiping to the right of the display.
There is an additional variant of the Smart Band 5 that supports NFC. This model features support for mobile payment services, and can be used to unlock smart doors and also serve as a transportation card at select subways.
The Mi Smart Band 5 goes on sale in China next week at a price point of RMB 189 ($26.75) while the NFC variant of the band is priced at RMB 229 ($32.5). The company says the device will be made available in international markets “soon.”
Xiaomi continues to be one of the leading players in the wearable market as it aggressively refreshes and introduces new devices. In November last year, Xiaomi its first smartwatch — called the Mi Watch — that looks strikingly similar to the Apple Watch. The Mi Watch is priced at $185.
According to research firm IDC, the company shipped 10.1 million wearable devices in the quarter that ended in March this year. It is ahead of Samsung, Huawei, and Fitbit. Apple maintains its top spot in the category.
Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. It’s been a tumultuous week for Chinese tech firms abroad: Huawei’s mounting pressure from the U.S., a big blow to U.S.-listed Chinese firms, and TikTok’s high-profile new boss.
China tech abroad
Further decoupling
Over the years, American investors have been pumping billions of dollars into Chinese firms listed in the U.S., from giants like Alibaba and Baidu to emerging players like Pinduoduo and Bilibili. That could change soon with the Holding Foreign Companies Accountable Act, a new bill passed this week with bipartisan support to tighten accounting standards on foreign companies, with the obvious target being China.
“For too long, Chinese companies have disregarded U.S. reporting standards, misleading our investors. Publicly listed companies should all be held to the same standards, and this bill makes commonsense changes to level the playing field and give investors the transparency they need to make informed decisions,” said Senator Chris Van Hollen who introduced the legislation.
Here’s what the legislation is about:
1) Foreign companies that are out of compliance with the Public Company Accounting Oversight Board for three years in a row will be delisted from U.S. stock exchanges.
PCAOB, which was set up in 2002 as a private-sector nonprofit corporation overseen by the SEC, is meant to inspect audits of foreign firms listed in the U.S. to prevent fraud and wrongdoing.
The rule has not sat well with foreign accounting firms and their local regulators, so over time PCAOB has negotiated multiple agreements with foreign counterparts that allowed it to perform audit inspections. China is one of the few countries that has not been cooperating with the PCAOB.
2) The bill will also require public companies in the U.S. to disclose whether they are owned or controlled by a foreign government, including China’s communist government.
The question now is whether we will see Chinese companies give in to the new rules or relocate to bourses outside the U.S.
The Chinese firms still have a three-year window to figure things out, but they are getting more scrutiny already. Most recently, Nasdaq announced to delist Luckin, the Chinese coffee challenger that admitted to fabricating $310 million in sales.
Those that do choose to leave the U.S. will probably find a warmer welcome in Hong Kong, attracting investors closer to home who are more acquainted with their businesses. Alibaba, for instance, already completed a secondary listing in Hong Kong last year as the city began letting investors buy dual-class shares, a condition that initially prompted many Chinese internet firms to go public in the U.S.
The long-awaited announcement is here: TikTok has pickedits new chief executive, and taking the helm is Disney’s former head of video streaming, Kevin Mayer.
It’s understandable that TikTok would want a global face for its fast-growing global app, which has come under scrutiny from foreign governments over concerns of its data practices and Beijing’s possible influence.
Curiously, Mayer will also take on the role of the chief operating officer of parent company ByteDance . A closer look at the company announcement reveals nuances in the appointment: Kelly Zhang and Lidong Zhang will continue to lead ByteDance China as its chief executive officer and chairman respectively, reporting directly to ByteDance’s founder and global CEO Yiming Zhang, as industry analyst Matthew Brennan acutely pointed out. That means ByteDance’s China businesses Douyin and Today’s Headlines, the cash cows of the firm, will remain within the purview of the two Chinese executives, not Mayer.
Huawei is in limbo after the U.S. slapped more curbs on the Chinese telecoms equipment giant, restricting its ability to procure chips from foreign foundries that use American technologies. The company called the rule “arbitrary and pernicious,” while it admitted that the attack would impact its business.
As Huawei faces pressure abroad due to the Android ban, other Chinese phone makers have been steadily making headway across the world. One of them is Oppo, which just announced a partnership with Vodafone to bring its smartphones to the mobile carrier’s European markets.
The U.S. has extended sanctions to more Chinese tech firms to include CloudWalk, which focuses on developing facial recognition technology. This means all of the “four dragons of computer vision” in China, as the local tech circle collectively calls CloudWalk, SenseTime, Megvii and Yitu, have landed on the U.S. entity list.
The smartwatch maker is eyeing a transparent, self-disinfecting mask, becoming the latest Chinese tech firm to jump on the bandwagon to develop virus-fighting tech.
The TikTok parent bankrolled financial AI startup Lingxi with $6.2 million, marking one of its first investments for purely monetary returns rather than for an immediate strategic purpose.
Xiaomi, the Chinese comapny famous for its budget smartphones and a bevy of value-for-money gadgets, said in a filing on Thursday that it has backed more than 300 companies as of March, totaling 32.3 billion yuan ($4.54 billion) in book value and 225.9 million yuan ($32 million million) in net gains on disposal of investments in just the first quarter.
The electronics giant has surely lived up to its ambition to construct an ecosystem of the internet of things, or IoT. Most of its investments aim to generate strategic synergies, whether it is to diversify its product offerings or build up a library of content and services to supplement the devices. The question is whether Xiaomi’s hardware universe is generating the type of services income it covets.
Monetize from services
Back in 2013, Xiaomi founder Lei Jun vowed to invest in 100 hardware companies over a five-year period. The idea was to acquire scores of users through this vast network of competitively-priced devices, through which it could tout internet services like fintech products and video games.
That’s why Xiaomi has kept margins of its products razor-thin, sometimes to the dismay of its investees and suppliers. Its vision hasn’t quite materialized, as it continued to drive most of its income from smartphones and other hardware devices. Services comprised 12% of total revenue in the first quarter, although the segment did record a 38.6% increase from the year before.
Over time, the smartphone maker has evolved into a department store selling all sorts of everyday products, expanding beyond electronics to cover categories like stationaries, kitchenware, clothing and food — things one would find at Muji. It makes certain products in-house — like smartphones — and sources the others through a profit-sharing model with third parties, which it has financed or simply partners with under distribution agreements.
Xiaomi’s capital game
Many consumer product makers are on the fence about joining Xiaomi’s distribution universe. On the one hand, they can reach millions of consumers around the world through the giant’s vast network of e-commerce channels and physical stores. On the other, they worry about margin squeeze and overdependence on the Xiaomi brand.
As such, many companies that sell through Xiaomi have also carved out their own product lines. Nasdaq-listed Huami, which supplies Xiaomi’s Mi Band smartwatches, has its own Amazfit wearables that rival Fitbit. Roborock, an automatic vacuum maker trading on China’s Nasdaq equivalent, STAR Market, had been making Xiaomi’s Mi Home vacuums for a year before rolling out its own household brand.
With the looming economic downturn triggered by COVID-19, manufacturers might be increasingly turning to Xiaomi and other investors to cope with cash-flow liquidity challenges.
Along with its earnings, Xiaomi announced that it had bought an additional 27.44% stake in Zimi, the main supplier of its power banks, bringing its total stakes in the company to 49.91%. Xiaomi said the acquisition would boost Xiaomi’s competitiveness in “5G + AIoT,” a buzzword short for the next-gen mobile broadband technology and AI-powered IoT. For Zimi, the investment will likely alleviate some of the financial pressure it’s feeling under these difficult times.
Competition in the Chinese IoT industry is heating up as the country races to roll out 5G networks, which will enable wider adoption of connected devices. Just this week, Alibaba, which has its finger in many pies, announced pumping 10 billion yuan ($1.4 billion) into ramping up its Alexa-like smart voice assistant Genie, which will be further integrated into Alibaba’s e-commerce experience, online entertainment services and consumer hardware partners.
On Wednesday, Utsav Somani announced iSeed, a micro VC fund to back up at least 30 startups over the course of two years. iSeed, which is not affiliated with AngelList, is Somani’s maiden venture fund.
In an interview with TechCrunch, Somani said he would write checks of $150,000 each to up to 35 early-stage startups in any tech category and enable his portfolio firms’ access to global investors and their knowledge pool. The fund will not participate in a startup’s follow-on rounds.
iSeed counts a range of high-profile investors, including Naval Ravikant and Babak Nivi, co-founders of AngelList, who are some of the biggest backers of the fund.
Others include founders of Xiaomi, Jake Zeller, a partner at AngelList and Spearhead, Sheel Mohnot, general partner at 500 Fintech, Brian Tubergen of CoinList, Deepak Shahdadpuri, managing director at DST Global, and Kavin Bharti Mittal of Hike.
AngelList launched syndicates program in India in 2018. The platform has been used for 140 investments in India since, including over 20 follow-ons in which firms such as Tiger Global, Sequoia Capital, Ribbit Capital participated.
Somani has also been an angel investor in more than a dozen startups including BharatPe, a firm that it is helping small businesses accept online payments and access working capital, and Jupiter, a neo-bank.
“I like the work AngelList India and Utsav have done since the launch. He brings energy, access and judgement to the table — the things to look for in a first-time fund manager,” said Ravikant in a statement.
Micro VCs is becoming a popular trend in the United States. Ryan Hoover of ProductHunt, for instance, maintains Weekend Fund. Somani said he has appreciated how others have been able to institutionalize the angel investing practice. According to Crunchbase, U.S. investors raised 148 sub-$100 million VC funds in 2018.
Running a micro-fund by leveraging AngelList’s infrastructure has also eased the burden starting such a venture creates for an investor, he said.
Indian startups could use any fund that backs early startups. Early-stage firms have consistently struggled to find enough backers in India, according to data from research firm Tracxn .
And that struggle is now common across the industry. More than two-thirds of startups in the country today are on the verge of running out of all their money in less than three months, according to a survey conducted by industry body Nasscom.
Somani said he is optimistic that great companies will continue to be born out of tough times. He said even his investors were aware of the pandemic and still stood by the fund.
“If you look at the market, we are seeing a number of layoffs. These are the people who would be creating jobs for others in the years to come. Entrepreneurship might be the only option for them.
Xiaomi on Tuesday unveiled the global version of MIUI 12, the latest update to its Android -based operating system, for hundreds of millions of smartphones as the Chinese electronics giant pushes to broaden its services ecosystem.
The world’s fourth largest smartphone firm said it is delivering a range of new features to its overseas users with MIUI 12 including a revamped user interface, the ability to cast the phone screen without the need to connect it to a computer, improvement to multitasking support and battery life, and more privacy controls to users.
Chief among the new changes is how the software looks. A company executive said animation renders slightly differently after installing MIUI 12, stretching more naturally across the screen — especially on smartphones with rounded corners — as a user taps on an app.
Xiaomi has been able to deliver this graphical improvement thanks to what it calls “kernel-level innovation” that includes a new rendering engine, she said.
“With our rendering, we have enabled color blending and Gaussian blur. You can see various degrees of blurring happening in real time as light penetrates different materials,” explained Louisa Jia, head of marketing and operations of Global MIUI, at an event today.
MIUI 12, which is built atop Android 9 and Android 10 (depending on the device it will be rolled out on), also changes how storage, memory, and power consumption usage are displayed on the phone, making it easier for users to quickly understand the state of their device at a glance.
As part of the new coat of paint, Xiaomi is also deploying dark mode across all third-party apps, including those that have not introduced support for this feature yet.
Support for multitasking is also getting an improvement, popping any additional app on a floating screen that users can move around to any part of the screen and engage quickly without having to switch from the game or other app that they were focusing on. The company said it is also introducing “ultra battery saver” feature that kicks in when the level of phone charge hits 5%. The new feature shuts off every non-essential service to deliver an additional five hours of battery life.
Privacy
Another interesting feature the company is introducing grants more privacy control to users. MIUI 12 will allow users to easily monitor and restrict apps from using the camera, microphone, location, contacts, storage, call history, and calendar.
Whenever an app uses any of these, a persistent icon appears in the notification bar, tapping which will allow users to see which app is using this data and easily shut that access. Additionally, like with newer versions of Android and iOS, MIUI 12 gives users the ability to determine how often an app can access sensitive personal information.
Xiaomi said with MIUI 12, it is also providing users with the ability to strip off sensitive information such as location data from a photo before they share it with their friends. By default, the new operating system will strip off such data from photos — a feature that privacy advocates have long desired, and business communication app Slack recently introduced to its service.
MIUI 12 will roll out to select smartphones — Mi 9, Mi 9T, Mi 9T Pro, Redmi K20, and Redmi K20 Pro — at the end of June, and dozens of smartphone models including Poco F1 and Redmi 6 that were launched in 2018, “soon afterward,” said Jia. The company said it will make a beta version of MIUI 12 available to users next week for those who don’t want to wait for too long.
