China-speed: just a few decades ago, this part of Shanghai was farmland. Photo credit: Tech in Asia.
2016 was a roller-coaster of a year for China’s tech industry. The ride-hailing war came to a US$35 million close, virtual reality and live streaming took off, and peer-to-peer lending came crashing down. With 2017 already in swing, the stage is set for another year of excitement.
In particular, as funding slows down in Silicon Valley – 83 percent of venture funding went elsewhere in 2016 – China’s influence continues to grow. Some of the world’s most active lead investors – such as Sequoia Capital and Lightspeed Venture Partners – are increasingly looking east while Chinese startups, such as Didi Chuxing and Ant Financial, raised some of the most notable funding rounds in 2016.
Here are nine startups that could make an impact in China – and the world – this year, and the trends they’re riding on.
The bike sharing war rages on: Mobike vs. Ofo
No such thing as too many bikes? Orange for Mobike, blue for Xiaoming Danche, Yellow for Ofo. Photo credit: Tech in Asia.
Transportation continues to be one of the hottest areas in China’s tech scene, with Mobike and Ofo racing head-to-head in the bike sharing industry. The two companies raked in a total of more than US$250 million in financing last year, according to the Tech in Asia database – and more capital is expected to flow in 2017.
In fact, four days into the new year, Mobike announced a US$215 million series D round led by Tencent that will help push its business beyond Chinese borders into Singapore.
Both Mobike and Ofo help users find and rent nearby bikes – bright orange and yellow, respectively – with dirt-cheap prices of less than US$1 per half hour of riding. As is common in China, so far the two archrivals are competing mainly on execution, not so much on product or service. Like ride-hailing and O2O food delivery, capital will probably still be one of the main factors behind who wins and who fails.
Mobike counts Sequoia Capital and Tencent among its investors, whereas Ofo is backed by Chinese unicorn Xiaomi and ride-hailing startup Didi Chuxing. Both sides have a lot of cash, which should come in handy as it’s not clear how profitable – if at all – the bike sharing business is. This year could decide the fate of both companies.
Precision health from China’s biotech unicorn: ICarbonX
Wang Jun, founder and CEO of ICarbonX. Photo credit: ICarbonX.
Shenzhen-based company ICarbonX rose into the spotlight last year when it became a unicorn less than a year after being founded. The ambitious biotech startup wants to build a one-stop platform that crunches all kinds of data, including genetic information and blood samples, to provide health-related insights and recommendations.
It’s a daunting vision, but ICarbonX has the money and talent to back it up. The company is led by Wang Jun, who previously cut his teeth as the co-founder and board member of Beijing Genomics Institute (BGI), a world-renowned genetics research center. Last April, the company pulled in US$145 million in a series A round led by Tencent.
So far, ICarbonX has spent its money – US$400 million of it – on its Digital Life Alliance, a cohort of biotech companies that will pool resources and talent for ICarbonX’s massive platform. Earlier this month, ICarbonX added seven companies to the alliance, including SomaLogic, a US company that measures and monitors proteins, and HealthTell, whose technology offers real-time monitoring of users’ immune systems.
China is a world leader in genetics research. Last year, Chinese researchers were the first to inject genetically edited genes into an adult human using CRISPR technology (which lets geneticists edit parts of the genome). Now, Chinese companies are venturing into the space as well. ICarbonX, with its pedigree and powerful backing, will be a startup to watch in this space.
Live streaming grows up: Inke
A live streaming host on Inke wins virtual gifts for her singing.
Live streaming made headlines in China throughout 2016, with over 200 apps crowding the space and numerous crackdowns on salacious content by the Chinese government.
Though a lot of live shows are pretty superficial – think flirtatious banter and amateur karaoke – there’s no doubt about the industry’s monetization potential. Momo, a Chinese company known for its dating services, saw its second-quarter revenue jump 222 percent compared to the same period the year prior, due to its pivot to live streaming.
Inke, founded in 2015, rose to the top as one of the most popular live broadcasting apps. Unlike more established players, such as YY, Inke is mobile-first, which means users can casually live stream through their phones instead of their computers. This year, Inke, along with other top players, will have to prove whether or not the industry can sustain itself beyond the hype.
Ecommerce is one possibility. In an interview with Chinese news outlet Sina Tech, Inke founder Feng Yousheng noted that the app’s live streaming hosts funnel as many as 50 percent of their fans to Weibo, WeChat, and other channels in order to sell products and monetize. On ecommerce sites, such as Taobao and JD, live shopping has already taken off, with the former claiming conversion rates of 32 percent.
This year could see more concerted efforts by live streaming startups, such as Inke, to tap into ecommerce and monetization beyond virtual gifts.
Dive into computer vision: SenseTime, DeepGlint, and Face++
SenseTime’s face clustering algorithm. Photo credit: SenseTime.
News around artificial intelligence is typically dominated by large tech firms, such as Google and Facebook. In China, search giant Baidu leads various research initiatives dedicated to deep learning, big data, AI, and most recently, augmented reality.
But a number of Chinese AI startups are filling the niche left in the wake of big tech corporates. In particular, computer vision, a subset of artificial intelligence, is proving to be a place where startups can shine.
Face++, a Beijing-based startup, services a number of well-known clients with its facial recognition technology, including Lenovo and Didi Chuxing. For Ant Financial, Alibaba’s finance affiliate, Face++ powers the “Smile to Pay” feature in its mobile payment app, Alipay. Hong Kong-based computer vision startup SenseTime has also seen its facial and image recognition technology embraced by a number of big-name clients, such as Huawei, Xiaomi, and UnionPay.
That’s because applications of computer vision are diverse: biometric authentication for fintech, object detection for autonomous driving, OCR for extracting text from images. DeepGlint, a Beijing-based startup backed by Sequoia Capital and ZhenFund, uses computer vision to help monitor crowds.
As the need for computer vision continues to increase, these startups will have more clients – and more relevance than ever.
New solutions in virtual reality: Pico VR
Pico’s latest headset, the untethered Pico Neo CV. Photo credit: Pico.
When it comes to VR hardware, Chinese startups, such as Baofeng Mojing, tend to take the well-worn path of producing cheaper – and usually lower quality – equivalents of international companies such as Oculus Rift and HTC Vive.
But Pico VR is on to something different. Last year, the Beijing-based startup launched the Pico Neo, a unique solution that put the gadget’s smart hardware in the controller instead of weighing down the headset. Last week at CES, the Beijing-based startup debuted its latest headset, the Pico Neo CV, a fully untethered headset with complete positional tracking.
We look forward to seeing what other products Pico comes up with this year.
Ant Financial: IPO finally?
Photo credit: Alizila.
Alibaba’s finance arm, Ant Financial, is one of the most influential players in China’s fintech scene. Its mobile payment app, Alipay, boasts 450 million users and hit a record of 1 billion transactions in one day last year.
In addition to mobile payments, Ant Financial also offers other financial products, such as a personal savings fund and loan services. In 2016, the company raised a whopping US$4.5 billion series B, one of the largest funding rounds in China that year.
2017 could be the year that Ant Financial, valued at US$60 billion, goes public. Last October, Jack Ma, who controls both Alibaba and Ant Financial, said that the fintech company was planning to IPO, though where and when it would list was undecided. Around the same time, Ma also announced Ant Financial’s new CEO, Eric Jing, who would oversee the company’s IPO.
According to sources at Reuters, Alibaba’s financial arm wants to ensure its listing is followed by growth and may have to hit certain targets before then. Though investors may have to wait until late 2017 to cash in, it’s worth keeping an eye on Ant Financial as it marches towards the stock market.
Currency converted from Chinese yuan. US$1 = RMB 6.83.
This post These 9 Chinese startups are poised to grab 2017 by the horns appeared first on Tech in Asia.