Issue 8 | October 23, 2017

An Interview
Last week, Hans Tung (Managing Partner at GGV Capital) interviewed Zhang Yiming, founder and CEO of Toutiao, at GGV’s Evolving Lifestyle conference in Beijing. Toutiao, “China’s content king,” is one of the country’s up-and-coming tech giants, now reportedly valued at over $22 billion. Its flagship product, the smart news app Toutiao, uses AI to recommend content to its 600 million users, who spend 74 minutes per day on the app on average. It also owns 4 out of the top 6 short video apps in China. Here is our roundup of Toutiao’s current state and the transcript of the conversation.

Hans Tung and Zhang Yiming of Toutiao

Meituan-Dianping raises $4 billion, will beef up autonomous delivery
Meituan-Dianping, which can be thought of as the Yelp + Groupon + Grubhub/Seamless (and more) of China, raised $4 billion last week at a $30 billion valuation, led by Tencent, a major shareholder. 

Meituan-Dianping, a company formed by a multi-billion dollar merger in 2015, provides a wide range of services including restaurant reviews and booking, group purchases, food delivery, and travel booking. It also recently started testing a taxi-hailing service (Didi is still the clear leader in this market), and is exploring expanding into offline retail as well. According to the 38-year-old CEO Wang Xing, the new funding will be used for initiatives like autonomous delivery (the company already has a whole team working on this) and artificial intelligence.

Meituan-Dianping currently has around 16 million orders per day. As of the first quarter of 2017, Meituan-Dianping had a 41% market share in China’s food delivery industry, (backed by Alibaba) had 41.7%, and Baidu Waimai had 13.2%, according to iiMedia Research. This market has seen significant consolidation: Baidu Waimai was sold to last month for $800 million, and Meituan itself acquired its rival Dianping in late 2015. Compared to its archrival, Meituan-Dianping has more customers in third- and fourth-tier cities.

It is notable that The Priceline Group also participated in this funding round. Priceline has also purchased shares of Ctrip, the largest online travel platform in China, which some consider to be a rival of Meituan in the travel-booking space. Some local media outlets have commented that whether Meituan and Ctrip decide to compete or collaborate, Priceline will benefit.

(Didi and Ctrip are GGV portfolio companies. Hans is a personal investor in Dianping through his previous fund.)

“Tencent of Southeast Asia” goes public
The Singapore-based online gaming and e-commerce company, Sea, went public on the New York Stock Exchange last Friday under the symbol “SE.”

Garena SEA IPO

Sea’s products include online gaming service Garena, e-commerce marketplace Shopee, and virtual payment app AirPay. Shares were priced at $15 in the $884 million IPO. Sea had a bumpy start to its public life, although it closed the day up around 8 percent.

Sea, which has been referred to as “the Tencent of Southeast Asia,” generates 90 percent of its revenue from its Garena gaming business. Tencent is a major investor, owning approximately 40 percent of Sea prior to the IPO, with plans to purchase at least $100 million in newly issued stock.

The firm, formerly known as Garena, is Southeast Asia’s second highest valued tech company, behind the reportedly $6-billion-valued ride-sharing company Grab.

(Grab is a GGV portfolio company.)

Microlender Qudian goes public, targets underserved young shoppers

Qudian, one of China’s largest online lenders, went public on the New York Stock Exchange last Wednesday under the symbol “QD.” Shares priced at $24 in the $900 million IPO and opened at $34.35.

Founded by the 34-year-old serial entrepreneur Luo Min, the company targets young, mobile shoppers in China who need access to small credit for buying expensive items online, but are underserved by traditional financial institutions.

Qudian goes public

One notable shareholder of Qudian is Ant Financial, the fintech arm of Alibaba. Qudian analyzes borrowers’ creditworthiness based on data provided by Ant Financial, which is gleaned from social media and individuals’ e-commerce history.

Various media outlets commented that the strong IPO underscores investors’ appetite for China’s  fintech sector.  Two days before Qudian’s debut on Wednesday, Chinese peer-to-peer lender Ppdai announced plans to go public in New York to raise $350 million.

A Quote
Over the past 10 years, the logistics industry in China has experienced miraculous growth. Last year, the industry processed 80 million packages each day, and we soon expect that figure to reach 100 million per day. Ten years from now, we may be faced with one billion packages per day. Cainiao, our logistics network company, must prepare for this future. We are taking part in the transformation of the logistics industry through integration of data and assets in the supply chain. Our goal is to realize delivery anywhere across China within 24 hours and anywhere in the world within 72 hours.
– Jack Ma, in a letter to Alibaba shareholders last week
(GGV was an early investor in Alibaba in 2003.)
– Zara Zhang & Hans Tung at GGV Capital