Issue 36 | May 14, 2018

An Exit: Huya Goes Public

Huya (虎牙), a leading game live-streaming platform in China, has gone public on the New York Stock Exchange under the ticker symbol HUYA. Huya priced its shares a $12, the top of its range, and raised $180 million in the IPO. It was trading up 30% at midday.

Huya is a spin-off of NASDAQ-listed YY, a GGV portfolio company. Following the offering, YY will hold 54.9% voting power in Huya, while a Tencent investment unit will hold 39.5%, Huya said in a statement.

China had the world’s largest video games market in terms of revenues and number of gamers in 2017, Huya said. In 2017, revenue from the gaming industry in Asia totaled $51.2 billion, almost double the revenue of the North American market. China’s e-sports market had the largest gamer base in the world with approximately 229 million gamers in 2017, and is expected to reach 537 million gamers by 2022, according to a Frost & Sullivan Report cited by Huya’s IPO filing.

As of Q4 2017, Huya had 610,000 monthly active streamers, which is more than the 550,000 that Twitch had. Huya had nearly 40 million average mobile monthly active users in the same period. Its revenue almost tripled to $344 million in 2017 from the previous year.

E-sports live streaming is one of the most popular content genres on Huya, which works with e-sports event organizers and game developers. Huya has also expanded into other entertainment genres, such as talent shows, anime, and outdoor activities.

Read Huya’s F-1 here.

Note: Huya’s parent company, YY, is a GGV portfolio company.

A Big Deal: DJI Raising $1 Billion
DJI, the world’s largest maker of drones for consumers, has picked five or six lead investors after receiving offers from around 100 investors to participate in its latest $1 billion funding round, according to local Chinese media reports. DJI’s valuation has reportedly shot up from $300 million to $15 billion within five years.

As part of the terms, prospective investors who want to invest in DJI equity must also provide the company with an interest-free loan. If DJI goes public, the loans convert into equity.

The fundraising has been described by local media as a pre-IPO round, despite earlier statements from the company that it was not interested in going public. DJI is the world’s leading civilian drone maker, with a global market share of around 70%  and US market share of 50% as of 2017.

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A Big Deal: Restaurant Booking App Raises $63M from Alibaba and Ctrip
Mei Wei Bu Yong Deng (美味不用等, or “deliciousness without the wait”), a mobile app that helps restaurants better manage their bookings and customer wait times, has raised $63 million from Alibaba and Ctrip in a series D1 financing round.

Founded in 2013, Mei Wei provides software solutions to restaurants allowing customers to automatically take a waitlist number and to be elsewhere during their wait time. It has partnered with 100,000 restaurants across more than 200 cities in China. The company’s vision is to enable the equivalent of “autonomous driving for the restaurant industry,” using AI to provide smart solutions that connect restaurants with customers and supply chains and dishes. It has previously received funding from Meituan-Dianping and Baidu.

The company also revealed plans to open its first “shared dining area” in Shanghai in June. Customers will be able to order food from restaurants within 800 meters from the venue and enjoy the food together. This way, people with different tastes and preferences can each order their favorite food, but still eat at the same physical location.

Note: Ctrip is a GGV portfolio company.
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A Number:
$3.14 Billion – amount earned by domestic Chinese movie theaters at the box office in Q1 2018, which is 42% higher than the North American box office total for the same period, according to Caixin.

This marks the first time that China’s film market has surpassed North America in quarterly box office revenue. The jump can be attributed to popular domestic blockbusters during the week-long Lunar New Year holiday in February. The five top-grossing films during the first quarter were all domestic productions, led by action movie “Operation Red Sea.”
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A Video: Jack Ma Says “Never Give Up”
Jack Ma, who was rejected from college three times in his youth, received an honorary doctoral degree from Tel Aviv University in Israel last week. Watch his acceptance speech here.
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996 Podcast: Yinglian Xie and Fang Yu of DataVisor on Fighting Fraud with Machine Learning
We interviewed Yinglian Xie and Fang Yu, the co-founders of DataVisor, a fast-growing startup in Silicon Valley that provides big data security analytics for consumer-facing websites and apps. Its customers include some of the world’s largest companies, such as Alibaba, Dianping, Pinterest, Yelp, and Bytedance (a.k.a. Toutiao), among others.

We discuss why China has the potential to be a great market for SaaS businesses, what it’s like to be female founders in a highly technical space, and how DataVisor uses a unique approach—unsupervised machine learning—to fight fraud.

Zara Zhang & Hans Tung at GGV Capital