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Asia Tech Review: February 25 2019

Welcome back, This week's edition is a little different because even I've become bored with the newsl
February 25 · Issue #105 · View online
Asia Tech Review
Welcome back,
This week’s edition is a little different because even I’ve become bored with the newsletter’s ongoing format. This new style is aimed at giving more weight to the week’s key topics and stories but without losing the regional news roundup.
Love it? Hate it? Have ideas or suggestions? Please let me know on Twitter – @jonrussell or @asiatechreview – or email
Beyond the newsletter, you can also chime in on topics in the Telegram group, which has over 400 people, and there is a curated channel on Telegram that sends alerts on notable stories as they happen.
That’s all for now, see you next week!

🚕 Another tactical exit from Uber 🚕
One of the biggest stories of the week is one that isn’t confirmed: it looks like Uber Eats is pulling out of India.
Uber Eats India likely to end up on Swiggy's plate
Like Uber’s withdrawals from China (2017) and Southeast Asia (2018), the writing appeals to be on the wall in India where media reports say Uber is in “final stage negotiations” to sell its food delivery business to rival Swiggy in exchange for 10% of the Swiggy business.
Swiggy, in case you missed it, is flushed with cash after raising $1 billion, has aggressively expanded into general deliveries and it has some powerful backers, including Naspers, Tencent and Uber investor Coatue.
This deal will allow Uber to keep its focus on the core transportation business in India, which is its largest market outside of the US and therefore very important as it prepares for its imminent IPO.
The reported deal has all the hallmarks of a strategic Uber exit, as happened in China, Southeast Asia and Russia:
  • Uber takes leaves of a battle focused around subsidies, cash burns and localization – three areas it struggles to compete in as a US business
  • Uber backs a back seat role by backing a local horse
  • Uber’s acquired stake represents value for money for investment to date – as Blume Venture’s Sajith Pai explains
Sajith Pai
If this is right, then Uber Eats is effectively buying Swiggy at a discount. At $3.3b, 10% of which is $330m, Uber Eats is paying 2/3rds. Not bad. Uber swung a similar bargain in Didi where it 'invested' / burnt $2b to get 17% of Didi (then $6b). /8
The deal with Grab in Southeast Asia has perhaps matured best of all.
Uber spent $700 million over five years to rival Grab and Go-Jek Southeast Asia and its exit deal got it a 27.5 percent share of Grab, which was then valued at $6 billion. Grab’s most recent valuation was $11 billion but, with a round ongoing now that’s likely increased to at least $15 billion (my estimation), that stake could be worth some $4 billion less than a year later. You can imagine that figure will go higher still – regardless of whether we agree with the valuations – which means, in the future, Uber might get a nice exit, a vantage point to buy Grab or other options.
Stay tuned for an Uber-Swiggy announcement very soon.
🇨🇳 China's startup readjustment 🇨🇳
A theme for 2019 is likely to be how Chinese startups adjust to the country’s economic challenges. In the same way that Apple’s China revenue is being hit, so those who are anchored in the country and plotting ambitious growth plans are scaling back or readjusting.
This month, Didi announced ‘readjustments’ that will see it lay off 15% of its staff – 2,000 people – in “non-core” areas, with the resources saved to be reassigned to more critical areas such as tech, customer service (Didi remains under pressure after two female passengers were murdered last year) and international operations. Indeed, on the final point, Didi is plotting expansions in South America.
Is global growth a more important area? Plenty of debate there but I’d speculate that this could be a case of showing growth in order to raise new capital. Indeed, this public acknowledgement of the adjustment – details of which the company leaked to press – adds to the idea that it is part of a strategy to raise funding. Didi’s last round was a massive $3 billion, but it was over a year ago. Why else would be so public with its layoffs? Just a theory.
Then, over at, we have news reports that the e-commerce firm will lay off 10% of its executive team – around 100 people – to cut costs.
“We are actively promoting the empowerment of staff at all levels, with the aim of maximizing resources to provide equal opportunities for qualified talent and to ensure quality growth of the business in the future,” a spokesperson told Reuters.
Expect to hear much of that in China in 2019.
But then there are the exceptions.
Alibaba – either stubborn or insulated by its lucrative China business – says it won’t lay off staff this year. There is also an opportunity for category-leading Chinese startups that are performing well with a sustainable model to attract cash from investors, who are now operating in a more cautious mode.
Exhibit A: Lalamove, which just raised $300 million at a valuation of over $1 billion.
Lalamove raises $300M Series D led by Hillhouse and Sequoia China
Lalamove operates in over 140 cities in China, is growing in Southeast Asia and it just entered India. Logistics on-demand is far more sustainable and stable than a consumer transport play like Didi, and it is building an ‘IPO ready’ business. That goes some way to explaining the VC interest, even in this current hard time.
💸 Tencent's impressive investments 💸
Finally a small note on Tencent’s incredible investment portfolio after the company opened up in a rare comment on its deals.
Over 11 years, Tencent has amassed a portfolio of 700 companies around the globe, 63 of which have gone public.
Additional colour from Bloomberg’s Lulu Chen:
Lulu Yilun Chen
In terms of investment, #Tencent might be on of the most prolific globally. 700 portfolios, of which 122 have become unicorns, 63 have gone public. The combined market value of companies in which it holds a stake of >5% is worth more than $500 billion. Quite a finance powerhouse
The remarkable thing is that Tencent’s deals have been so financially successful.
A massive exit returns a pro VC’s fund and gives them a reputation to raise more, but Tencent does over $10 billion in revenue per quarter so the numbers alone aren’t the answer.
Corporate investments don’t focus on capital returns in the same way as professional investors. Sure, there’s attention to financials, but often the primary concern is whether the tech is game-changing, if a deal could help with future M&A for a once-in-a-generation business, or if there is insight/partnership to gained for the parent business. Tencent has focused on the latter point a lot, with investments in overseas companies in recent years including Spotify, Tesla, Snap and, most recently, Reddit.
That thesis often results in some turkeys – look at Tencent’s investment in Kik, Alibaba’s deals with Tango, Snapdeal, Visualead, Quixey… and many others – so Tencent deserves credit. But with anti-China sentiment growing in the US and starting to take shape in India, it isn’t a given that Tencent will continue to get into top overseas deals.
News across the region
What happened in tech news across Asia last week.
Huawei founder says the US cannot crush the company
Teachers are being told to stop using WeChat to give out homework link
Xiaomi launched its new flagship Mi 9 link (and brazenly copied Apple’s wallpaper)
Speaking of Apple, it began offering interest-free iPhone financing packages to arrest a sales slump in China link
China’s game regulator has reportedly paused new applications because it is flooded by the backlog following a long pause in awarding new licenses link
Coworking startup Ucommune is apparently looking to go public in the US at a $3 billion valuation link
Struggling selfie app company Meitu is going after gaming with $340 million investment link
China wants to rural areas to go cashless by 2020 link
Alibaba is adding carpooling to its TransTech service, the weird new name for what was once HelloBike link
Alibaba was unmasked as the company behind China’s viral propaganda app, although there were already plenty of clues link
Amazon’s China import business may merge with a rival link
Baidu’s earnings show it is acting like a startup “but not in a good way” link
Huawei has reportedly gone after Apple’s secrets link
Mini programs are a new battlefront for China’s social giants link
The New York Times looks at concern among Chinese entrepreneurs who feel the government is promoting internet control over economic growth link
India is turning its back on Silicon Valley
A look at Apple’s struggles in India link
India’s parliament summoned reps from Facebook, WhatsApp and Instagram to discuss plans to safeguard their services ahead of the May election link
PayU is reportedly investing $150 million in Capital Float link
Flipkart co-founder Sachin Bansal invested $92 million into Ola as part of $1B+ new round link
Bansal is reportedly also getting into fintech link
OYO expanded to Japan and Saudi Arabia link
Fortune looks at Google’s efforts in India link
Confirmed funding rounds for digital lender Ziploan ($12.5M) and travel startup PickMyTrails ($3M)
Key investors are unhappy with SoftBank's Vision Fund
Sony launched an internal startup program for employees link
Recruit’s blockchain fund is now official and it is $25 million link
Samsung unveiled its first foldable phone
Samsung also announced the new Galaxy S10, earbuds that charge wirelessly, a new smartwatch and more link
Here’s a more detailed look at the Galaxy S10 link
Southeast Asia
Google opened a dedicated developer space inside its Singapore office
Vizsense raised $20 million led by Vertex Ventures link
Entrepreneur First raised $115 million – partly to go after growth in Asia link
A report says Go-Jek leads online payments in India, OVO leads offline link
South Korean food delivery unicorn Woowa Brothers is moving into Southeast Asia after making an acquisition in Vietnam link
VC newcomer Vynn Capital landed investment from Mavcap link
Razer made layoffs – 2% of its staff – and shuttered its digital games store after less than a year link
Outside of Asia Tech
Facebook has a history of relying on PR tactics to solve its privacy problems
Inside the final months of madness at Theranos link
Facebook is closing down its Onavo app, which essentially operated as spyware link link
Heart-breaking story of an 18-month old Uighur-Australian boy trapped in China’s police state link
Photo of the week
gяєgσя ѕтυαят нυηтєя
When you’re just casually browsing Uniqlo pyjama bottoms and you suddenly think gosh that chap surrounded by men who look like bodyguards really resembles the guy in the Philippines whose death squads have murdered thousands in extrajudicial killings and oh dear it’s him isn’t it
Bloomberg is hiring a number of editorial and reporter roles across Asia links on Twitter
Sinocism, the excellent China newsletter, is hiring interns link
This is a semi-regular feature when I find opportunities that I think are interesting, none of the above are paid for listings
Closing thought
💡 We wanted flying cars, instead we got Asian super apps 💡
Red Herring became notorious for its pay-to-play ‘startup listing’ that essentially sold the company’s dying reputation in exchange for boosting company profiles with a Red Herring endorsement.
I’m not saying Fast Company is paying companies to list them in its 'most innovative’ listing, but it is hard to take the ranking seriously when Fast Company itself does little reporting on tech these days. Listings themselves are usually pretty useless, too. Any ranking based on 'innovation’ is highly subjective, personal preference, context and other factors greatly skew company scores.
Tl;dr Meituan Dianping is top, followed by Grab (!) and the NBA… there, I saved you a click!
It seems to me that there’s a disconnect here. People in the US may marvel over Meituan and Grab’s super app strategies but those on the ground may see things differently.
Meituan remains deeply unprofitable, it shed staff to cut costs in December and it bought into bike-sharing – a business model that is now breaking down – after acquiring Mobike for $2.7 billion last year only to later downsize Mobike’s operations.
Many in Southeast Asia, meanwhile, bemoan Grab operating without competition from Uber. Its app is known for bombarding users with notifications, while its driver matching engine – widely seen as inferior to Uber’s – appears still far from being world class. There’s also the question of profitability, too.
It’s positive to see Asia tech getting recognition globally, the super app model is more innovative than simply ride-hailing, but it is hard to see these two companies as world-leading innovators.
Where are the flying cars?
That's all for now, see you next week!
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