May 15, 2019

Asia Tech Review: May 14 2019

Revue

May 15 · Issue #114 · View online

Welcome back,

This week’s accidental theme is Making Moolah – and I’ve three hot takes to get you started before we round up last week (and some of this week’s) important news stories from across Asia.

Housekeeping: I can’t stand the sound of my own voice, but I did appear on the Analyse Asia podcast to talk Grab, Go-Jek, super apps and Honestbee.

Let’s get into this week’s ATR update 😉

Tencent's pro-government game is making moolah

Tencent took the reputation hit when we all mocked ‘Game for Peace,’ the hilariously pro-state replacement for hit battle royale PUBG that it launched last week. But the joke is on us.

The game is estimated to have grossed $14 million in just its first three days, according to app analytics company Sensor Tower. One analyst firm told Reuters it could pull in up to $1.5 billion in its lifecycle such is demand for the genre and Tencent’s publishing know-how.

PUBG was ‘tested’ in China for over a year, during which time Tencent didn’t make a cent as it didn’t have a license for monetization. Game for Peace, on the other hand, is made with China’s new license rules in mind – no blood, no corpses, a nationalist agenda and players that wave goodbye after they die – and already it is paying dividends.

Lulu Yilun Chen

@luluyilun

Tencent's Game For Peace made $20m in five days, for comparison it made about 43X as much as PUBG Mobile for iOS globally in its first 5 days back in April 2018, according to @SensorTower https://t.co/o4Yj3xImLl

3:11 PM - 14 May 2019

Look for more in Tencent’s earnings tomorrow, May 15.

SoftBank Vision Fund is making moolah

Masayoshi Son got candid and very un-VC-like when he revealed some key figures for the Vision Fund as part of his presentation for SoftBank’s financials.

Fund performance is usually reserved for internal personnel and LPs, but Son-san revealed Vision Fund backers are already up 45% IRR within two years of the fund’s creation.

You’ll notice that there’s a blended rate. That’s because certain LPs in the fund are less exposed to risk. Some 40% of the capital in the fund – which is now very close to that $100 billion target – pays out at a fixed rate of 7% through preferred equity. That means that, if things go wrong, these people get their return before the others – those in the performance-based distribution band.

But that bottom bracket are the big winners, so far, and rather interestingly, SoftBank Corp actually represents nearly half of that riskier band of LPs. So, as Son pointed out, his company remains very much a key stakeholder in the fund despite what is often assumed. (FYI, Masa, it helps when your anchor investor isn’t a Saudi public fund that murders critical journalists.)

Those 45% gains are of course almost all on paper at this point – Ping An Health and Guardant Health have gone public, Flipkart sold to Walmart and SoftBank dumped its Nvidia shares at profit – but Uber’s IPO and upcoming public listings for Slack and WeWork will give us a clearer idea of how some of the big bets have gone.

As for its progress so far, Son himself said the numbers beat his near-two-decade tenure as SoftBank CEO and those in the VC industry are impressed.

“Funds that return 3X over 10 years are usually indicative of 20% net IRR so 45%, if maintained, could be the sign of a 5-8X returning fund,” an unnamed but friendly VC told ATR.

When it comes to a $100 billion fund, 5-8X would be quite something.

So, know we understand the rumors of a Vision Fund IPO.

Grain: how to get VC funding moolah

Finally a quick note on Grain, a food startup from Singapore that announced $10 million in new funding last week.

Grain’s story isn’t Tencent or Vision Fund level but it is positive tale for startups that go through challenges. The company raised $1.7 million back in 2016 but went through a funding crunch and crisis when a food poisoning outbreak hospitalized 20 customers in 2017.

The company – which controls its own food production and delivery – weathered the storm and focus on the fundamentals. It cut some costs and shelved expansion aspirations but turned its business profitable in 2018 all by itself.

“We didn’t think of raising a Series B. Instead, we focused on the business and getting profitable… we thought that we can’t depend entirely on investors,” Grain CEO Yi Sung Yong told me in an interview.

And, of course, by not needing VCs, it attracted VCs. And by negotiating from a position of strength, it netted a solid round and even turned some interested parties away. It’s funny how things work out.

China

Grindr’s Chinese owner Beijing Kunlun Tech must sell gay dating app by 2020 over US national security fears

www.scmp.com – Share

The company confirmed it has reached an agreement with the Committee on Foreign Investment in the US (CFIUS) which will prohibit it from accessing information about Grindr users and require the app to be sold by June 30 2020. Recent media reports had speculated that the US government was concerned about its ownership.

Meanwhile, the government has also blocked China Mobile from offering services in the US link

Surprise: JD.com posted a rare (and record) profit link 🔒 (JD just quit the Australian market)

Alibaba is revamping Aliexpress – imo an underestimated service – to add retailers outside of China link 🔒

Huawei is going after the database market, according to The Information link 🔒

Ride-hailing Didi is prioritizing safety as it bids to repair its reputation following two passenger murders last year – the company is still some way from profitability and its plan to go public has taken a back seat link

EV maker Xpeng is the latest to rival Didi by offering ride-hailing link

Meanwhile, Didi launched its platform for transportation and AI link

Tencent Music changed its leadership after Q1 results showed increased revenue and profits but growing costs link

Report: China has 202 unicorns and Sequoia is the top investor link

💸Deals 💸 Facial recognition startup Megvii raised $750M ahead of a rumoured IPO (link) JD.com invested $55M in Jiangsu Xinning Modern Logistics (link) Luckin Coffee could raise over $500M from its US IPO (link) Byton is reportedly raising $500M at a valuation of $2.5B (link)

India

India is probing Google over Android anti-trust

in.reuters.com – Share

India’s antitrust watchdog has ordered an investigation into Alphabet Inc’s unit Google for allegedly abusing the dominant position of its popular Android mobile operating system to block rivals.

Uber drivers in India get paid a lot less today than previously link

Hotstar set a world record for concurrent livestream audience: the deciding game of India’s IPL cricket league clocked 18.6 million simultaneous users link

The Ken looks at India’s food delivery space and the battle between Zomato and Swiggy (link) 🔒

Paytm, India’s top mobile wallet company, added a credit card – interesting move, company has struggled as payments are increasingly commoditized and rivals use payment as a loss-making channel for user acquisition link

India’s top internet services are becoming super apps link

India’s smartphone market is still growing despite global fall link

Uber added e-bikes and bicycles in India with a test rollout in Bengaluru – but the company still appears to have taken its foot off the pedal in India link

Apple is reportedly launching its first store in Mumbai link

💸Deals 💸 InnoVen Capital gets $200M more for venture debt investments (link) New firm A91 closes first fund of $350M (link) Locus raised $22M for logistics management service (link) BigBasket officially became a unicorn after raising $150M (link) CollegeDekho raised $8M (link) banking startup Open is reportedly raising $50M (link) Cars24 is reportedly raising $80M (link) Treebo is reportedly raising $40M from Accor (link) Upstox is said to be raising $25M (link)

Korea

Nexon has reportedly delayed the bidding process for a controlling stake in its business link

Southeast Asia

Singapore fake news law polices chats and online platforms

www.bbc.com – Share

The law has passed as was widely expected. The biggest update since its drafting looks to be the focus on private chats, which it remains to be seen is any more than wishful thinking on the government’s side. End-to-end encryption is the standard for most – it is in place for WhatsApp, Singapore’s most popular messaging app – so the government’s wish to have unfettered access looks impossible to deliver. The rest of the law has potentially severe implications for media and social networks and it appears, on paper at least, to be very messy to implement.

The FT reported Grab may spin out its financial services business – I’d be remiss to not point out that I reported this in March with PayPal and Ant Financial two possible investors link (I initially tweeted this link as a Grab ‘confirmation’ but I don’t think it is a direct one, more like a tacit admission that a spinout could happen…)

Gree Ventures, a long-standing seed VC, is now Strive and it hit first close on a new $140M fund for India, Southeast Asia and Japan link

Vietnam’s FastGo is the latest to challenge Grab in Singapore link

Malaysia lifted its regulation of ride-hailing services following complaints link

I wrote about Brankas, an up-and-coming fintech startup helping banks to get into the digital age link

I looked at Kargo, a startup looking to modernize the logistics space in Myanmar and the challenges of being a startup there link

💸Deals 💸 fintech startup Thunes raised $10M led by GGV (link) Kejora closed a $100M+ fund for Southeast Asia (link)

Outside of Asia Tech

A look at why fake news is thriving on Facebook and WhatsApp link

Uber went public link

Uber’s stock price went down link

Meanwhile, Bitcoin’s price is flying again (lol) link

WhatsApp got hit with a nasty security flaw – the James Bond-style hack installed spyware simply by calling a target’s phone… details on how this could happen aren’t clear right now link

Photo of the week