The world was shaken unimaginably with the outbreak of coronavirus in Wuhan, China at the beginning of this year. Since then, every sphere of the economy has faced disruptions. The startup ecosystem in China was no different, startups that were already struggling to raise funds due to a slowdown in 2019 courtesy US-China trade tensions it seemed that coronavirus could be the last straw. However, fundraising and venture capital in the dynamic startup ecosystem of China remained resilient, making continuous advancements in their strategies amidst these unprecedented times.
Advancements in strategies and resilience helped the Chinese startup ecosystem to grow
Looking back at the fundraising deals that happened during the COVID-19 outbreak, the industry witnessed continuous investment in education technology, robotics, frontier technologies, and supply chain logistics.
The pandemic accelerated the demand for autonomous solutions, various deals were closed in robotics that included hardware such as robot waiters, cleaners, chatbots, audio recognition, software like computer vision, and more. AISpeech, headquartered at Zhejiang specializes in voice interactions, closed a deal of US$58 million in a funding round led by CTC Capital. Foxconn, Alibaba, and MediaTek were the other investors in this deal.
Bytedance led a US$ 14.1 million funding round for a maker of autonomous cleaning robots company, Narwal Robotics. Bytedance is headquartered in Beijing is a multinational internet technology company that was valued in May 2020 at US$100 billion added it to the list of unicorns in China. Another company in the hardware side, Shanghai-based Keenon Robotics that manufactures robot waiters raised US$28.8 million.
With educational institutions pivoting the online platform, China’s online education system saw a rapid growth. Yuanfudao, an EdTech giant based in Beijing managed to raise US$1 billion funding. Xiaomawang, a coding education company raised US$21.2 million in funding.
Health care was another sector that saw a boom and due to the pandemic the sector was forced to develop online solutions to manage the crisis. In March, Yizhun Intelligent closed a US $ 14 million funding deal. The company uses AI to improve diagnostics and medical imaging.
China, once being called the world-factory and a booming startup ecosystem was shaken by the pandemic. With stress on global supply chains, the Chinese companies were keen to modernize logistics networks in agriculture and future foods. Starfield, an artificial meat startup in Shenzen closed an undisclosed amount funding round from New-Cop Capital, a US-based company. In the ecommerce supply chain space, SFMap, an SF Express’ map service subsidiary closed a deal of US $ 14 million. The company specializes in enhancing smart supply chain management and delivery logistics by using AI.
The companies dealing in frontier technologies including enterprise AI, autonomous driving, and space exploration also managed to raise sizeable funding. Pony.ai raised funding of US$ 400 million, the funding round was led by Toyota.
The pandemic resulted in the digitization of many businesses that worked online traditionally. The healthcare and education sector with digitization increased their accessibility levels across the nation which were primarily centered in urban areas of China.
There were a few that had to face the brunt of pandemic were the hospitality and tourism startups of the country. However, China recovered faster than the rest of the world with their stringent anti-pandemic strategies. The travel industry that was shut down for almost a month is now getting back to business. The innovative mindset has been the key to win back traveler’s confidence. With the concept of smart tourist attraction gaining momentum things are almost back to normal.
Unicorns that emerged in this new normal
Even though the COVID-19 pandemic rattled economy, a few Chinese startup companies thrived on changing trends in consumer spending and business trends. Beijing Calorie Technology, operates the Keep Fitness app, surpassed the US$1 billion mark in May 2020 and boasts of 200 million registered users.
Dingdong Maicai that sells fresh produce got a boost during the lockdown period and expanded its network of warehouses countrywide from just Beijing and Shanghai. In the first half of 2020, 20 out of 50 Chinese startups that raised most funding were from medical fields such as biopharmaceutical development and genetic analysis as per 36Kr, a Chinese tech news portal.
Chinese Startup Ecosystem Looks All Set For 2021
Startups are crucial to the country’s long-term economic ambitions and have already surpassed the US to become the world’s biggest hub for unicorns. The COVID-19 pandemic has opened up a competitive landscape for startups. With the size of Chinese the market, scaling the digital platforms and services has proven to be capital-intensive for companies. However, venture capital activity remains vital to the overall health of the startup ecosystem.
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