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US early-stage investment share shrinks as China surges

The global early-stage investment pie is getting bigger… a lot bigger. Just four years ago, investors were putting less than $10 billion per quarter into early-stage deals (Series A and B). The past two quarters, however, have all come in over twice that level. Q1 2018, meanwhile, looks to be a record-setting one, with Crunchbase projecting $25 billion in global early-stage investment.

But while overall investment is on the rise, the U.S.’ share is dwindling. A few years ago, North American startups reliably received at least two-thirds of global early-stage investment. No more. For the past three quarters, North America’s share has dwindled to less than half, as the chart below illustrates:

The rise of China’s startup scene, combined with local investors’ penchant for jumbo-sized Series A rounds, goes a long way to explaining the shift. Venture ecosystems in Southeast Asia, Brazil and elsewhere have also been in growth mode, and thus accounting for a more significant share of global early-stage investment.

Huge Series A rounds are huge in China

Before we venture further, it should be noted that although we associate Series A with early-stage companies, this is not always the case. Some of the largest Series A rounds globally have gone to companies that were relatively mature but previously bootstrapped or spun out of large corporations.

Recent data shows both the U.S. and China have their share of spin-outs and older companies gobbling up so-called early-stage rounds. OneConnect and Ping An Healthcare, subsidiaries of Chinese insurance giant Ping An, which raised $650 million and $1.2 billion, respectively, are examples of such activity.

Venture investors in China also put far more into Series A and B deals than U.S. counterparts. A Crunchbase News analysis found that the average Series A round for a China-based startup in 2017 was $32.8 million, just over triple the size of the average Series A for a U.S. company.

The momentum is holding up in 2018. So far this year, at least 12 Chinese companies have raised early-stage rounds of $100 million or more, altogether bringing in more than $4 billion (see list). Recipients of some of the largest rounds include:

  • Ziroom, an apartment rental service provider based in Beijing, raised $621 million in its Series A round.
  • Black Fish, a consumer finance platform, raised a $145 million Series A round.
  • Pony.ai, an autonomous vehicle startup with significant operations in both Silicon Valley and China, raised a $112 million Series A.

U.S. is no slouch in big A and B rounds, either

The U.S. has also had a dozen startups (plus Pony.ai) bring in $100 million or more in early-stage rounds this year. However, the aggregate total these startups have raised — about $1.8 billion — is less than half that of Chinese counterparts.

As mentioned previously, many of the largest early-stage round recipients are mature companies or spin-outs of mature companies. The list includes two companies founded in 2009 that closed Series B rounds of around $100 million this year: Joby Aviation, a developer of electric planes, and Vacasa, a vacation property management company.

Healthcare spin-outs are also attracting big dollars, including Celularity, a developer of placental stem cell-based therapies, and Viela Bio, a developer of therapies for autoimmune diseases.

But while big rounds are still getting done, the number of U.S. early-stage rounds of all sizes has declined a bit over the past four years. Over the last two quarters, Crunchbase projects fewer than 900 early-stage rounds are closing quarterly. Globally, however, the number of early-stage rounds has been trending up:

Part of the pattern is that the dynamics of early-stage funding have changed over the years. In the past, Series A and B rounds were for startups to develop working prototypes, hone market segments to target and attract the earliest customers. Scaling on a national or international level was generally for later stages, after a company had proven demand and a working product.

These days, markets move faster, and it’s not uncommon to see startups move in just a few quarters from concept to scaling en masse. Just look at Bird, the scooter sharing company that raised $115 million after mere months of operation with a business model intended to terrorize pedestrians and motorists provide a last-mile transit solution.

The entire bike, scooter and moped sharing sector has blossomed over a couple of short years, with big early-stage rounds all around. And it’s an area where China was the early leader for scaling. But fintech, biotech, agtech and other fields are also providing fertile ground for substantial early-stage funding rounds.

Should we worry?

So is the declining share of North American early-stage funding a source of worry for founders and investors in the region? Or is it a predictable evolution following economic growth in China and elsewhere?

We won’t attempt to answer that here, but others have tried. Sequoia Capital’s Michael Moritz drew wide criticism earlier this year for an essay sounding the warning bell on what he perceived as superior work ethic among Chinese entrepreneurs compared to their U.S. counterparts.

Purely following the money, the takeaway is this: Investors globally have decided the early-stage opportunity is a lot bigger than they thought a couple of years ago. And while investors are putting a bit more into mature ecosystems like the U.S. and Silicon Valley, they are putting a lot more into China and other regions with underdeveloped venture markets relative to their size and technology prowess.

News Source = techcrunch.com

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Artificial Intelligence

Ucare.ai is using AI to make healthcare more efficient in Southeast Asia

AI is being applied across the board in many industries worldwide, and its scope of influence is only likely to continue to expand as Kaifu Lee, a noted AI expert who was formerly head of Google China, recently told TechCrunch.

The main battle appears to be between companies in the U.S. and China, but this week a startup in Southeast Asia came out of stealth mode to show that innovation is present elsewhere in the world.

Ucare.ai is focused on applying AI on the healthcare system to increase efficiencies and help patient coverage. It focuses on three distinct audiences: patients, health providers and those who pay the bills.

In particular, the company uses deep learning and neural network algorithms to predict healthcare patterns in patients, and beyond, to reduce preventable hospitalization, and, in turn, save on costs and hassles. That also allows medical professionals and insurers to focus on the more obvious risk patients, Ucare.ai said.

The company was founded in 2016 by Neal Liu, an MIT graduate who career includes six years with Google and stints with Microsoft, eBay and others. The company picked up seed funding in 2016, finance executive Christina Teo came on board as CEO (Liu is CTO) a year later and this week Ucare.ai came out of stealth with the announcement of its $8.2 million Series A round from backers that include Walden International and Singapore’s Great Eastern.

Singapore is gaining ground as startup destination that locates founders within striking distance of Greater China whilst also giving them access to Southeast Asia, a nascent but fast-growing market where the ‘internet economy’ is tipped to reach $200 billion by 2025 according to a recent report co-authored by Google.

Ucare.ai spent its initial two years developing its core AI smarts, the backbone of its service, by stitching together de-identified healthcare data using a mix of publicly available information and data from private partners, before then building out products for the health sector.

“Healthcare costs are only going in one direction as people are living longer and chronic diseases become more prevalent,” Teo told TechCrunch an interview. “That means that costs are going up, and payers are paying more, while corporate health is receiving a lot of attention with corporate clients expecting cost coverage and intervention programs.”

Ucare.ai CEO Christina Teo (left) and CTO Neal Liu (right)

That’s the ecosystem Ucare.ai has set out to impact. With hospitalization one of the most significant costs, the startup wants to reduce that through AI-powered predictive services. Healthcare provider Parkway Shenton, which has over 1,000 clinics, is one public name that signed on with Ucare.ai with other partners as-yet-undisclosed. Clients like Parkway pay for various different products which can provide real-time predictions, or more regular report-like information, Teo explained.

Liu had been based in Singapore while at Google, and he saw an opportunity to develop the startup there whilst tapping into the unique features of the city-state.

“Singapore is ideal,” Teo, herself a Singaporean, told TechCrunch. “It has a robust healthcare system, is well audited, there’s tech adoption such as cashless payments, and data privacy is taken seriously.”

“It’s also a country where you can study people of different backgrounds and lifestyles, which makes it fairly good for scientists. The cost of businesses is reasonable, there are government grants and there’s talent,” she added.

There’s also the potential to expand the business. Ucare.ai has focused its efforts on Singapore, to date, but Teo said there are opportunities to move into neighboring markets to both improve the systems by adding more data and grow the business from a revenue perspective.

“The heavy lifting has been done in the last two years, now we’re looking at opportunities to scale and repeat the business models in other parts of Southeast Asia,” she said, adding that Greater China is also a focus of interest.

Right now, the startup has less than 20 staff with a blend of nationalities, but Teo said the headcount is climbing on “a near-daily basis.”

Other notable healthcare-focused startups in Southeast Asia include fellow Singapore-based CXA, which helps corporates provide quality healthcare to employees, and mClinica, which maps healthcare sales and data in the region.

News Source = techcrunch.com

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Asia

Facebook adds option to report conversations in Messenger following widespread criticism

In reaction to criticism around the use of Messenger in some countries worldwide, particularly Myanmar, Facebook has introduced new tools that it allow users of the app to report conversations that violate its community standards.

A new tab inside the Messenger app lets users flag messages under a range of categories that include harassment, hate speech and suicide. The claim is then escalated for review, Facebook said, after which it can be addressed. Previously, Messenger users could only flag inappropriate content via the web-based app or Facebook itself, that’s clearly insufficient for a service with over a billion users, many of whom are mobile-only.

Facebook said the review team covers 50 languages. It has been widely criticised for its small team of Burmese language reviews, most of which is based in Ireland — with a six-hour time gap — although it has pledged to staff up on Burmese experts.

In April, six organizations teamed up to write a letter to Facebook CEO Mark Zuckerberg after he claimed in an interview that Facebook’s “systems” were able to detect and prevent hate speech in Myanmar, a country where racial tensions simmer and Facebook is considered de facto internet.

Zuckerberg’s claim was incorrect, and he referred an incident last September which saw chain letters on Messenger inflame tensions. Buddhist community figures received messages warning of a planned Muslim attack, while those in the Muslim community got messages claiming there was imminent violence planned by militant Buddhist groups.

Instead, local organizations stepped in to defuse the situation when they were made aware of it. Facebook’s AI or systems did nothing.

While Zuckerberg later apologized to the Myanmar-based organizations “for not being sufficiently clear about the important role that your organizations play in helping us understand and respond to Myanmar-related issues,” the group went on the offensive again stating that Facebook actions are “nowhere near enough to ensure that Myanmar users are provided with the same standards of care as users in the U.S. or Europe.”

The changes to Messenger are a start, but Facebook has a lot more to do if it is to live up to its responsibility in Myanmar, but also other countries such as Vietnam, Sri Lanka, India and beyond where there are concerns that its platforms are not adequately policed.

Indeed, a recent UN Fact-Finding Mission concluded that social media has played a “determining role” in the Myanmar crisis, with Facebook identified as the chief actor. The issue was also raised in a Senate hearing with Zuckerberg last month.

News Source = techcrunch.com

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Asia

NES Classic loaded with classic manga games raises hopes for other special editions

Japanese gamers and manga aficionados and every combination thereof will get a treat this summer with the release of a NES Classic Edition loaded with games from the pages of Weekly Jump. The beloved manga mag is celebrating its 50th anniversary and this solid gold Famicom is part of the festivities.

There’s basically no chance this Jump-themed NES will get a release in the US — first because hardly any Americans will have read any of these manga (with a couple exceptions) and second because even fewer will have played the Famicom games associated with them.

Familiar… and yet…

That said, this nurtures the hope inside me that we will at some point see other themed NES Classics; the original has, of course, a fantastic collection — but there are dozens more games I would have loved to see on there.

You can hack the thing pretty easily and put half the entire NES library on it, but Nintendo’s official versions will have been tested and perhaps even tweaked to make sure they run perfectly (though admittedly emulation problems aren’t common for NES games).

Review: The NES Classic Edition and all 30 games on it

More importantly it’s possible these hypothetical themed consoles may come with new accessories that I desperately need, like a NES Advantage, Zapper (not sure how it would work), or NES Max. Perhaps even a Power Glove?

In the meantime, at least if you missed the chance to buy one the first time around, you can grab one come the end of June.

News Source = techcrunch.com

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