Asia-based insurtechs raised $7.4B in funding between 2018 and 2022, fueling a group of startups across the insurance landscape — especially in personal lines coverage and distribution channels.

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For example, China-based livestreaming app Kuaishou went public a few weeks ago following stellar gross merchandise volume growth in 2020, while payment unicorn Klarna recently partnered with ShopShops to offer livestream shopping during its second virtual shopping event.

Livestreaming commerce has also captured executives’ attention recently, with mentions on earnings calls soaring in 2020.

WHAT YOU NEED TO KNOW:

• China leads the way: Livestreaming is expected to generate up to 20% of China’s total e-commerce sales by 2022 — doubling its share from 2020 — according to estimates by HSBC and Qianhai Securities. Chinese live video platforms such as Kuaishou and Bytedance are quickly adding commerce features, while e-commerce leaders such as Alibaba and JD.com have both ramped up their livestreaming efforts in the past year, including a push in Europe from Alibaba’s AliExpress.
• Livestreaming is slowly gaining traction in North America: Amazon has been experimenting with livestream shopping for some time and holds several patents in the space. During its Prime Day event in November 2020, the company actively promoted its Amazon Live feature by working with its network of influencers to promote exclusive deals on select products. More recently, US-based TV shopping player QVC debuted a livestream shopping channel on YouTube TV.

What’s next?

• Luxury brands and esports companies will move to popularize livestreaming outside of China: While luxury brands have been experimenting with livestream shopping in China, the pandemic has pushed a number of them to start livestreaming runway shows in other regions. For example, Burberry livestreamed its spring/summer 2021 collection show on US-based Twitch, a popular livestreaming platform among gamers.
• More social media platforms will make live videos shoppable: Facebook launched Instagram Live Shopping in the US at the end of 2020, making it possible for sellers to tag products when they go live for viewers to buy. Tiktok is also reportedly working on a livestream shopping feature, which could further boost livestream commerce penetration outside of China.
• Startups want to make shoppable content tech more accessible: Startups such as Mai and Instreamatic are using artificial intelligence to make it easier to add shopping features to visual and audio content respectively. These tools aim to help content creators, including brands and retailers, to offer livestream shopping experiences on their own platforms.
• Livestreaming technology partners will become essential for brands and retailers: As livestream commerce becomes more popular, brands and retailers — looking to boost their return on investment — will drive up demand for technology partners that can help offer high-quality streaming and convenient purchasing experiences.

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Formerly known as Ant Financial, the Hangzhou, China-based Ant Group is aiming to raise $34B in its highly anticipated debut. The offerings value Ant at close to $313B, making it the most valuable fintech company in the world.

Against the backdrop of rising US-China tensions, Ant Group is planning to offer shares in Hong Kong and Shanghai instead of pursuing a US-based listing.

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When the pandemic first broke out in China in January 2020, the country saw crowded hospitals and growing fears around the virus. This led many people to rethink how they sought medical care.

As a result, several Chinese telehealth platforms — many of which have raised hundreds of millions in funding — have stepped in to take on some of the most important roles within healthcare services, from triaging patients to fulfilling prescription refills. Though not a new technology, telehealth has seen renewed demand in China amid the crisis, with many companies like Ping An Good Doctor, We Doctor, and Haodaifu reporting significant uptick in usage.

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Those who are unfamiliar with the name ByteDance have most likely heard of its flagship product, TikTok. As of May 2020, the viral video app has been downloaded approximately 2B times.

The onset of the global coronavirus pandemic and the associated lockdowns have further accelerated TikTok’s trajectory. In Q1’20 alone, TikTok accumulated 315M new downloads worldwide — a record-breaking quarter for an individual app, according to Sensor Tower.

As of spring 2020, ByteDance operates more than 20 apps in spaces ranging from news and video to music and mobile gaming. Some, like TikTok, are international in scope. Others, like the news aggregator product Toutiao, have so far only been made available in China.

With each new product it launches, ByteDance leverages the same 3 key advantages it has cultivated in its core business areas like news curation and short-form video:

• A young and highly engaged user base. Like Facebook before it, ByteDance is leveraging an audience of actively engaged young people to facilitate its growth. In the US, 60% of TikTok users reportedly fall between the ages of 16 and 24. Worldwide, two-thirds are under the age of 30.
• Products engineered for virality. With TikTok, ByteDance appears to have tapped into something powerful in the way that users currently want to engage with content. The top 50 content creators on TikTok have more followers than the populations of Mexico, Canada, the UK, and Australia combined.
• Personalization and recommendation algorithms. One way to think of ByteDance is not so much as a creator of content platforms, but as an artificial intelligence laboratory that specializes in developing algorithms that can match users with content, from video and music to news and e-commerce.

ByteDance is jockeying for a spot alongside global tech leaders like Google, Facebook, Amazon, as well as their China-based counterparts Baidu, Tencent, and Alibaba. But a permanent place in Big Tech is far from guaranteed.

Concerns about ByteDance’s approach to user privacy are mounting and established tech companies and startups alike are singling ByteDance out as a threat, launching products to compete with it directly.

ByteDance will have to prove its viral products are more than a craze.

In this report, we look at ByteDance’s expanding product portfolio, highlighting how its core advantages play out in each product. We’ll also examine how the company is expanding its geographic reach, focusing on its expansion in 3 critical markets: China, India, and the US.

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In its recent Q1 earnings call, NIO reported narrowing operating losses and an expected all-time high in vehicle deliveries in Q2. Separately, the company announced that it hit record deliveries in May.

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Despite the market volatility wrought by the virus, China invested heavily in AI infrastructure to combat Covid-19. Tech giants like Alibaba and Baidu stepped up to hone diagnostics tools and virus analysis algorithms; and AI heavyweight SenseTime deployed contactless temperature detection software as well as a biometric identification system for people wearing masks. 

Below, we spotlight funding trends in the China AI space, top areas of investor focus, and the most well-funded AI startups in the country. 

Funding trends

AI startups in China saw financing jump by 63% QoQ with $545M raised — nearly half of all AI financing in Asia in the first quarter of the year. This increase comes after an 81% rundown since Q3’17, but funding is still down 59% YoY. Deal count hit a 3 year low, with 52 deals. 

Seed-stage deal share plunged to an all-time low of 13% in Q1, underscoring the effort to double down on later-stage bets. Mid-stage deal share also surpassed early-stage in Q1’20 to reach 50% of all deals.  

Areas of focus

The areas that have garnered the most investor attention over the past 5 years are: speech/NLP(G)/computer vision, which has garnered $6.1B across 163 deals; finance and insurance, with $1.3B spanning 88 deals; and healthcare, which has raised $585M across 102 deals. 

The US has recently placed China-based facial and voice recognition startups under greater scrutiny due to privacy concerns. In October 2019, the US government blacklisted top China-based AI startups from purchasing tech from US companies without approval. 

However, commercial opportunities for biometric AI startups have flourished in China. In addition to the biometric identification system, SenseTime also struck a partnership in Q2 with the People’s Bank of China — which has announced plans for a national digital currency — to build out AI-focused fintech solutions. 

Most well-funded AI startups

TikTok parent Bytedance, valued at $140B, holds the title for the top-funded AI startup, with $3.1B in total funding. In second place is facial recognition firm SenseTime, with $2.6B under its belt. Electric vehicle maker NIO, which went public in September 2018, is third on the list, with $2.2B (including pre-IPO funding). 

For more funding trends, valuation data, and geographic spotlights, clients can check out CB Insights’ interactive Story on AI In Asia: The Impact Of Covid-19 On Funding, Exits, Valuations, And R&D.

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Funding to Asia-based fintech startups dropped nearly 70% in Q1’20 from the prior quarter, while deals fell 23%.

For the first time in 5 quarters, funding to India-based fintech startups exceeded that of China-based fintech startups. This was in part due to Covid-19, as China shut down first to fight its spread.

As such, the country saw its worst quarter for fintech funding since 2015, with 29 deals totaling $175M in Q1’20, down 41% in funding quarter-over-quarter.

Both China and India saw 29 deals to fintech-based startups, down 12% from 33 each in Q4’19. Singapore, Japan, and Indonesia also saw deals to fintech startups dip in Q1’20.

As the first country to fight and start to recover from the coronavirus, what happens next in China could be a gauge of what’s ahead for fintech as the virus takes its toll across other regions.

For more information and more insights on fintech funding trends in Q1’20, take a look at CB Insights’ State Of Fintech Q1’20 Report: Investment & Sector Trends To Watch.

The post How Asia-Based Fintech Fared In Q1’20 appeared first on CB Insights Research.

Search engine Baidu reportedly controls around 70% of the search market in China; e-commerce giant Alibaba accounts for half of all online retail sales in China; and gaming and internet giant Tencent is one of the world’s largest game publishers.

However, these 3 tech titans have also moved to expand beyond their core businesses, snapping up 158 companies over the last 2 decades across industries like autonomous driving and online food delivery.

Similarly, FAMGA (Facebook, Amazon, Microsoft, Google, and Apple) has also cut big checks — even amid Covid-19 — to grow their reach. We visualize FAMGA’s biggest acquisitions in this post.

Using CB Insights M&A data, we look at BAT’s billion-dollar acquisitions below.

Please click to enlarge.

KEY TAKEAWAYS

• Collectively, there have been 14 billion-dollar acquisitions by Baidu, Alibaba, and Tencent to date.
• With 11 billion-dollar deals under its belt, Alibaba is by far the most active big spender out of the 3 giants. Tencent has inked 2 billion-dollar acquisitions, while Baidu has closed 1.
• The largest acquisition (by company valuation) on our timeline is Alibaba’s purchase of logistics giant Cainiao, which valued the company at $20B. Alibaba first acquired a majority stake in Cainiao in 2017, but upped its stake with an additional $3.3B investment 2 years later at an even higher valuation of $27.5B.
• Rounding out the top 3 acquisitions are video game developer Supercell, which Tencent purchased from SoftBank in 2016, and online food delivery platform Ele.me, which was acquired by Alibaba in 2018.
• Baidu’s purchase of Android app distributor 91 Wireless in 2013 was the first $1B+ buy from the trio.
• The most recent billion-dollar acquisition was Alibaba’s $1.8B acquisition of cross-border e-commerce platform Kaola. Alibaba announced at the time that it would integrate the platform with Alibaba’s own online retail arm, Tmall.
• 2019 tied with 2016 and 2014 for the most active year for $1B+ purchases, with 3 acquisitions each.

For more on tech giants, check out our infographic visualizing FAMGA’s billion-dollar acquisitions.

The post Visualizing Chinese Tech Giants’ Billion-Dollar Acquisitions appeared first on CB Insights Research.

Deals to China-based healthcare companies fell 39% compared to the quarter prior, with just 100 healthcare deals in the country as Covid-19 pushed investment appetite down.

The number of mega-rounds ($100M+) to China-based companies also fell, from 8 rounds in Q4’19 to just 3 in Q1’20.

More specifically, the digital health space in China saw a large decline, with funding down 52% and deals down 51% quarter-over-quarter since Q4’19.

Telehealth companies, however, saw a spike in utilization for their services as patients turned to online visits.

The largest China-based digital health financing in the quarter went to Zhangshang Tangyi, a mobile diabetes management app that allows patients to record their own health data. It raised a $144M Series D in January from investors including Samsung, Talsy Capital, and SIG Asia Investments.

For more information and additional insights into healthcare funding trends, check out our State Of Healthcare Q1’20 Report: Investment & Sector Trends To Watch.

The post What Happened To China-Based Healthcare Funding In Q1’20? appeared first on CB Insights Research.

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While activity had trended down after a 2018 peak, there was a sharp drop-off in Q1’20 that coincided with the virus outbreak.

The outbreak caused deals to VC-backed China-based companies to reach their lowest levels since Q2’16 (when deals reached 377). In Q1’20, deals fell 35% versus the year prior and 39% compared to Q4’19.

Despite the decline in deals, funding still rose on a quarterly basis due in part to 3 $1B+ mega-rounds. 

Looking beyond the standout mega-rounds, the fall-off in activity overall was not restricted to one part of the venture ecosystem: CVC investments and seed rounds also fell sharply in China in Q1’20. Mega-round deal count, similarly, experienced a decline.

Corporate activity declines sharply

As China-based corporations revised their outlooks, corporate-backed deals contracted dramatically in Q1’20. Deals with CVC or corporate participation fell 43% compared to Q4’19 and 46% versus Q1’19.

Although Tencent Holdings remained relatively active and was the most active corporate investor in China in Q1’20, participating in 15 equity deals, this reflects a decline from 19 deals in the country in Q4’19 and 18 deals in Q3’19. 

Surprisingly, some of China’s corporate investors also showed a willingness to invest. 

Beijing-based consumer electronics company Xiaomi, for example, sustained its investment activity in China-based startups. Xiaomi participated in 9 equity deals in China in Q1’20, up from 8 deals in both Q4’19 and Q3’19.

Seed deals decline most

Seed-stage startups took a disproportionate blow from the Covid-19 outbreak, as early-stage investors redirected attention from deal sourcing and new companies to managing existing portfolios. 

Seed-stage deals declined 44% in Q1’20 versus the previous quarter and 55% compared to the same quarter a year ago.

The dramatic decline in seed-stage deals was coupled with an even larger decline in seed-stage funding, which fell 70% quarter-over-quarter. 

Among seed deals with disclosed funding, the average deal size was $5.2M in Q4’19. In Q1’20, deal size fell to $2.7M as investors exercised greater caution. 

Plum Ventures and Sequoia Capital China were the most active seed-stage investors in China in Q1’20.

Meanwhile, investors that had invested in seed deals in Q3’19 and Q4’19, such as Linear Venture, QingSong Fund, and Innoangel Fund, sat on the sidelines in Q1’20.

Mega-rounds continue to decline 

The number of $100M+ deals to VC-backed startups in China fell to 14 in Q1’20, representing a 30% decline from Q4’19 and a 48% drop compared to Q1’19. 

While the Covid-19 outbreak has likely contributed to the decline in $100M+ deals, the number of mega-rounds has decreased for six consecutive quarters.

The number of mega-rounds peaked in Q3’18, as investors poured heavily into a wide variety of sectors, including facial recognition technology, transportation, e-commerce, and education.

In Q1’20, investors have continued to place $100M+ bets on startups serving the growing Chinese middle class, such as e-cigarette brand SnowPlus, dairy manufacturer Junlebao, and diabetes management app Zhangshang Tangyi.

Further, companies developing emerging technologies, including navigation systems for autonomous vehicles, advanced computer processors, and artificial intelligence solutions for government and enterprises, have attracted $100M+ deals despite the outbreak. 

Mininglamp Technology, for example, raised a $300M Series E from Tencent Holdings, Temasek, and Kuaishou. The Beijing-based startup develops AI technologies, such as facial recognition, for financial services, public security, smart city and industrial engineering applications.

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In the midst of the Covid-19 pandemic, the company raised $100M in funding and doubled its valuation to $2B. This financing highlights the appeal of value-based brands with strong e-commerce capabilities, especially when CPG businesses globally are re-assessing distribution strategies to cater to the shopping and spending habits of younger, digital-first consumers, as well as to weather virus outbreaks that cast a shadow on physical retail.

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Launched in 2011, the app first blew up when it allowed people to send digital “red packets” (monetary gifts exchanged during holidays or special occasions) during the Chinese Spring Festival in 2014. As of Q1’19, WeChat boasted over 1.1B monthly active users, who make over 1B daily transactions through the app’s WeChat Pay feature.  

Today, the WeChat app ecosystem has evolved beyond payments, allowing consumers to complete a wide range of day-to-day tasks — hail rides, read the news, look for apartments, invest in ETFs, buy movie tickets, and much more — without ever leaving the platform.

And now, the super app is turning to a new frontier: healthcare.

Below, we identify 9 ways that Tencent’s portfolio companies or owned healthcare assets are leveraging WeChat’s ecosystem to upend various parts of Chinese healthcare.

Why use WeChat?

WeChat’s Official Accounts and Mini Programs products make it easy for companies to create WeChat-native apps and interactions. 

First introduced in 2012, the Official Accounts feature, similar to Facebook’s Pages, allows companies to create digital channels to share content and interact with users. There were over 20M Official Accounts on WeChat as of 2018. 

Mini Programs, launched in 2017, takes this one step further by allowing developers to create WeChat-native applications across iOS and Android. Users can open Mini Programs right from their WeChat home screens to access apps and pay for products and services. As of 2018, there were over 1.2M Mini Programs and 200M daily active users. 

With its large user base and the wide proliferation of Official Accounts and Mini Programs, Tencent’s WeChat is increasingly connecting healthcare services and products with consumers.

A whopping 38,000 healthcare service providers have opened Official Accounts on WeChat, as of December 2019. Around 24,000 (2%) of the 1.2M Mini Programs are health- and wellness-related, according to data firm iResearch.

Tencent has also been building its own healthcare assets on WeChat, as well as investing continuously in the healthcare space. Tencent’s investment portfolio includes numerous healthcare companies, such as Shuidi Huzhu and We Doctor, that could profit from having access to Tencent’s user base and technology infrastructure.

9 areas where WeChat is influencing healthcare

1. Appointment booking & telehealth

We Doctor, previously known as Guahao.com (which means “booking” in Chinese), was one of Tencent’s first healthcare portfolio companies. 

Through the We Doctor Mini Program, users can schedule appointments with doctors for free. The company also offers a virtual assistant to help patients identify the appropriate hospitals and doctors for their issues.

As of June 2019, We Doctor had integrated with 290,000 doctors and 2,700 hospitals. 

While scheduling appointments is free, We Doctor makes money through its multi-specialty, multi-modality telehealth offerings, which users can access directly through the Mini Program.

(To learn more about the telehealth landscape, clients can view our telehealth Market Map here.)

Source: We Doctor Mini Program

2. Personal Health Records management 

Tencent has partnered with hospitals and some local governments to create an integrated healthcare experience for patients. 

For example, through a partnership with Fudan University Shanghai Cancer Hospital, users can pay hospital bills, check diagnostics reports, and check personal health records via WeChat’s Public Services function.

Source: WeChat Public Services page for Fudan University Shanghai Cancer Hospital

3. Primary Care Access

Tencent Trusted Doctors (TTD), an ambulatory care platform, aims to tackle two major problems in Chinese healthcare: lack of primary care resources and overcrowding of hospitals.

Through TTD’s Mini Program, users can access primary care through a subscription model and can take advantage of primary care services, such as medication refills, both virtually and in person.

Users can also access their health records, medication lists, and treatment plans using the TTD Mini Program. 

TTD raised $250M in a Series A round from Tencent, Sequoia Capital China, and others.

Source: TTD Mini Program

In addition to offering primary care, TTD is building out other ambulatory offerings, including outpatient surgery, ophthalmology, and dentistry. 

4. Chronic disease management

Tencent entered the chronic disease management space in 2015 with the launch of Tencare Doctor Tang, a connected glucose monitoring device for diabetics. 

The device is linked to a companion program on the WeChat Official Account, which records the data automatically. Data can then be shared with family members and providers. Patients can also connect with providers for care management services through a WeChat-sponsored subscription program. 

Source: Tencare Doctor Tang

Tencent also linked up with Novartis in 2019 to launch a long-term health management platform for patients with heart disease. This platform will sit within a Mini Program in WeChat. Tencent will likely continue to create infrastructure for the long-term management of other chronic diseases.

5. Consumer-Facing Knowledge Platform

In 2017, Tencent launched Tencent Medical Knowledge Bank (Tencent Yidian), a WeChat-native healthcare knowledge platform featuring vetted, consumer-facing educational content. 

The Mini Program allows consumers to look up medications and check for vaccine integrity. The vaccine integrity check is especially relevant in light of a slew of fake vaccine scandals in 2018 and 2019, and has been implemented in partnership with the National Medical Products Administration, China’s FDA-equivalent regulatory body.

The Knowledge Bank platform also allows users to upload diagnostic reports, such as complete blood count and urinalysis, and to compare their personal data to a benchmark.

Source: Tencent Medical Knowledge Bank Mini Program

Furthermore, Tencent has recently signed partnerships with medical publishers, such as WebMD and New England Journal of Medicine (NEJM), to improve consumer access to medical knowledge. It has also paired up with medical information and solutions provider Elsevier to accelerate the dissemination of health news and studies to medical professionals. Finally, Tencent’s partnership with Springer Nature Group supports scientific research, discovery, and knowledge-sharing.

6. Provider-Facing Knowledge & AUTHENTICATION Platform

With 4.6M members, the Chinese Medical Doctor Association (CMDA) is China’s largest medical association. In August 2019, CMDA signed a partnership with Tencent to build a WeChat-native app to offer its members continued education opportunities and a digital “Provider Card” that is tied to the provider’s credentialing. Providers can also publish educational content on the platform to build their brands and earn money. 

Once rolled out, the Provider Cards will be searchable on WeChat and via QR codes. Provider Cards will allow users to identify providers’ credentials, specialties, publications, and other information, which helps to establish authentication and trust between providers and patients. 

Source: CMDA Mini Program

The Card could eventually become a virtual credentialing system to facilitate healthcare payment and monitor provider performance. 

7. Group-buying healthcare products & services

The Nasdaq-listed JD.com is China’s second-largest e-commerce company. After investing $215M in 2014, Tencent took a minority stake of over 20% in JD.com, and WeChat has since become an essential channel for users to access the e-commerce platform. As of 2017, 24% of JD.com’s new users came from WeChat and QQ (another Tencent-owned communication asset geared toward a younger audience).

This number could continue to climb, as JD.com recently announced a partnership with Tencent to offer group-buying options through a WeChat Mini Program. Group-buying allows users to form groups to access volume discounts and buy items in bulk. 

JD.com’s health unit JD Health uses this Mini Program to offer group-buying for certain healthcare products. For example, through group-buying, consumers enjoy a 13% discount off of the popular weight-loss drug orlistat (shown in the graphic below). 

Source: JD Health Mini Program

8. Crowdfunded health insurance 

Although 95% of the Chinese population is covered by some form of government-sponsored basic health insurance, coverage is typically shallow. Close to 29% of total healthcare expenditure is still borne out-of-pocket by patients, compared to close to 10% in the US. 

Commercial insurance providers are rushing to close this gap. Shuidi Huzhu, which raised $250M across four funding rounds featuring Tencent (among others), uses crowdfunding to provide catastrophe insurance, through which emergency medical fees are shared by the platform’s users.

Through Shuidi Huzhu’s WeChat Official Account, users can purchase insurance with a low minimum commitment. Shuidi Huzhu hedges against the insurance death spiral by offering a low cost to participate and by using WeChat to assemble a broad pool of participants.

Source: Shuidi Huzhu Official Account

As of December 2019, 88M users have participated in Shuidi’s programs, which has paid out $157M in claims. The company has expanded to offer telehealth services and insurance brokerage. 

9. Gamifying aesthetic medicine 

SoYoung is an aesthetic medicine marketplace. Through its Mini Program, users can book appointments, leave reviews, and share experiences of previous cosmetic surgeries.

Tencent led the company’s $50M Series C round in 2016. Then, in early 2019, the company went public on Nasdaq.

SoYoung has leveraged WeChat to attract leads and raise brand awareness, such as through its social media-ready games. For example, in SoYoung’s “Golden Triangle” game, hosted in WeChat, users can upload pictures of themselves and receive data on how their faces compare to the proportions of the “golden triangle face,” the “pear-shaped face,” and the perfect “mandibular angle.” The “Big Eyes Competition” game analyzes users’ eye sizes and shows how they stack up against other users. 

Source: SoYoung Mini Program

Users can easily share these results on their WeChat Moment, a function similar to Facebook’s Wall. 

Looking ahead 

We expect to see continued development of WeChat-native healthcare applications from Tencent’s owned and partnered healthcare efforts, its portfolio companies, and third-party developers.

Tencent continues to invest in companies that are built on the WeChat ecosystem. In 2019, it bought a 6.7% stake in China Youzan, a Hong Kong Exchange-listed company that helps businesses develop Mini Programs. 

To succeed in China’s healthcare system, companies will need to consider how to plug into WeChat’s ecosystem to meet customers where they are. They will also need to strategically position their services and products to coexist with Chinese big tech companies, such as Tencent, Alibaba, and Baidu, which are increasingly betting on healthcare as a major growth engine. 

The post 9 Ways The WeChat Super App Is Becoming The Front Door To Chinese Healthcare appeared first on CB Insights Research.

Six major digital health hubs emerged as digital health gained traction in China. Below, we look at each of these cities and some of the startups that they host.

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Now, China is the second most active country when it comes to digital health funding, according to CB Insights’ Q3 Healthcare Report.

Since 2009, over $11B in private funding has flowed into China-based digital health companies across nearly 800 deals. Annual funding first crossed the $1B mark in 2015, while 2018 saw a peak of 222 digital health deals.

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China and Hong Kong have been no exception to the trend: fintech companies in the region raised a record $26B in 2018, and exits in the sector have been elevated over the past few years.

Since 2017, 15 fintech companies based in China or Hong Kong have exited via an IPO or M&A deal valued at $1B+. Using CB Insights’ market intelligence platform, we visualized these exits together in one timeline.

See billion-dollar fintech exits by US companies here.

Our analysis included first exits by China- and Hong Kong-based fintech companies only. No billion-dollar fintech exits in the region occurred prior to 2017, as shown below. Data is as of 12/19/2019.

Please click to enlarge. 

Key takeaways

ZhongAn Insurance is the highest-valued exit on our list, going public at a valuation of $11B in late 2017. The online insurtech company was launched in 2013 in a joint effort by China-based tech giants Alibaba, Tencent, and Ping An. ZhongAn became China’s first online-only insurer to break the $1.49B premium mark and has pursued technological innovations like blockchain; however, its stock has fallen by more than 50% since its IPO.

Qudian and Du Xiaoman Financial round out the top 3 highest-valued exits on our graphic.

Beijing-based electronics retailer Qudian raised nearly $955M in funding before going public at a valuation of $7.9B in 2017 (though its market cap has since fallen to $1.1B amid a difficult climate for China’s online lenders). Du Xiaoman Financial, which is the only M&A deal featured in our graphic, was acquired by a consortium of investors led by TPG Capital and Carlyle for $4B in 2018.

Financial account management platform OneConnect is the most recent exit to appear on our graphic: the Ping An spinoff went public at a valuation of $3.7B in December 2019 — a significant downround since its $8B valuation in January 2018.

Futu Securities is the only Hong Kong-based company to exit with a $1B+ valuation. The online stock trading company went public at a valuation of $1.3B in March 2019.

Seven companies on our list reached $1B+ private unicorn valuations prior to exiting: ZhongAn ($8B private valuation), OneConnect ($8B), Lakala Payment ($1.6B), Qudian ($1.2B), Tiger Brokers ($1.1B), 9f Group ($1B), and 51Xinyongka ($1B).

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In this brief, we highlight the 17 Asia-based companies that were featured in our inaugural DH 150. These startups hail from 7 countries and represent 5 healthcare categories: diagnostics, care delivery, provider tools, digital therapeutics, and drug R&D.

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The first is the financial affiliate of Chinese e-commerce giant Alibaba Group, Ant Financial, valued at $150B.

The second, conceivably, is Tencent’s fintech business. In May 2019, Barclays released a note estimating the value of Tencent’s fintech business at $123B, or close to a third of the company’s total market cap.

While Tencent groups the results of the division with business services (cloud and B2B services), fintech is now driving growth at the social media and gaming giant. In Q2’19, Tencent’s fintech and business services category grew 37% YoY in contrast to 16% growth in online advertising revenue, down from 25% in Q1’19.

Both Ant and Tencent have converged on a growth playbook that focuses on converting their massive audiences of digital payments users into consumers of financial services across lending, wealth management, insurance, and credit scoring.

In this analysis, we highlight 5 ways Ant Financial and Tencent are continuing to refine their fintech growth playbooks. As more platforms hope to move beyond payments into fintech super apps (think MercadoPago in Latin America or PhonePe in India), Ant and Tencent’s moves provide hints as to what could come next around the world.

1. Building flywheel effects

The key to Ant and Tencent’s fintech playbooks is to build a powerful flywheel effect by using payments as a customer acquisition engine into higher-margin financial services for its 800M-900M users in China.

Ant and Tencent continue to dominate third-party mobile payments in China, which saw $7.8T in transaction value in Q2’19. Ant’s Alipay and Tencent’s WeChat Pay control 54.2% and 39.5% of the market, respectively.

As the payment market matures, Ant and Tencent are providing technology and user behavior analysis to help financial institutions provide more tailored product offerings.

This is already leading to substantial growth. At its Investor Day in September 2019, Ant disclosed that financial services has overtaken payments and now makes up over 50% of its overall revenue.

Notably, Ant Financial customers who have used 3+ financial services grew to 80% in June 2019, while customers who use 5 financial services grew to 40%. This is important because Ant’s ability to earn more of its users’ share of wallet increases with time and trust.

2. Making virtual credit a part of everyday life

One area where Ant has ingrained itself into the daily lives of its younger users is in short-term installment lending.

Millennial and Gen Z consumers in China are spending differently than previous generations by showing a willingness to take on debt for both everyday purchases (cosmetics, clothes, food) and bigger-ticket items (cameras, smartphones).

Ant Financial’s Huabei, which allows users to pay for items on credit with an interest-free payment period, has grown significantly in 2019 and has reportedly extended loans in excess of more than 1 trillion yuan ($140B) since its launch in April 2015. That’s 10X more than the outstanding loans on Huabei at the end of the first half of 2017 (99.2 billion yuan).

Now, Tencent is also developing its own virtual credit product called Fenfu, which is expected to go live within WeChat Pay in Q4’19. This would be Tencent’s first move to provide a payment option beyond its users’ debit and credit cards issued by regular banks. Tencent’s expansion into virtual credit payments will likely play a big role in its own moves toward pushing its user base into additional financial products.

3. Prioritizing health insurance

One area of expanding importance for Ant and Tencent is health insurance.

With the Chinese government issuing multiple policies to boost the development of protection-based insurance products, health insurance in China is projected to grow at a 20% CAGR from 2018 to 2023, while long-term health insurance is expected to account for 65% market share of health insurance in terms of gross written premiums in 2023.

To boost health insurance penetration among China’s lower-tier cities and rural areas, Tencent and Ant have both invested or built mutual aid platforms.

Tencent is an investor in Waterdrop, which has grown to 80M members who contribute 3-5 yuan per month and receive up to 300K yuan for major medical expenses. Waterdrop has provided assistance to over 4K individuals since its 2016 launch.

Waterdrop launched Waterdrop Insurance Mall in May 2017. As a national insurance brokerage selling more than 80 insurance products, Waterdrop Insurance Mall has grown to more than 12M users, 90% of which are completing their first-ever online insurance purchase, according to the company. In July 2019, premium sales exceeded $83M.

Meanwhile, Ant launched its own mutual aid platform aimed at rural cities, Xiang Hu Bao, in October 2018, which has grown to more than 80M members (the fastest growth across any of its product categories). Ant reported at its Investor Day that since the launch of Xiang Hu Bao, the sale of traditional health insurance products distributed by Ant has accelerated.

Tencent and Ant are also investing in expanding health insurance more broadly. Tencent is an investor in Xiaobang, which targets middle-income families with online courses on insurance planning and financial education. When users finish the courses, the startup targets high-intention users with one-on-one consultants who tailor insurance plans to their profiles.

Tencent has also been building out its own digital brokerage, WeSure, and launched a low-cost health insurance plan with Taikang Life in May 2019. The new offering extends coverage for six years without having to re-qualify for coverage after every year.

4. Diversifying options for savings and investing to expand the market

With over 600M users, Ant Financial’s Yu’e Bao is frequently touted as the largest money market fund in the world. But in September 2019, Yu’e Bao lost the top money market fund spot as its assets shrunk 39% from its peak in March 2018.

This isn’t a bad thing for Ant. As Ant has moved toward an open platform model, it is moving toward diversifying away from just one fund into a platform business of dozens of funds.

In May, for example, Invesco announced that it had quadrupled the assets managed by its local joint venture, Invesco Great Wall, to $31.5B, since the fund was added to Yu’e Bao in June 2018.

Tencent, too, is looking to work more closely with wealth management incumbents. While Tencent’s Licaitong wealth management platform has grown to $112B, it is reportedly in talks with BlackRock for a potential tie-up to make its tools for investment portfolios available to the Chinese market.

5. Focusing on small businesses

According to China’s central bank head Yi Gang, small businesses account for 90% of all companies in China and contribute more than 60% of economic output.

Now, China’s fintech giants are getting deeper into financial products for small businesses. MYBank, an online lender backed by Ant Financial, is launching a new receipt financing service that will utilize QR codes to scan receipts and obtain tax information from suppliers.

With the availability of more information from receipts, the new service will reportedly make larger loans available to small businesses in as little as a few minutes.

According to its annual report, MYBank served 12.3M small businesses and private business owners through the end of 2018.

WeBank, a Tencent-backed digital bank that is reportedly valued at $21B, is also expanding credit to China’s small businesses. According to the company, 66% of WeBank’s small business customers (10 employees on average) are receiving a loan from a financial institution for the first time.

WeBank and MYBank are further examples of Ant and Tencent’s fintech playbook of leveraging their massive user bases and technology capabilities to bring financial institutions on board. Of note, WeBank partners with more than 40 banks in China, with up to 80% of the capital coming from these partners reimbursed through a profit-sharing agreement.

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In China, Tencent is synonymous with mobile gaming and messaging. But financial services is quickly becoming a key third source of revenue as the internet giant faces headwinds from more stringent regulatory reviews in gaming that have curtailed profit growth.

There are three main ways in which Tencent currently makes money through financial services:

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Using CB Insights’ earnings calls analysis tool, we looked into the data behind what is top-of-mind for leading executives.

Brexit chatter tracks major events

Discussion of Brexit on earnings calls skyrocketed after the UK’s vote to leave the European Union in June 2016 — but mentions had already substantially subsided by the next quarter. This trajectory continued over the next two years, until beginning to rise as the initial EU exit deadline of March 31, 2019 loomed.

This uneven cycle in mentions is likely due in part to a broad continuation of the status quo in trade relations between the EU and the UK, even as political exit negotiations took place in the background. Companies knew change was coming, but weren’t sure exactly what that change would be.

The companies that mention Brexit the most on earnings calls come from sectors including finance, auto, and travel — reflecting three key UK industries with close ties to the European market.

“I was in London […] trying to understand what Brexit means. I’m still not much smarter.”— Oliver Schmidt, Head of Investor Relations, Allianz

Trade with China is a sustained topic on earnings calls

Talk of China tariffs overtook Brexit in Q2’18 — just as the announcements of hefty tariffs were escalating — and has continued on an upward trend ever since. Since then, the only quarter when Brexit was a bigger feature of earnings calls was Q2’19, in the run-up to the original deadline for Britain to leave.

Businesses have had to respond to a regular stream of new tariff announcements since the US-China trade war, contested between the world’s two biggest economies, began in earnest. This fast-moving series of events, along with their near-immediate economic consequences, may have kept trade with China top-of-mind for many companies.

The businesses mentioning China tariffs the most represent industries such as shipping, energy, and agriculture.

“Tariffs imposed on Chinese imports resulted in an adverse impact of approximately 5% on gross profits.”– Richard Mushrush, CFO, Telkonet 

“There’s still a little bit unknown about what — how this China thing is going to play out. And that’s a big important market for us and that’s probably what makes me a little more anxious.”– Bob Swan, CEO, Intel

What next?

Expect discussion of Brexit to spike again when the extended deadline for leaving the EU by the end of October edges closer. Though many view leaving without a deal as unlikely, the UK’s government has said it is actively preparing for such a scenario.

Businesses may especially take note if the UK exits in a “no deal” scenario — where the country leaves the EU without alternative trade arrangements in place — as this would have an overnight effect on many of Europe’s supply chains and cross-border trading costs.

“Brexit remains unresolved with skewed risk to the downside. And trade tensions between the US and China are progressively impacting the growth outlook for both markets.” – Ewen Stevenson, CFO, HSBC

China tariffs will likely remain a common fixture on earnings calls as long as the trade war continues unabated. However, if the US and China run out of quick ways to apply economic pressure, discussion may subside, as companies bake the costs into their earnings projections and move on to other worries — like, say, a sustained market downturn.

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Through AR technology from L’Oréal’s ModiFace, Chinese consumers will now be able to virtually try on lipsticks, eyeshadow, and other products from Armani Beauty’s cosmetics line using their mobile phones, as well as take screenshots, save photos, and share images to social media.

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