Y Combinator is launching a startup program in China

U.S. accelerator Y Combinator is expanding to China after it announced the hiring of former Microsoft and Baidu executive Qi Lu who will develop a standalone startup program that runs on Chinese soil. Shanghai-born Lu spent 11 years with Yahoo and eight years with Microsoft before a short spell with Baidu, where he was COO and […]

U.S. accelerator Y Combinator is expanding to China after it announced the hiring of former Microsoft and Baidu executive Qi Lu who will develop a standalone startup program that runs on Chinese soil.

Shanghai-born Lu spent 11 years with Yahoo and eight years with Microsoft before a short spell with Baidu, where he was COO and head of the firm’s AI research division. Now he becomes founding CEO of YC China while he’s also stepping into the role of Head of YC Research. YC will also expand its research team with an office in Seattle, where Lu has plenty of links.

There’s no immediate timeframe for when YC will launch its China program, which represents its first global expansion, but YC President Sam Altman told TechCrunch in an interview that the program will be based in Beijing once it is up and running. Altman said Lu will use his network and YC’s growing presence in China — it ran its first ‘Startup School’ event in Beijing earlier this year — to recruit prospects who will be put into the upcoming winter program in the U.S..

Following that, YC will work to launch the China-based program as soon as possible. It appears that the details are still being sketched out, although Altman did confirm it will run independently but may lean on local partners for help. The YC President he envisages batch programming in the U.S. and China overlapping to a point with visitors, shared mentors and potentially other interaction between the two.

China’s startup scene has grown massively in recent years, numerous reports peg it close to that of the U.S., so it makes sense that YC, as an ‘ecosystem builder,’ wants to in. But Altman believes that the benefits extend beyond YC and will strengthen its network of founders, which spans more than 1,700 startups.

“The number one asset YC has is a very special founder community,” he told TechCrunch. “The opportunity to include a lot more Chinese founders seems super valuable to everyone. Over the next decade, a significant portion of the tech companies started will be from the U.S. or China [so operating a] network across both is a huge deal.”

Altman said he’s also banking on Lu being the man to make YC China happen. He revealed that he’s spent a decade trying to hire Lu, who he described as “one of the most impressive technologists I know.”

Y Combinator President Sam Altman has often spoken of his desire to get into the Chinese market

Entering China as a foreign entity is never easy, and in the venture world it is particularly tricky because China already has an advanced ecosystem of firms with their own networks for founders, particularly in the early-stage space. But Altman is confident that YC’s global reach and roster of founders and mentors appeals to startups in China.

YC has been working to add Chinese startups to its U.S.-based programs for some time. Altman has long been keen on an expansion to China, as he discussed at our Disrupt event last year, and partner Eric Migicovsky — who co-founder Pebble — has been busy developing networks and arranging events like the Beijing one to raise its profile.

That’s seen some progress with more teams from China — and other parts of the world — taking part in YC batches, which have never been more diverse. But YC is still missing out on global talent.

According to its own data, fewer than 10 Chinese companies have passed through its corridors but that list looks like it is missing some names so the number may be higher. Clearly, though, admission are skewed towards the U.S. — the question is whether Qi Lu and creation of YC China can significantly alter that.

Chinese Tesla rival Nio files to raise $1.8 billion in US IPO

Tesla may be looking to go private, but Chinese rival Nio is going the other way after it filed to raise $1.8 billion in an IPO on the New York Stock Exchange. Nio was started in 2014, initially as NextCar, by Bin Li, an entrepreneur who founded online automotive services platform Bitauto. The company is backed by Chinese […]

Tesla may be looking to go private, but Chinese rival Nio is going the other way after it filed to raise $1.8 billion in an IPO on the New York Stock Exchange.

Nio was started in 2014, initially as NextCar, by Bin Li, an entrepreneur who founded online automotive services platform Bitauto. The company is backed by Chinese internet giants Baidu and Tencent among others, and it has developed two vehicles so far: the EP9 supercar and ES8.

The former is really a concept/racer car — it broke the electric vehicle speed record last year — but the ES8, pictured above, is a car designed for the masses which is priced at 448,000 RMB, or around $65,000.

Nio opened sales for the ES8 last year but it only began shipping in June. Thus, to date, it has fulfilled just 481 orders, although it claims that there are 17,000 customers who put down reservations waiting in the wings.

That means that, essentially, it is pre-revenue at this point.

The company reported revenue of $6.9 million as of the end of June — so one month of deliveries — with a total loss of $502 million for 2018 to date. Last year, Nio lost $759 million in 2017, that included no revenue and nearly $400 million spent on R&D.

Nio may be in the same space as Tesla, but its approach differs from the U.S. firm. The company operates ‘clubhouses’ where it sells to new customers and allows existing owners to come to spend time, while it also goes direct to consumer with mobile-based sales. (Not, unlike, say an early Xiaomi model.)

Nio’s pricing is more focused on mid-market and, without a charger network like Tesla (most Chinese households would struggle to charge at home), it has developed its own unique way to handle battery charging. Its vehicles support battery swapping at dedicated stations while it operates a range of roaming charging trucks can  reach users who are low on juice.

Those on-demand charging services come as part of a subscription-based package which will add further revenue beyond car sales. Further down the line, the company said its vehicles will be compatible with the national EV charging network China is developing so that’ll help on the charging front, too.

Like China’s infrastructure play, Nio itself is very much a work in progress.

Indeed, case in point, it doesn’t yet operate its own factory.

Right now, state-owned JAC Motors handles product but Nio has pledged to invest $650 million to construct its own manufacturing plant in Shanghai. Nio’s current order backlog will take six to nine months to process, according to the filing, but its own factory could mean orders are dispatched to customers within 28 days of purchase.

The interior of the NIO ES8

The company’s focus is China, but Nio has global roots. Shanghai is its headquarters and home to nearly 2,500 staff, but it also has teams in Munich (design), San Jose (software and self-driving) and London and Oxford in the UK, which handle vehicle concepts.

Its executive team is predominantly Chinese but one familiar name is Padmasree Warrior who is the head of Nio’s U.S. business. The former Motorola CTO joined the company in 2015 after calling time on Cisco, where she spent seven years and had been chief technology and strategy officer.

Despite an international setup, there’s no word in the filing on whether Nio has a timeframe for selling vehicles outside of China. For now, the company cites analyst data claiming that “China is a clear leader in the global EV market” with sales growing from 21,800 in 2013 to 740,900 units last year. That’s despite the Chinese government cutting back on some of its generous subsidies aimed at encouraging early ownership of EVs and eco-friendly hybrid cars.

Chinese tech stocks tumble from more than just trade tensions

Editor’s note: This post originally appeared on TechNode, an editorial partner of TechCrunch based in China. Reports of trade tensions between China and the US in the past few months have been hard to ignore. In early July, the US imposed $34 billion on Chinese goods, prompting the Shenzhen Component Index, dominated by technology and […]

Editor’s note: This post originally appeared on TechNode, an editorial partner of TechCrunch based in China.

Reports of trade tensions between China and the US in the past few months have been hard to ignore. In early July, the US imposed $34 billion on Chinese goods, prompting the Shenzhen Component Index, dominated by technology and consumer product stocks, to fall to its lowest point since 2014, igniting fears among investors.

“The U.S. tariffs, coupled with a falling yuan, will significantly increase the cost for many Chinese technology companies that rely on imported raw materials, such as semiconductors, integrated circuits, and electric components,” Zhang Xia, an analyst for China Merchants Bank Securities, told the South China Morning Post.

Additionally, the U.S. commerce department announced yesterday it will place an embargo on 44 Chinese companies—including the world’s largest surveillance equipment manufacturer Hikvision—for “acting contrary to the national interests or foreign policy of the United States.” The move caused the companies’ share prices to fall by nearly six percent.

However, the focus has shifted to more than just the trade war. And a number of big Chinese tech companies have seen their share prices plummet for other reasons.

Pinduoduo, China’s latest e-commerce giant to list on the Nasdaq, found that an initial public offering (IPO) is not a panacea. Conversely, its listing has drawn attention to the company’s counterfeit products. And investors are not happy.

Tencent’s shares have nosedived by over 25 percent since its peak in January, erasing $143 billion in market value over the past seven months.

Search giant Baidu also hasn’t been immune. The company’s stock price dropped by nearly 8 percent this week following news that Google plans to re-enter the Chinese market.

Government crackdowns

While IPOs are usually a cause for celebration, Pinduoduo has proven this past week they can also be bad for business. The company—which has integrated e-commerce and social media—caters to low-income consumers living outside first and second-tier cities. It has been plagued by accusations of facilitating the sale of counterfeit low-quality goods.

Just days after going public, its share price tumbled by 16 percent, falling below its offer price of $19. The drop was, in part, initiated by requests made by television maker Skyworth to remove counterfeit listings of its products from the e-commerce firm’s marketplace.

The company announced (in Chinese) this week that it had removed 10.7 million listings of problematic goods. However, this did little to assuage concerns from investors and regulators after the latter launched an inquiry into Pinduoduo’s product listings. Its stock price dropped to 30 percent below its closing price on its first day of trading, wiping out over $9 billion in value.

This is unlikely to be helped by the fact that seven U.S. law firms have launched investigations into the company on behalf of its investors. The statement issued by the firms shows that investors suffered financial losses after Chinese regulators began looking into the company’s dealings. The company met today with regulators and agreed to improve its products’ vetting procedures.

However, it’s not only e-commerce platforms that have been affected. Video streaming service Bilibili has seen its stock price drop by almost 21 percent since July 20. The decline comes amid renewed efforts led by the Cyberspace Administration of China (CAC) to crack down on what it deems to be “vulgar” or “inappropriate” content.

The company has subsequently had its app removed from app stores in the country for one month. Nasdaq-listed Bilibili responded by saying it is “in deep self-review and reflection.”

Screenshot of the drop in Bilibili’s stock price. Accessed August 3, 2018

Rumored competition

Baidu, which runs China’s biggest search engine, found that even unconfirmed competition can cause stocks to tumble. In a move which could mark its re-entry into the Chinese market, news broke this week that Google has plans to launch an Android app that could provide filtered results to users in China.

Baidu currently commands nearly 70 percent of China’s search market. Google shut down its search engine in China in 2010 over censorship concerns, giving up access to a vast market. China’s online population now exceeds 770 million, double the entire populace of the U.S. and more than that of Europe.

Baidu’s income is still highly dependant on ad revenue, which increased by 25 percent in the second quarter. Google’s return is clearly seen as a threat, causing Baidu’s stock price to fall from $247.18 on July 31 to $226.83 on August 2. This marks the most significant fall since the company announced the departure of its chief operating officer Lu Qi in May.

Steady decline

Nonetheless, all these losses seem insignificant in comparison to Tencent’s. The company saw its stock price increase by 114 percent in 2017, reaching a record high in January 2018. However, since then, the price has dropped by nearly $130 per share, eviscerating a considerable portion of its market value. In July alone, its stock price fell by 9.9 percent. The company’s devaluation tops Facebook’s $130 billion rout following its earnings call last month.

In April, the company lost over $20 billion in value after South African investment and media firm Naspers — an early and loyal backer — announced it was trimming its stake by two percent. Additionally, Martin Lau, the company’s president, sold one million of his shares in the company. This, added to the Naspers sale and warnings of margin pressure, led to a loss of $51 billion in market value.

“Investors are increasingly pricing in lower expectations for Tencent’s interim results,” Linus Yip, a strategist at First Shanghai Securities in Hong Kong, told Bloomberg.

Yip expects the downward trend to continue, and not just for Tencent. “Overall, tech companies are facing a similar problem. They have been enjoying fast profit growth in the past few years, so it will be difficult for them to maintain similar growth in the future as the competition grows and some segments are saturated,” he said.

Daimler deepens ties with China’s Baidu on automated driving

Daimler, the owner of the Mercedes-Benz brand, and China’s Baidu are expanding their partnership with plans to cooperate more closely on automated driving and connectivity services in the German automaker’s vehicles. The two companies have signed an agreement to collaborate in these two areas, specifically with Baidu’s Apollo program, an open-source autonomous driving platform. Both companies said […]

Daimler, the owner of the Mercedes-Benz brand, and China’s Baidu are expanding their partnership with plans to cooperate more closely on automated driving and connectivity services in the German automaker’s vehicles.

The two companies have signed an agreement to collaborate in these two areas, specifically with Baidu’s Apollo program, an open-source autonomous driving platform. Both companies said they will also work to explore new fields in vehicle connectivity services.

What this deeper relationship will produce isn’t entirely clear, although there is at least one component of the announcement that provides a bit more detail.  Baidu’s connectivity services will be integrated into Mercedes-Benz’s new infotainment system known as MBUX, Daimler said.

Daimler’s relationship with Baidu has strengthened as it has expanded its presence in China. Daimler was one of the first partners to join Apollo, which Baidu launched in April 2017. Daimler is also a member of the Apollo Committee, a group that wants to accelerate research on safer solutions in automated driving in China and promotes the drafting of related laws and regulations.

Daimler  was granted in July a license to test self-driving vehicles on public roads in Beijing, making it the first international automaker to receive such permission. The automaker was given the test permit by the Chinese government after extensive closed-course testing. Daimler said, at the time, that is marked an important milestone in its research and development efforts in China.

Baidu’s open source Apollo program reflects the Chinese search engine’s strategy to gaining a piece of the autonomous vehicle industry pie. Baidu isn’t interested in making the actual car — just the software that drives it.

Baidu has focused its effort on delivering services, like data and high-skilled computing. And it’s betting that its tech will help it become China’s leading developer of self-driving vehicles.

The goal, of course, is to persuade as many companies as possible to use its Apollo platform. Some 116 partners are now on the Apollo platform, including new partners Jaguar Land Rover, Valeo, Byton, Leopard Imaging and Suning Logistics. Daimler was one of the first.

Baidu unveiled an upgrade to the Apollo platform at its developer conference in July.  Apollo 3.0, as it’s being called, aims to better support autonomous driving in geo-fenced areas. It also includes new solutions to support valet parking, autonomous mini buses and autonomous microcars.

A previous update, announced in January at CES 2018, included support for new computing platforms, new reference vehicles and more HD mapping services.