Five Chinese startups survived a difficult year due to Covid-19 closures

Robot Kennon Robotics delivers food at a Haidilao hot pot restaurant in Shanghai on April 7, 2021.

Qilai Shen | Bloomberg | beautiful pictures

BEIJING – In a year of Covid lockdowns and travel restrictions, a handful of surviving Chinese startups have found growth online and abroad.

Economists estimate China’s economy could grow by just 3% in 2022. The lockdown has stunted business activity and made it impossible for investors to check transactions. The path to an IPO in the United States – an important path to investment returns – has been essentially frozen.

According to a review from Preqin, a VC data service, the next year or two will still be weak in terms of supporting venture capital for startups in China and elsewhere. The amount of US dollars raised by China-focused venture capital funds has fallen by more than 80% from 2021 to just under $9 billion by 2022, according to Preqin data as of Dec. .

But many deals are still happening in China’s information technology industry, factory-related sectors and business connectivity applications, among others, said Angela Lai, senior research analyst at Preqin said.

She says venture capitalists have near-record capital on hand – what’s known as “dry powder”. Preqin data shows China-focused venture capital funds have $104.7 billion as of March 2022.

“Asset managers are ready to react when the market is up,” Lai said. “Everybody is waiting to see when the entry is really good, when the macro will turn up.”

As China prepares to reopen from scratch with Covid, here’s a pick of how five startups said they did in 2022, in alphabetical order:

Anxinsec technology

Year of establishment: 2019

Notable Backers: Hillhouse Capital, BlueRun Ventures

Head office: Beijing

Founder Alex Jiang said cybersecurity firm Anxinsec has seen its revenue quadruple by 2022 to tens of millions of yuan. That’s thanks to large corporate clients, which he said now include Siemens, and Baidu.

The three companies did not immediately respond to a request for comment.

Read more about China from CNBC Pro


Year of establishment: 2016

Notable Backers: Skyline Ventures

Head office: Foshan

In a year of inflation and war, European-focused kitchen appliance brand Ciarra has seen sales increase about 25%, said founder Kang Zuotian.

He claimed that if the war in Ukraine did not break out, sales could increase by about 60%, but European consumers’ willingness to spend declines as rising energy prices outweigh rising incomes.

The company sells range hoods and induction cookers for home use, with list prices of several hundred euros each — or several hundred dollars, to the US market.

Kang said that while Ciarra products can be 30% to 40% more expensive than similar products on the market, they use half the amount of electricity. “We don’t want Chinese companies to go abroad just because it’s cheap.”

He said most products arrive in Europe by ship and are sold mainly through physical stores. Kang said he plans to use the financial results of 2022 to prepare for an IPO in mainland China in the near future.

Keenon the robot

Year of establishment: 2010

Notable Backers: SoftBank, Prosperity7 Ventures, Yunqi Partners

Head office: Shanghai

With no growth in China in 2022, Keenon Robotics has seen revenue grow by more than 40% thanks to its overseas business, said CEO Wan Bin.

Wan said the company has aggressively ramped up overseas operations in 2022 – launching subsidiaries in Tokyo, Seoul, Germany, Dubai, Los Angeles and Hong Kong. He said the plan by 2023 is to expand business in the region from those places, while taking advantage of China’s recovery.

Previously, Wan said that Keenon had at least doubled or more revenue per year from a lower base, as the Chinese market was growing.

Keenon has reached unicorn status, with a valuation of over $1 billion. In September 2021, SoftBank’s Vision Fund 2 led a $200 million Series D investment round, and SoftBank Robotics announced a partnership with Keenon.

Wan said it took about five years for Keenon to focus on service robots, especially food service. Their robot is currently serving food at restaurants like Haidilao hot pot, or delivering to hotel rooms.

In China, customers pay about 2,000 yuan a month for each robot, Wan said, noting that overseas prices are higher.

Wan did not have specific details to share about the IPO plan.


Year of establishment: 2020

Notable Backers: eWTP Capital, Skyline Ventures

Head office: Guangzhou

Founder Ayden Lin says home furniture brand Povison has seen sales more than double last year, to more than $50 million by 2022. He expects an IPO in three years.

The company primarily sells to US consumers through its website – which lists $2,000 marble dining tables, $1,500 and $500 wooden vanity sets. for a pair of adjustable velvet stools. Lin said the company has a staff of 100 in southern China’s Guangdong province and Los Angeles.

Lin said he started working in China’s domestic furniture e-commerce market in 2017. He noticed overproduction in the industry, but suppliers didn’t know how to adjust. its business activities.

Lin attributes part of its success to the company’s development of digital systems that allow Povison to explore areas of consumer demand and respond quickly through its 40 to 50 suppliers. .

Lin says a system that manages inventory and breaks down the manufacturing process into parts, so that steps like painting and gluing can be done simultaneously. “The other connects shipments with trucks that can deliver products in the US,” he said.

Volant Aviation Technology

Year of establishment: 2021

Notable Backers: Future Capital, Shunwei Capital, Ventech China

Head office: Shanghai

2022 is the year of China’s first passenger aircraft, Comac C919, finally got local certification. Just over a year ago, engineers working on aircraft started their own startup, Volant Aerotech, to build what is essentially an electric helicopter.

Founder and CEO Dong Ming says that engineering experience gives Volant an edge in effectively developing aircraft that can meet regulatory requirements — such as flight review on the water — from the very beginning.

Volant has built a prototype that China’s aviation regulators have given the green light for a test flight, scheduled for early 2023.

The vehicle, which is expected to begin deliveries in the second half of 2026, can be used in shuttle services, for charter flights, tourism and package deliveries, Dong said. By the end of 2027, he expects Volant to deliver about 100 cars.

Delta Airlines and other passenger flight operators have supported startups develop similar vehicles, officially known as the electric vertical take-off and landing (eVTOL) aircraft.

Correction: This story has been updated to reflect that Anxinsec only works with businesses.


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