Sparklabs Global Ventures' Technology and Internet Market Bi
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SparkLabs Global Ventures’ Technology and Internet Market Bi-Monthly Review September 22, 2014 Weekly Highlights Global Trends • The travel industry is booming on smartphones as mobile bookings hit 40 percent Americans are rapidly moving away from desktops and getting comfortable booking all of their travel reservations on tablets and smartphones. In other words, people are making their travel plans on mobile devices, not desktops and laptops. For the first six months of 2014, over 40 percent of Americans booked travel reservations — flights, hotels, cruises, for example — on mobile devices, up more than 20 percent for the same period last year, according to Criteo’s new Travel Flash Report. Criteo is Paris-based with offices in New York and the Bay Area. Criteo, a virtual brand retargeter that helps clients retain customers in marketing campaigns, also queried over 1,000 of their clients, many of whom reside in the online travel ecosystem, for example, like Expedia and Hotels.com. Other findings indicate that mobile devices now account for 21 percent of hotel bookings. Peer-to-peer apartment rentals booked through mobile is now 34 percent globally, not just in the States. Mobile penetration trends in Asia, Latin America, and Europe, mirror, more or less, the mobile numbers in the States. Indeed, Asia has seen a 20 percent growth on those booking through mobile devices. But in Germany, the biggest economy in all of Europe, online booking with a mobile device stood at a paltry 10 percent. • How Apple Pay is set to change commerce Recently, Apple announced two new iPhones that included Near Field Communication (NFC) for wireless payments for the first time. The company’s new Apple Pay service provides a full digital wallet for the iPhone 6 and 6 Plus, which enables consumers to pay by phone using NFC with simplicity. NFC Payments have been around a while, but Apple Pay has the potential to make widespread adoption of digital wallet payments a reality at last. With mobile payments, it is the intersection of four key Apple capabilities, combined with a very slick customer experience that makes this a game changer: Touch ID, Passbook, iTunes, and NFC. Touch ID technology is now on at least 14 million smartphones around the world. Passbook, the digital wallet app is deployed on 200 million iPhone. Also, there are well over 800 million iTunes accounts with stored credit card information. Lastly, a method of connecting to a point of sale terminal when in close proximity, NFC technology is already embedded into 395 million smartphones. What this means for in-store payments is that Apple finally has a chance to succeed in making a phone a wallet. The user experience is very slick and this will draw an influential and affluent new segment of consumers into NFC payments. There are still some hurdles, of course: Many more retailers will need to upgrade their POS terminals to accept NFC; more merchant acquirers will need to support Apple Pay; and customers will need to upgrade their phones. • The rise of Uber and the demise of taxis, in one chart The taxi business has taken a massive hit thanks to the extraordinary rise in ride-sharing services. A new report from the San Francisco Metropolitan Transportation Agency finds that since 2012, the average number of trips per taxi has plunged from 1,424 a month in March 2012 to 504 in July 2014 — a 65 percent drop. The report underscores how fast consumers will take advantage of better options once they are available. A recent study from UC Berkeley found that during the evening rush hour, 92 percent of ride-sharing services such as UberX and Lyft arrived in under 10 minutes, while just 16 percent of taxis did so. Thirty seven percent of taxis took longer than 20 minutes. The same study found that 39 percent of ride-sharing users would have taken a taxi had Uber or Lyft not been available. Rather than trying to out-innovate their new competition, taxi groups have pressured the state government to impose paralyzing regulations. Full report can be found here. SparkLabs Global Ventures (http://www.sparklabsglobal.com) is a global seed-stage fund with partners in Silicon Valley, Chicago, London Tel Aviv, Singapore, and Seoul. 1 SparkLabs Global Ventures’ Technology and Internet Market Bi-Monthly Review September 22, 2014 Asia Pacific China • Alibaba Raises $21.8 Billion in Initial Public Offering The Alibaba Group, the Chinese Internet juggernaut, raised US$21.8 billion in its initial stock sale, as investors flocked to buy a piece of the company that is poised to continue dominating China’s burgeoning e-commerce industry. The company priced its shares at $68 each, at the top end of an already raised range. At that level, the online market operator will have a market value of about $168 billion — much more than eBay, Twitter and LinkedIn combined. The stock sale also marks a coming of age of the Internet in China, a country with nearly 1.4 billion, less than half of whom venture online. Alibaba’s main pitch to investors in a globe-spanning roadshow over the past two weeks has been the enormous potential wealth that can be made as more Chinese citizens log onto the Internet and shop for goods. • Tencent Leads US$20M Funding in Chinese Outbound Travel Site Woqu Woqu, launched in April this year, is a Chinese travel site currently focused on only one market, the U.S.. The site secured US$20 million in Series B round of funding led by Tencent and joined by existing investor MorningSide Ventures. The site announced multi-million dollars in Series A from MorningSide shortly after its launch. Woqu is founded Huang Zhiwen, former president at Chinese travel site Mangocity.com. The new funding will be used for developing mobile services and expanding to other markets, such as Australia, New Zealand and Europe according to the company. China outbound tourism has been developing fast. In the 12 months ending in March 2014, 102 million border crossings took place in China, according to a report by China Outbound Tourism Research Institute (COTRI). 1.4 million Chinese traveled to the U.S. in 2012 and 2013 saw a 27% increase, according to Woqu. It is expected the number will reach 2 million by the end of this year. • Chinese Game Developer Feiyu Technology Files for Hong Kong IPO Feiyu Technology, a Chinese mobile and web game developer, has filed for an IPO on Hong Kong market. Xiamen Haloer and CAIROT, two of China’s leading game developers, merged together into Feiyu Technology July this year for scale operation. Legendary Chinese angel investor Cai Wensheng is the backer for both of the companies. According to prospectus released by the company, Feiyu Technology has recorded revenue of around US$21 million in H1 this year, of which mobile games account for 69.6% of the total revenue. As of June 30, 2014, Feiyu Technology’s RPG games have registered 198.55 million users and the monthly active user for this June is around 2.30 million. The total registered user of Feiyu’s casual games is around 173 million with monthly active users for June stands at 22.5 million. The company has rolled out altogether seven mobile and plans to launch new games like Carrot Fantasy: Magic Forest, Jiongxiyou II, Battery Run, etc. from H2 2014 to 2015. The prospectus mentioned the company’s plans to enrich game categories and expand R&D teams by investment or acquisition. • Nova Founders Capital receives US$50M from Hong Kong’s Pacific Century Group to boost fintech in Asia Nova Founders Capital, an Asia-focused VC firm created by Rocket internet alumni Mads Faurholt-Jorgensen and Raphael Strauch, announced it just received a US$50 million investment from Pacific Century Group, an investment company founded by Richard Li, son of Hong Kong’s Li Ka-Shing. A spokeswoman for Nova Founders Capital says that the firm will use the funding to tilt its focus towards fintech firms. Not unlike Rocket Internet, it has committed not just to investing in companies, but also building new ones and possibly acquiring old ones. Even though Nova describes itself as a global-facing venture capital firm, its investment portfolio leans heavily towards Asia. Its teams include the Compare Asia Group, which runs a batch of financial product comparison sites in Taiwan, Singapore, Hong Kong, Malaysia, Vietnam, the Philippines, Thailand, and Indonesia. The Nova-Hong Kong connection also warrants attention. Two of the city’s high-profile startups work in fintech – 8 Securities recently raised US$9 million from Velocity Capital and others, and in May DemystData raised US$5 million from a bevy of investors including Arbor Ventures, a Hong Kong-based VC firm that specializes in fintech. • Financial Social Media Snowball Raises US$40M in Series C Funding Led by Renren Snowball Finance (Xueqiu in Chinese), the Chinese financial social media, announced that the company raised US$40 million in Series C funding led by Renren Inc. and joined by existing investor MorningSide Ventures. Xueqiu.com is now one of the most popular financial social networks among Chinese investors in China. The company raised Series B funding of US$10 million last year and US$3.2 million in Series A in 2011. Renren, the notorious Facebook copy, didn’t turn out to be successful in China even though Facebook hasn’t been accessible here. The company reported 42% year-over-year decrease in total revenue in Q2 2014. Gaming, which used to be SparkLabs Global Ventures (http://www.sparklabsglobal.com) is a global seed-stage fund with partners in Silicon Valley, Chicago, London Tel Aviv, Singapore, and Seoul.