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SparkLabs Global Ventures’ Technology and Internet Market Bi-Monthly Review August 11th, 2015 Bi-monthly Highlights Global Trends • The Apple Watch is winning in the battle of fitness trackers Consumers are ditching their fitness trackers for the added functionality of smartwatches. And as smartwatches become increasingly easy to use and affordable, they will capture an even greater share of the wearables market, driving down demand for fitness- and activity-tracking bands, like the Fitbit. The fitness-band category will make up 42% of total wearables shipments in 2020, down from an estimated 48% share this year, and a 53% share in 2014. To win over nontech buffs, smartwatch makers are also offering models that cater to health and fitness enthusiasts, for example the Apple Watch Sport model. According to BI Intelligence, by 2020, Apple Watch shipments will be equivalent to about two-fifths of the luxury-watch market. Assuming a lower-bound price of $350 for the luxury-watch category, and including Apple Watch in that category, traditional wrist watches would account for ~60% of total shipments in 2020, while Apple Watch would account for ~40%. • Facebook is leading the way in social commerce Facebook is the top social commerce platform, driving more than two-thirds of mobile e-commerce traffic and boosting social media's quickly growing share of e-commerce web traffic. Facebook accounts for 50% of total social referrals and 64% of total social revenue. According to BI Intelligence, social is driving much bigger increases in retail traffic than any other online channel. Social media increased its share of e-commerce referrals nearly 200% between the first quarters of 2014 and 2015. In addition, for retailers to maintain these social gains, they will need to pay special attention to mobile, where social engagement with retail content is still limited. Social media users are 35% less likely to share a brand's or retailer's social post on mobile than they are on desktop computers. In fact, Pinterest is a major social commerce player despite a relatively small user base. The pinning platform drives 16% of social revenue despite an audience 6.5 times smaller than Twitter. Twitter is losing its influence for mass-market merchants, but it could still have a role to play among sporting and events marketers, especially for location-based promotions. • Are digital wallets the future of Asian economy? As many e-commerce businesses are vying for competitiveness in Money 2.0, the idea of a digital wallet will eliminate the traditional method of money transactions, simplifying and compacting the way goods and services are bought and sold. A few technological giants have all recognized a need in the market for transactions to be easier and safer. Apple is slowly implementing its much anticipated Apple Pay and Google with Google Wallet. In similar fashion, banks have also started to integrate digital payments platforms as part of their banking services, an addition that has been very well received within certain Asian countries, most notably in Singapore. The transition to payments made through digital wallets has been a popular approach taken by most of Asia’s biggest banks, and the seemingly warm reception of Singaporean merchants to this new technology is a sign of expansive efforts to make digital payments available all throughout Asia. With the advent of new technologies such as NFC and commercialized cloud storage, removing the physical wallet and replacing it with a digitized wallet on your mobile devices is fast becoming the norm rather than the exception. 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 August 11th, 2015 Asia Pacific China • Startup gets US$50M to shake up China’s used car market Chinese consumers are new to the concept of buying used cars, but they know the industry is dodgy and dirty. Just like in most other countries, a used car is a very risky buy. There aren’t many second-hand cars on the market in China as the new car boom is continuing, albeit at a slower pace than in the past few years. Used vehicles accounted for 19.1 percent of total car sales volume in China in 2013 – compared to 72.4 percent in the US – but the market for pre-loved cars is growing fast. Mychebao revealed that it has pinned down US$50 million in series B funding to grow its website and service to more Chinese cities. After securing US$10 million in series A last year from Gobi Partners, the newest investment is led by Jiuding Capital and Addor Capital, followed by Gobi Partners, Nanjing Venture Capital, and Bank of Nanjing. Lee’s startup sees 5,000 deals taking place each month. It makes money by charging a three percent fee on top of the transaction amount from the buyer. • China’s top ‘Uber for laundry’ startup cleans up with US$100M series B funding China’s leading on-demand laundry startup, Edaixi, revealed that it has secured US$100 million in series B funding. The latest investment, just over a year after getting US$20 million in series A from Matrix Partners and SIG, is led by Baidu and followed by the two previous backers. People can use the Edaixi service in over a dozen cities across China, with a large bag of laundry costing RMB 99 (US$16), or lower prices are available for single items – all the way down to just RMB 9 (US$1.50). Customers can submit an order from Edaixi’s website, native app, or WeChat service account; the startup promises to return items all freshened up within 72 hours. Edaixi’s blockbuster funding means it has raised a lot more than its Silicon Valley counterpart Washio, which locked down US$10.5 million for its series A. • Chinese cloud server ops startup raises US$9M as it prepares to triple revenues ChinaNetCloud, a China-based startup that provides cloud server solutions, announced that it has raised a US$9 million series A. The round was led by Juren Capital with participation from Jolly Capital – both Chinese investment firms in the Shanghai area. ChinaNetCloud says the funding will be used to accelerate the company’s growth and further tech development. ChinaNetCloud calls itself an Internet operations-as-a-service provider. It offers a range of services that include building new server systems, managing and optimizing existing systems, and building and managing cloud servers. It claims to offer one-stop-shopping so that instead of trying to build, manage, and scale servers themselves, companies can leave that work to ChinaNetCloud’s team all while paying what the company calls a relatively low price. ChinaNetCloud already has partnerships with a number of high profile web companies in China including Alibaba’s cloud computing spinoff Aliyun, and it claims to have seen consistent 50-100 percent growth in the years since its 2008 launch. • China’s Airbnb-esque Tujia is a new startup unicorn after US$300M funding China’s top Airbnb-like site secured its biggest ever round of VC funding – to the tune of US$300 million. Tujia, which started operations in 2011, is now valued at over US$1 billion – so it’s officially a startup “unicorn”. It has raised a total of US$455 million from private investors in four major rounds. This newest round was led by Hong Kong’s All- Stars Investment, which is a new backer for Tujia, with The Ascott, a chain of serviced apartments that’s a part of CapitaLand, also joining in. Tujia’s website shows a holiday home rental for US$160 per night. All the money it’s raised makes Tujia effectively China’s seventh best-funded startup. Airbnb rival Homeaway has previously invested in Tujia and this partnership gives Tujia overseas property listings in over 60 foreign destinations that Chinese tourists can browse in their own language. • NetEase puts up US$500K to fund mobile game developers NetEase announced that it’s opening up an initiative that it calls the NetEase Success Fund. It’s positioning this as an alternative to the publishing model for mobile developers who need for marketing and player acquisition, Each studio accepted into the program could get up to $500,000 each, and accepting the funding does not put developers into a situation where it owes tons of money to NetEase in perpetuity or has to hand over its intellectual property. NetEase North America business director Ryan DeSanto announced that his team’s goal is to provide small indie studios with a way of acquiring players without having to spend a ton of cash on traditional marketing. Not only will NetEase let developers keep their properties and equity, it will also only split revenue until it gets back its initial investment. 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. 2 SparkLabs Global Ventures’ Technology and Internet Market Bi-Monthly Review August 11th, 2015 • China's Sleepace secures US$7M in Series B from Luolai and JD China-based smart sleep solutions startup Sleepace has secured US$7 million in Series B from Luolai Home Textile and B2C e-commerce company JD. It had previously raised US$3.2 million in Series A round from Gobi Partners in July 2014. Earlier this year, it secured US$164,623 from over 1,000 backers in an Indiegogo crowdfunding campaign for its flagship product RestOn, a non-wearable sleep monitor that links up to the Sleepace app via Bluetooth to track and analyse the quality of an individual’s sleep.

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