SparkLabs Global Ventures’ Technology and Internet Market Bi-Monthly Review November 14, 2014 Bi-monthly Highlights Global Trends • Online games expected to hit US$13B in 2014, with at least US$946M from League of Legends alone Mobile may be the hottest game market, but massively multiplayer online games on the PC are expected to grow from US$11 billion in 2014 to US$13 billion by 2017, according to market researcher SuperData Research. It wrote that MMO market has changed dramatically in revenue, player preferences, and the size of its potential audience. One of the clear winners from the changes is the free-to-play League of Legends, a multiplayer online battle arena game (MOBA). League of Legends has already generated $946 million so far in 2014, accounting for 11.9% of the overall market. But SuperData said it is worth noting that Wargaming’s World of Tanks, which is No. 5 on the rankings of MMOs with $369 million in revenue, monetizes much better on a smaller user base. The success of MOBA titles tells us the market is shifting to free-to-play, but the traditional subscription game World of Warcraft from Blizzard still generated $728 million this year from subscription revenues. Online games are 21% of the overall digital games market. By looking at the spending habits of 37 million digital gamers, SuperData’s latest data shows that incumbent titles like SmileGate’s Crossfire ($897M) and Nexon’s Dungeon Fighter ($891M) are holding on to their leadership positions, and Valve’s Dota 2, a MOBA with $136 million in revenues, is coming on strong. Asia remains the biggest market for free-to-play MMOs, with $4.2 billion in revenues. That compares to $3.1 billion in North America and $2.1 billion in Europe. • Home Automation Gadgets Are Leading Explosive Growth In The Consumer 'Internet Of Things' Market Homes around the world are going to become smarter and more connected over the next five years. Overall, a fair number of mainstream consumers still don't fully understand what connected-home devices are and how they work. However, adoption and awareness is still high for such a new category. We expect the devices to become more prevalent in the next two years, when growth will peak. According to a recent report on the connected home, BI Intelligence, connected-home device shipments will grow at a compound annual rate of 67% over the next five years, much faster than smartphone or tablet device growth, and hit 1.8 billion units shipped in 2019. Connected- home devices include all smart appliances (washers, dryers, refrigerators, etc.), safety and security systems (internet-connected sensors, monitors, cameras, and alarm systems), and energy equipment like smart thermostats and smart lighting. The connected-home category will make up about 25% of shipments within the broader Internet of Things category this year, but that share will increase gradually to roughly 27% in 2019 based on our forecast, as growth in other IoT areas picks up. Connected-home device sales will drive over US$61 billion in revenue this year. That number will climb at a 52% compound annual growth rate to reach $490 billion in 2019. 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 November 14, 2014 Asia Pacific China • Chinese fitness wearable maker Codoon secures US$30M funding Codoon, the smart wearable maker from China famous for cloning the Jawbone Up, has raised a US$30 million series B funding round from SIG and SBCVC. The new investment comes just half a year after Codoon picked up a US$10 million series A round from CITIC Capital. The startup offers a redesigned wristband in addition to the lookalike, along with a couple other activity tracking gadgets that look different but essentially do the same thing as the bracelets – track steps taken and monitor sleep. Then there’s this smart kitchen scale and heart rate monitor. Each of the gadgets syncs with the user’s smartphone via Bluetooth. This latest investment will go toward developing Codoon’s new social network for its device users, which aims to help incentivize exercise. Codoon also offers an API for developers to create apps to work with its devices and, conversely, a firmware ROM that can be used to run similar smart wearables. While the price of Codoon’s gadgets undercuts Fitbit, it will have a much more difficult time in China thanks to smartphone maker Xiaomi’s entrance to the fitness market. Earlier this year, Xiaomi launched an activity tracking wristband that offers many of the same functions as Codoon and Fitbit for only RMB 79 (US$13). In contrast, Codoon’s bands cost RMB 399 (US$65) and RMB 499 (US$82). • Tencent-backed on-demand laundry app gets US$20M funding just 4 months after seed round Edaixi, the on-demand laundry app that Tencent invested a US$3.2 million seed round of funding into in July, has already raised a series A round worth US$20 million. This latest investment comes from Matrix Partners and SIG. The doorstep pickup laundry service – available via native app, WeChat service account, and website – is backed by longtime franchise of Chinese laundromats, Rongchang. Edaixi’s main service charges a flat RMB 99 (US$16) rate per each of its custom laundry bags, but it will also clean individual pieces of clothing, shoes, furniture, air conditioners, and handbags. CEO Lu Wenyong told QQ Tech that Edaixi sees 10,000 orders per day in Beijing, mostly through WeChat. Most of its customers are young people in their late 20s and early 30s. This latest round of funding will be used to recruit more delivery drivers and scale up operations to more cities. The startup is still limited to Beijing for the time being, but plans to head into Shanghai, Shenzhen, and Tianjin. The money will also go toward user subsidies, which will help it undercut competition. Edaixi is up against at least half a dozen like-minded apps, including 24tidy, which raised a sizable seed round earlier this year. • This Uber for local deliveries in China just secured US$15 million from Tencent Renren Kuaidi, a crowdsourced delivery system with no relation to the struggling social network of a similar name, announced today it secured a US$15 million series A round of funding from Tencent and Banyan Fund. Renren Kuaidi, which literally translates to “Everyone Express,” let’s anyone who meets the eligibility requirements sign up to be a courier. Those requirements include real-name authentication, binding a bank card, a smartphone with a phone number, and a photo. Couriers can choose to deliver packages by bike, scooter, car, bus, or even on foot. The startup specializes in delivery for boutique stores and local lifestyle products like flowers, cake, coffee, gifts, and food. It’s not about to turn China’s logistics industry on its head, but it could make a valuable impact on last-mile and local delivery. It could be especially useful during times of peak demand for local couriers that need to temporarily bolster their staff. Using a similar model to Uber, Renren Kuaidi doesn’t own its own fleet of staff and vehicles. Couriers sign up to use the mobile app, and Renren takes a cut of their pay per delivery. Customers can book the nearest courier on demand. Founded in 2011, the startup now operates in Beijing, Shanghai, Shenzhen, Suzhou, Hangzhou, and Chengdu. This latest round of funding will go toward hiring new personnel and paying for operating expenses. • China’s top gay hook-up app attracts US$30 million in funding from DCM China’s gay hook-up app, Blued, has secured US$30 million in series B funding led by DCM, the startup has confirmed. This dwarfs the app’s series A round, which amounted to US$1.6 million in February. The financials are not the only rocketing numbers. Blued, which is aimed at China’s gay men, now claims to have 15 million registered users. That’s up from three million towards the beginning of the year. The startup’s founders cite reports that China has as many as 70 million gay men, despite a conservative culture that discourages both men and women from straying away from building up a traditional family. Blued’s users are mostly concentrated around China’s largest cities – Beijing, Shanghai, and Guangzhou – and an increasing proportion of them are China’s “post-90s” generation. Nearly a quarter of that user base is monthly active users – that’s 3.5 million. That compares quite strongly against China’s top flirting app, Momo, which is aimed at straight men and women. Momo has 52 million 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 November 14, 2014 active users at the last count from a total registered base of over 150 million. Blued is up against hook-up apps such as Jackd, Zank, and Hornet. • Tencent makes a play for China’s Snapchat generation with US$20M investment in Blink Tencent has made a new social play in the same vein as Snapchat to appease China’s “post-90s” youths. The web giant made a fresh US$20 million series A investment into Blink, a new photo sharing and messaging app out of China.