A Silicon Valley VC is being probed for reportedly leaking secrets to China
A Silicon Valley VC is being probed for reportedly leaking secrets to China
Hone Capital raised money from China and it is alleged to be helping Beijing; Swiggy goes to IPO and more
Welcome back,
This week’s newsletter includes some big story focuses that include: a Silicon Valley investment firm that’s being probed by the US for allegedly leaking secrets to Beijing; Swiggy’s much-anticipated IPO that could raise over $1B and value the firm at over $15B.
There’s also news of an impending IPO for India’s first unicorn and the VC formerly known as Sequoia India and Southeast Asia has cashed over $1B since splitting from its parent last year.
Have a great week,
Jon
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News in Focus
Silicon Valley VC Hone Capital investigated for links to China
There’s been plenty of concern around the mix of Chinese capital and US VC firms and startups, principally that by investing in Silicon Valley, China gets access to secrets and data that it shouldn’t. Political tension is one reason for the breakup of global funds like Sequoia and GGV, which have hived off their regional funds, but now we have a rare example of a specific probe into a fund.
The Financial Times reported that US-based fund Hone Capital, which has invested in more than 360 US startups including Stripe and AngelList since launching a $115M fund in 2015, used funds from China to help Beijing access information and glean trade secrets.
Hone’s investments are said to span AI, cybersecurity, and supersonic jets and its connection to China is Shan Xiangshuang, who founded $10B PE firm CSC Group and had looked to bridge technology between China and the US through strategies that included backing Hone.
There’s not a lot more to say at this point, other than that reports of the investigation mark a rare focus on a specific fund. Silicon Valley players are in a tight spot between wanting to raise capital and avoiding money from sources that might compromise them politically. The same can be said about finding deals in markets like China.
Swiggy files for $1B IPO
It is here. Delivery giant Swiggy filed for an IPO that could see it raise $1.25B at a reported valuation of $15B, according to Reuters.
Swiggy is selling shares worth 37.5 billion rupees ($448.56 million), while existing shareholders including Prosus, Accel India and Tencent Europe will sell about 185.3 million shares, the company said in its draft prospectus.
The main purpose of the listing, aside from allowing early investors to get their exits, is to grow its quick commerce strategy, which has become a key battleground for delivery and on-demand startups in India
Swiggy was last valued at a touch over $10B when it raised $700M in 2022, and its numbers seems promising:
It posted a net loss of 23.5 billion rupees in the year ended March 30, 2024, about 44% smaller than a year earlier. Revenue climbed about 36% to 112.47 billion rupees.
Timing also seems to be on its side too:
The IPO also comes as India's stock markets surged to record highs recently, with about 235 companies raising more than $8.6 billion - more than double the amount raised last year, LSEG data showed.
Swiggy has chosen a good time to come to the market, said WealthMills Securities equity strategist Kranthi Bathini, noting that investor sentiment towards IPOs was strong.
"It will also attract extra interest from the investors because of the outperformance of Zomato in the recent past," Bathini said.
Stay tuned for more
India's first AI unicorn set for imminent IPO
India’s IPO window might attract the country’s first AI unicorn. A lot of tech firms have gone to IPO or are closing in on a listing, and US-Indian firm Fractal Analytics is reportedly looking to go public as soon as November which could raise $500M at a valuation of $3.5B.
Fractal became a unicorn in January 2022 when it raised $360M from TPG. Unlike other AI startups, though, it is more than 20 years old. The firm said at the time of the raise that it was looking to go public, and now that time may be soon. The startup has raised nearly $700M from backers to date, and its tech is used by the likes of Google, Wells Fargo and Fortune 100 firms.
Peak XV, formerly Sequoia India and Southeast Asia, sees over $1B in exits
We wrote about the separation of Sequoia’s international funds when it was announced last year, and speculated that the future would look very different for Peak XV, the fund formerly known as Sequoia India and Southeast Asia.
The firm has done good on cashing out many of its Sequoia-era investments, with TechCrunch reporting it has seen $1.2B in cash flow from exits since going independent last year. The broader question will continue to be how it will establish its name without the Sequoia brand, and how international it chooses to be. Leaks like this TechCrunch story and piles of cash in returns will certainly only help its track record and raise more funds from LPs and convince startups to take its money.
China
The success of hit game Wukong has prompted the Chinese government to embrace video games as soft power, shifting its previously critical stance, say Chinese developers and analysts—however, given strict rules for streamers who got early access to the title, it remains to be seen how the government will respond to more negative criticism link
Shein is laying off over 20 employees at its Singapore headquarters as part of a global IT restructuring—the layoffs come amid uncertainty over its planned IPO in London link
You may assume China’s AI industry is struggling, but Alibaba’s Qwen model is widely seen to be challenging US dominance and scaling leaderboards despite chip restrictions link
A teardown of Huawei’s bestselling Qingyun L540 laptop shows that China’s dream of self-sufficiency is distant with its components and chips still reliant on foreign tech link
TikTok is closing down its music streaming business in November link
TikTok has, though, expanded subscriptions features for creators, adding new monetisation options in regions that include Brazil, France, Germany, Spain, UK, Indonesia, Italy, Japan, South Korea, and US link
It also added a Search Ads Campaign tool, allowing advertisers to target ads based on user searches link
Chinese esports company VSPO, backed by Tencent, announced its first multi-title tournament in Asia, the Esports Asian Champions League (ACL), set to launch next year—Saudi Arabia will support the six-month event link
Huawei HarmonyOS Next gets 10,000 apps after blocking Android link
Uber is partnering with Chinese autonomous car company WeRide to expand its robotaxi offering to the UAE link
Prosus has fully cut its stake in Chinese online travel agency company Trip.com in a $743M block trade, becoming the latest international investor to exit a Chinese tech stock link
Hackers linked to the Chinese government have breached several US internet service providers in recent months, seeking sensitive data, according to sources—the campaign, dubbed Salt Typhoon, highlights Beijing's cyberespionage success, with hackers infiltrating broadband networks to access telecom data or enable future cyberattacks link
China's over-the-counter cryptocurrency brokers saw record inflows, driven by demand for alternative investments amid weak equity and property markets. Inflows exceeded $20 billion in each of the first three quarters of 2023, totaling $75.4 billion, according to Chainalysis. link
Tencent is said to be behind the recent share sale of Chinese brokerage platform Futu Holdings—an unidentified seller raised around $206M selling Futu’s American depositary shares at a 5.9% premium to the last close link
India
India’s Enforcement Directorate cracked down on illegal betting app Fiewin, seizing assets, including cryptocurrency in Binance wallets linked to Chinese nationals. The app had been promoted as a quick money-making platform and it was operated by Chinese nationals with the help of Indian accomplices. Four Indians have been arrested in connection with the scheme, which funnelled nearly $50M into wallets controlled from China link
US investor Tiger Global could be about to invest in quick commerce startup Zepto at a $5B valuation link
Xiaomi has asked India's antitrust body to recall its report that found the company and Flipkart breached competition laws, arguing it contains commercial secrets link
Qure.AI, which uses AI to help detect diseases, raised $65M from investors led by Lightspeed Venture Partners and 360 ONE Asset Management link
The US and India have agreed to collaborate on establishing a semiconductor fabrication plant in India, producing infrared, gallium nitride, and silicon-carbide semiconductors link
E-visa startup Atlys raised $20M in a Series B round led by existing investors Peak XV Partners and Elevation Capital link
Mukesh Bansal's new AI venture, Nurix AI, raised $27.5M from Accel and General Catalyst to build custom AI agents for enterprise services link
Foxconn is planning to open a $1B display assembly unit in Tamil Nadu link
SaaS startup Whatfix raises $125M from Warburg Pincus and SoftBank at a $900M valuation link
Tokyo Electron, Japan’s largest chip equipment maker, plans to build a team of chip engineers in India to provide technical services to Tata Electronics and capitalise on the government’s push for semiconductor manufacturing link
Taiwan's Powerchip Semiconductor Manufacturing Corp (PSMC) is pulling out of plans for a Japanese chip plant as the company shifts its focus to a technology partnership in India that will put less strain on its finances link
Star Health and Allied Insurance, one of India’s biggest health insurance firms, is investigating a cybersecurity incident that allegedly leaked sensitive data associated with its customers, including medical records link
UAE-based Redwood has acquired a majority stake in Indian game streaming platform Loco for $65M, giving a full exit to its existing backers—Loco's valuation dropped a $150M peak in 2022 which reflects broader revenue challenges faced by Indian esports streaming firms link
Southeast Asia
Chinese-founded courier J&T, after expanding from Southeast Asia to China, is now targeting the Middle East and South America as part of its global push link
Singapore passed Southeast Asia's first gig worker protection law, providing injury compensation and retirement benefits, though some fear higher costs may be passed on to workers link
Vietnam’s Prime Minister Pham Minh Chinh vowed to lure “crucial” foreign investment into AI development by cutting logistics costs and improving infrastructure link
Vietnam’s government is known to make big claims, its latest is that SpaceX plans to invest $15B in the country link
Entertainment group Neon is considering a Singapore IPO that could raise as much as $389M link
Singapore-based game developer Virtuos, a key player in the development of major franchises like Call of Duty and Horizon Zero Dawn, plans to acquire a Japanese studio soon to strengthen its position in the world’s third-largest gaming market link
South Korea
Samsung plans to invest $1.8B for a factory in northern Vietnam to produce OLED displays for automobiles and technology equipment link
SK Hynix shares jump as company announces mass production of updated AI chip link
Japan
Kioxia, a chipmaker backed by investors including Bain, has reportedly scrapped plans for an IPO—the listing was planned for October with a $10B+ valuation but recent share sell offs from rival firms has postponed the plan for now link
Tokyo-based Dinii, a cloud-based restaurant management platform, raises a $45M Series B link
PayPay, Japan’s largest QR-code based payment app, now allows companies to pay employees part of their salaries digitally, the latest attempt at boosting the country’s cashless transactions link