At the tipping point - fbicgroup Global... · 2016-09-06 · April 10, 2015 !! At the tipping point...

April 10, 2015

At the tipping point

D E B O R A H W E I N S W I G E x e c u t i v e D i r e c t o r – H e a d G l o b a l R e t a i l & T e c h n o l o g y F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m N e w Y o r k : 6 4 6 . 8 3 9 . 7 0 1 7

Shenzhen as an International Hub of Hardware Innovation

• Shenzhen is cultivating numerous promising hardware startups, including the world's largest maker of drones for civilian use.

• Intel and Microsoft, as well as Chinese technology leaders Tencent and Huawei, all play

a role in cultivating Shenzhen's talents and supply chain capabilities. • Accelerators, maker spaces and events are increasingly building a vibrant

entrepreneurial community.

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Fung Business Intelligence Centre (FBIC) publication: Shenzhen as the hub Copyright © 2015 The Fung Group, All rights reserved.

At The tipping point Shenzhen as an International Hub of Hardware Innovation INTRODUCTION Shenzhen is working to rebrand itself as a hardware innovation hub.

The city is already home to several brands at the forefront of Chinese technology, the most famous of which are Tencent in mobile software, Huawei in telecommunication hardware, BYD in rechargeable batteries and electric vehicles. Shenzhen's manufacturing cluster has evolved to a stage where the expertise that remains are the higher value-‐added processes (e.g. 3-‐D printers, laser cutters and computer numerical control machining) and a sophisticated supply chain of electronic components.This happens to be just the right environment for entrepreneurs to build connected hardware.

This report will explain the value proposition that Shenzhen offers to hardware startups, and note how far Shenzhen has come from a fishing village 35 years ago to what it is today. Ironically, being the capital of pirated goods is actually a strength, not a weakness, in encouraging creativity and a flexible supply chain.

We then map the key players in the startup ecosystem, including the accelerators, maker spaces, and notable entrepreneurs and startups. Lastly, we look at the challenges facing Shenzhen's startup ecosystem for hardware.

Even though Shenzhen now brands itself as China's Silicon Valley for hardware, the startup ecosystem is far from complete and faces two major challenges that apply to China as a whole. The first is the scarcity of indigenous innovation. There are many me-‐too Chinese startups that are born to address the domestic market, or to compete solely on price, or both. When compared to the global market, the most commercially promising tech companies from China are not groundbreaking innovation that disrupted the market with a new technological solution.

The funding environment is another major constraint. Venture capital (VC) in China is a young, fragmented industry. Processes for due diligence and valuation are opaque relative to international markets. Startups often bend the rules of the funding game – they commonly exaggerate their Series A rounds by a factor of two to three, or purposefully confuse the yuan with the dollar as reported by online media Tech in Asia. Exaggerating the size of investments can make startups appear stronger than they are, but is unhealthy for VCs that are trying to gauge the true value of a business or a market. If China is to cultivate a “Silicon Valley” in any of its leading tech hubs, whether it is Shenzhen or elsewhere, the venture capital industry would need to mature as a professional sector and take matters of governance more seriously.

The story of Shenzhen as a hardware innovation hub raises an important question about the role of government in a startup ecosystem. In theory, governments are not the best innovators, and usually get in the way of people in the private sector who can innovate. In practice, there is evidence that government policies helped the technology sector in Seoul and the startup scene in Singapore.

Up to this point, the Shenzhen hardware startup scene evolved largely without a plan or initiative from the government. Now, government entities are much more proactive. Authorities in the Qianhai free trade zone, located in the west of Shenzhen, are finalizing plans to offer rent-‐free space and support an incubator for startups from all over the world. In the case of Shenzhen, it remains to be seen how the government’s enthusiastic support will help the growth of the hardware startup ecosystem.

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HARDWARE IS HARD: COMMON PITFALLS OF HARDWARE STARTUPS AND WHY SHENZHEN COULD HELP In order to appreciate the solution Shenzhen offers to hardware innovators, it is important to note that developing a business in connected hardware is several magnitudes more complex than developing a software business. Hardware businesses need to consider the sourcing of components, the manufacturing process, logistics and distribution channels—a whole value chain that is not needed for software. Below are two common pitfalls of hardware startups:

1. Hardware Is Prone to Delays

The sheer number of processes and partners/suppliers involved means that shipment is prone to delays. If entrepreneurs have made early prototypes without involving the factory, they might realize later that the components they wanted to use were too rare, or that a factory process may be too costly.

From prototype to production, hardware startups require more iteration because they need to deliver on quality and functionality. This is in contrast to software startups, which can get away with releasing a “minimum viable product” that has basic functionality and perhaps even a few bugs, just to test the market and generate cash flow. If hardware startups were to do that (i.e., ship a partial product with missing functionality), negative customer reviews would put them out of business.

2. The Post-‐Launch Cash Crunch

Startups struggle with cash flow, and hardware startups struggle even more. For their initial cash income, crowdfunding has become one of the major ways for business-‐to-‐consumer (B2C) hardware startups to promote themselves and fund their product development. However, according to data from the two largest crowdfunding platforms, Kickstarter and Indiegogo, it usually takes six months to two years after first shipment for startups to regain the level of sales achieved when they had an aggressive marketing campaign during crowdfunding. In other words, when startups go from launch to scaling the business, they have to survive a further period of burning through their cash as they pay suppliers and staff.

Shenzhen Offers a Solution

Shenzhen's manufacturing prowess and supply chain capabilities can help hardware startups make and ship their products at high speed, at an affordable cost and with high quality. There are factories in Shenzhen ready to collaborate with entrepreneurs and advise them on the right components to use to maximize efficiency in cost and sourcing time. These factories also have no problem in taking small-‐volume orders, a willingness that is much less common for factories in the US and Western Europe. Of course, it still takes insider knowledge to find these factories and select which ones to partner with. That is where Shenzhen's maker spaces and hardware accelerators provide essential support.

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THE BIG PICTURE: SHENZHEN'S OPEN ECONOMY AND MANUFACTURING PROWESS

As Joi Ito of the Massachusetts Institute of Technology (MIT) Media Lab put it in his trip report after visiting Shenzhen, the city is “global supply chain meets international maker movement.” But Shenzhen did not start that way. It is largely an unplanned confluence of events that has made it into a vibrant innovation hub today. 1980s Shenzhen was the first city to open to international investors when it became China's first “special economic zone” in 1980. Manufacturing activities from Hong Kong and Taiwan relocated or expanded to Shenzhen and the surrounding region to capture cost advantages and preferential policies.

From the 1980s to 1990s, many Western countries outsourced their manufacturing activities to the region. Shenzhen was one of the southern Chinese hubs for original equipment manufacturer (OEM) of all kinds of consumer and technological products. Guangdong Province became synonymous with low-‐quality products and dubious protection for intellectual property rights. The phenomenon of producing pirated goods such as fake iPhones and all kinds of consumer electronics is known in Chinese as “shanzhai.” Many cases involve blatant disrespect for intellectual property rights. But at the same time, producing fake electronic goods trained many factories in making minor modifications, producing small batches and getting them to market as quickly as possible. This is why the shanzhai phenomenon has also been credited with promoting creativity and technical flexibility in the Shenzhen manufacturing sector.

1990s Since 1992, the Chinese government has actively cultivated a strong private sector-‐led economy in Shenzhen in a conscious effort to reduce reliance on state-‐owned enterprises and to avoid long-‐term dependence on foreign investment. Financing for the private sector and small and medium enterprises (SMEs) was made easier in the Shenzhen banking system, especially with the establishment of China Merchants Bank. It was the first privately owned bank in China and is currently the sixth-‐largest bank in the domestic Chinese market.

Meanwhile, specialization took place within the manufacturing sector. Lower-‐skilled factories started moving away, and remaining factories moved up the value chain.

2000s The Shenzhen government put effort into cultivating its information technology, biotech and other technology related sectors, though it focused on supporting the larger players. Technology companies including Tencent, Huawei and BYD rose to international stature.

Shenzhen in the Numbers Population: 10–15 million Average age: 33.6 (excludes migrant workers) GDP: US$233 billion, fourth highest among Chinese cities Unemployment: 2.4%, lower than China’s urban unemployment of 4.1% Export value: US$305.7 billion, first among Chinese cities Multimodal transport hub: One of the busiest airports and busiest sea cargo terminals, connected with a network of roads and railway Research and development (R&D) spending as % of GDP: 4% Source: Statistical Yearbook of Shenzhen; CAAC; data refer to 2013

SHENZHEN HONG KONG

CHINA

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KEY ELEMENTS IN A VIBRANT STARTUP ECOSYSTEM

TALENT Founding team members are often described as “hackers, hustlers and hipsters”—skill with technology, design and sales is essential for founders. As startups grow, they require personnel with skills and experience in product, design, marketing, sales, etc., who are willing to join a volatile and uphill journey.

EDUCATION

Universities have an important role to play in providing a safe environment for students to test their ideas and connect with mentors. Universities can also be powerful research institutions.

In general, the ecosystem benefits from a highly educated population and the presence of high-‐quality research institutions for science and engineering.

STARTUP CLUSTERS, NETWORKS AND EVENTS When startups are located in a single neighborhood or community, engineers, designers, marketers and other like-‐minded individuals can meet up, share ideas and information, and collaborate in problem solving. This enables an interconnected and flourishing ecosystem.

MENTORSHIP Guidance from experienced mentors is extremely important to startup founders. This role is usually taken up by investors and experienced entrepreneurs.

INCUBATORS AND ACCELERATORS Accelerators take single-‐digit percentages in equity and provide a three-‐to-‐four-‐month program of intensive training and mentorship to startups that have only a concept or early prototype. Incubator programs usually run longer, from six months to two years. Incubators provide a collaborative office space for little or no rent, and access to mentors.

FUNDING Access to funding is important. It can come from local and regional investors, and from public and private sector funds. Often, a previous generation of entrepreneurs has set up venture funds. In more mature ecosystems, the number of mergers and acquisitions, exits and initial public offerings are indicators of the startup landscape.

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THE ENTREPRENEURIAL ECOSYSTEM A vibrant entrepreneurial ecosystem can maximize the chance of success for startups and entrepreneurs. The ecosystem provide a network of resources that a lone entrepreneur might not otherwise be able to access, such as funding, mentorship, knowledge about factory and supply chain partners, or potential team members.

The Technology Ecosystem Foreign tech companies

Intel and Microsoft have launched a program known as China Technology Ecosystem (CTE), which have indirectly but significantly benefited the supply chain capabilities and technical skill sets available in Shenzhen. By implementing this strategy, Intel and Microsoft engage not only China's biggest players in Internet technologies, but also encourage partnerships, collaboration and sales with smaller suppliers and manufacturers. The CTE program has led Intel and Microsoft to build significant on-‐the-‐ground presence in Shenzhen. No wonder Intel relocated its annual Intel Developers Forum (IDF), an industry conference for discussing technologies based on Intel products, from Beijing to Shenzhen in 2014. Similarly, Microsoft revived its originally US-‐based trade show Windows Hardware Engineering Community (WinHEC) and held it in Shenzhen in March 18-‐19.

Domestic tech companies

Tencent, Huawei and BYD can be considered the technology giants of China. Shenzhen also has an edge in biotech and medical technologies. China's largest medical equipment manufacturer, Mindray, and leading genome sequencing firm, BGI, are both headquartered in Shenzhen.

However, in relation to supporting the hardware startup ecosystem, the presence of these tech companies are more symbolic than practical. On one hand, these companies largely developed their technology indigenously instead of depending on joint ventures with Western companies, so the original founders are often held up as role models for Chinese entrepreneurs.

On the other hand, the tech companies of Shenzhen are just beginning to take a more proactive role in training the next generation of entrepreneurs. Since 2013, Tencent has been the chief organizer of an annual China Internet Entrepreneurship Competition, where thousands of startup teams from all over China can compete online over several months and finalists have the opportunity to pitch to venture capital investors. The assistance provided by Tencent tend to be geared towards promoting its own services and scouting for talent and technology it can use or acquire. For example, Tencent has built “Tencent University,” an online platform providing training for developers to use Tencent API to build their own apps; and 18 “incubation centers” around China, to provide physical office space for startups and developers who are working on such apps EXISTING SUPPLY CHAIN CAPABILITIES Huaqiangbei, a business district with megamarkets for electronic components began as an electronics manufacturing area in the 1980s and now also comprises specialized markets for home appliances, jewelry, apparel and watches. The megamarkets sell electronic components of a wide variety

The district reportedly generates daily foot traffic of 500,000 people and daily revenue of US$160 million. The electronic component market is associated with Shenzhen Huaqiang Industry, a conglomerate also involved in commercial real estate and cloud management services.

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ACCELERATORS AND INCUBATORS Haxlr8r, a hardware accelerator

Haxlr8r (pronounced “Hax-‐celerator,” a combination of the words “hack” and “accelerator”) is a hardware-‐only accelerator programAs a mostly foreign-‐owned accelerator, the program put a tremendous effort into promoting Shenzhen as a hardware hub to the rest of the world. Cofounder Cyril Ebersweiler, an investment partner with SOSventures, an Austin, Texas headquartered venture capital firm, is a vocal advocate for Shenzhen.

The Haxlr8r program features 16 weeks in Shenzhen and ends with a pitch event in San Francisco. It was first launched in 2011 and runs twice a year admitting 10 startups each time through a highly competitive application process. The size of the 2015 cohort increased to 15 startups for the first time. The program provides seed capital between US$25,000 and $100,000 for 6-‐9% equity.

Based on our conversations with Ben Joffe, general partner of Haxlr8r, the accelerator is an effective training ground for foreign founders who learn to take advantage of the Shenzhen manufacturing and supply chain capabilities to build their products. Many of these foreign founders were coming to China for the first time or speak no Chinese, so the accelerator program was particularly valuable in connecting them with the right factory and supply chain partners.

But the accelerator is also key for Chinese hardware startup teams that are developing products for the global market. Darma, the smart seat cushion that monitors posture, heart rate and breathing (explained in more detail later in the 'Notable Startups' section), is one example of a product developed by a Chinese team that launched with Haxlr8r's help. PCH International, a global product development and supply chain company

PCH is a global product development and supply chain company whose operational headquarters are in Shenzhen and whose corporate headquarters are in Ireland. (Disclosure: PCH is a Fung Capital USA backed company.)

PCH owns manufacturing facilities in Shenzhen that assemble electronic products and compete against Foxconn. PCH currently provides fulfilment service to Xiaomi, the Chinese mobile phone maker.

PCH launched a San Francisco-‐based hardware accelerator, Highway1, in 2013, whose program includes two weeks in Shenzhen exploring the manufacturing process and supply chain. Entrepreneurs spend four months in San Francisco undergoing training in user research and pitching, and working on prototypes. Halfway through the program, they go to Shenzhen for two weeks to tour the facilities that may manufacture their product. The accelerator takes 4%–7% in equity and offers US$50,000 in funding.

Seeed Studio, a quick prototyping platform

If a startup founder does not have the engineering skills or the available equipment to make his own prototype, Seeed Studio can help. Seeed Studio helps early-‐stage startups build prototypes, and produce and ship one to 1,000 pieces of their products. It was founded in 2008 by Eric Pan, a pioneer in the

Shenzhen maker scene who founder in Chaihuo Maker Space. Seeed combines local knowledge of supply chain management—where to source electronics and components—with connections to global open-‐sourced hardware communities. It also runs a Web platform known as Wish where entrepreneurs can commission works from industrial designers, engineers and hobbyists around the world to serve their specific needs.

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STARTUP CLUSTERS, NETWORKS AND EVENTS Chaihuo Maker Space, a playground for hardware innovators

This is China's equivalent of TechShop in Silicon Valley. For an affordable monthly membership fee (US$20), entrepreneurs, engineers and hardware enthusiasts can use the workspace and equipment (such as a 3-‐D printer and machine tools) to build prototypes and test their ideas.

What is even more valuable is the community and network that Chaihuo offers: there are frequent networking events where seasoned entrepreneurs from China and other countries share their experience and advice.

Shenzhen Maker Faire, an annual event, is coming up June 19–21, 2015

Part of the international maker movement, the first Shenzhen Maker Faire was held in April 2014. “Maker Faires” consist of conferences, expos and carnivals held all over the world to engage the hardware developer community—even

the White House had one in June 2014. But the Shenzhen Maker Faire bears special significance. As if to prove stereotypes of low-‐quality Chinese products are now outdated, the 2014 Shenzhen Maker Faire was entitled “Innovative with China.” It was a big show-‐and-‐tell, and could be considered a milestone in rebranding the “Made in China” stigma. The whole ecosystem—from large corporates to small players to venture funds, from Chinese to foreigners, from professionals to hobbyists— gathered as part of this vibrant industry meetup. The upcoming Shenzhen Maker Faire in June will certainly be an event to watch.

Talent and Education

Apart from nurturing entrepreneurs, the education system is also important for training talents to equip them with the technical skills necessary to join tech startups. In this sense, the Chinese education system can cultivate strong engineering skills. However, the more conservative culture in China is such that many early stage startups still hire staff on a salary instead of giving equity. This could pose an unnecessary burden on the startup founders.

Universities as Educational Institutions

Shenzhen is not an educational cluster in itself. It has several mid-‐ranking universities, as well as satellite campuses of top-‐tier institutions Peking University, Tsinghua University and Harbin Institute of Technology. There are also the South China Institute of Technology and Zhongshan University in Guangzhou, which are tier-‐one universities. However, the talent pool for Shenzhen's tech startups comes from all over China, partly attracted by the big names such as Tencent and Huawei in Shenzhen.

In China, universities will be taking a larger role in educating future generations of entrepreneurs. Since 2012, the Ministry of Education has made entrepreneurship a mandatory part of the undergraduate syllabus, although implementation of this policy has been slow. Preferential tax rates and social insurance waivers also apply to startups founded by university graduates. In some universities, it is increasingly common for graduate students to take time off their academic programs to pursue entrepreneurial ventures.

Universities as Business Incubators

The role of universities as startup incubators or technology transfer hubs is at a nascent stage in China. Science parks have been established by Tsinghua University and Peking University in Beijing, and by Fudan University in Shanghai. Although these initiatives tend to be government supported, amply funded and technology focused, they have been slow to benefit the overall startup ecosystem.

Shenzhen also has several university parks, some of which are bustling with new activity as the schools nurture entrepreneurs. One such university park is I-‐Park in Nanshan District. In January, the University of California, Berkeley and Tsinghua University launched a joint research institute there, featuring 16 laboratories devoted to everything from nanotechnology to data science.

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NOTABLE STARTUPS The below list of six startups show the different approaches adopted in the Shenzhen ecosystem. Some succeed and leave Shenzhen to target the global market, while others choose to stay rooted in the manufacturing hub. Some develop a consumer product to showcase their technology in order to earn the credibility to expand into the enterprise market. Some may be considered more innovative than others.

The mention of two foreign founded startups is intended to raise the question – if foreign entrepreneurs simply use Shenzhen as a provider of manufacturing and supply chain services, how does that benefit the local ecosystem or stimulate the ecosystem towards greater innovation?

DJI A world-‐leading maker of camera drones

DJI was founded in 2006 by engineering student Frank Wang and Professor Li Zexiang at the Hong Kong University of Science and Technology (HKUST).

Today, DJI occupies 70% of the global market for civilian-‐use unmanned aerial systems. It is funded through sales of its products. Sales in 2013 were reported at US$130 million.

Darma A seat cushion that monitors posture, tracks heart rate, breathing and sitting time.

In a world where wearables are all the rage, this startup decided to build an 'un-‐wearable' product in the form of a seat cushion. Founder Hu Junhao is originally from Hubei Province, completed his PhD in optical engineering in Singapore. Hu contacted former NASA director of life sciences Joan Vernikos and got her on board as an advisor. Hu believes a cushion is less of a bother for the user, and sensors on a cushion can collect data more accurately.

Darma is a graduate of Haxlr8r in 2014. The Haxlr8r demo day in San Francisco attracted a lot of interest for Darma, and the team is now working primarily in Silicon Valley. The startup raised US$100,000 on the first day of its Kickstarter campaign. It has also received interest from upscale furniture companies and airlines wanting to use Darma's patented technology in their seats.

uArm by UFactory

An industrial robotic arm in desktop size.

This is one of three startups that demonstrated their products to Premier Li Keqiang during his visit to Chaihuo Maker Space.

“uArm” is a robot arm modeled after the ABB industrial Palletpack. The product is made of laser-‐cut acrylic and parts, powered by Arduino. The arm performs tasks of picking up and putting down objects at a high degree of precision. The user can control the robot arm through a Windows app. Although promoted as a consumer product, uArm is also used in laboratories to handle test tubes.

This is a Kickstarter funded product for US$250,000. Backers include MakerBot co-‐founder Zach Hoeken. The four-‐person team is headed by Deng Shitao, a graduate from Zhongshan University, Guangzhou.

Orvibo

Chinese startup based in Shenzhen. Smart home appliances

Founded in 2011 by Mark Wang, Orvibo has now become a high profile startup, and Wang a frequent commentator and speaker on everything related to smart home innovation. In December, Orvibo, together with the Shenzhen government's science and innovation commission and a few local universities, launched a smart home research and development initiative in Nanshan I-‐Park.

One of Orvibo's most heavily promoted products is Kepler, a gas and carbon monoxide detector. (The discerning reader would note that Nest home appliances, now part of Google, has a product that has the same functions. So the reader wouldn't be surprised to know that the design of Orvibo's smoke detector product also bears some resemblance to that of Nest's.)

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Incubated in Shenzhen – foreign founders

Nomiku An immersion circulation cooking device for everyday kitchens. Previously available equipment was prohibitively expensive for an everyday home.

Nomiku is another Haxlr8r graduate. Persistent Nomiku co-‐founders Lisa and Abe Fetterman lived in Shenzhen for two years to work closely with the factory while developing their product. Nomiku was funded for US$1.3 million in two Kickstarter campaigns. The cooking device enjoyed enormous commercial success, achieving millions in orders. Nomiku is now also a Y-‐Combinator backed company.

Manufactured in Shenzhen – foreign founder

LittleBits

Manufactured in Shenzhen. Electronics modules for consumers

LittleBits was founded by MIT alumna Ayah Bdeir, who gave a TED talk to market her product that resulted in 700,000 views when her product was still under development. LittleBits are electronic modules that snap together with magnets. Users can create do-‐it-‐yourself electronics; e.g., combine sensors and dimmers to create a light or a musical device, or make any home item wifi-‐connected. It is Series B-‐funded, having raised US$15.6 million so far, and its products are manufactured by PCH in Shenzhen.

A Note on the China Funding Environment for Startups Investor funding is essential for the growth of most tech startups. The same case applies to startups in Shenzhen. Many of the hardware startups we discussed in this report received their initial funding from crowdfunding, and then they either support themselves through sales or seek funding outside of China.

We have already alluded to the governance problem in Chinese startups and their VC investors. The practice of misrepresenting the startups' early stage or Series A rounds is unhealthy for the ecosystem. It makes it difficult for investors to separate the wheat from the chaff and hindering an optimal use of capital. There are currently two ongoing debates in the China VC sector. The first concerns the role of government. Can government funding be effective in taking the VC sector to the next level? The national government is setting up a US$6.5 billion government venture capital fund, which is intended to attract an influx of private venture capital.

The government certainly believes that it could play a role. In a statement published on March 15, the State Council called for ministries and local governments at all levels to support innovation and startups. The government must "promote financing for technology startups, improve the funding and investment exit system of venture capital funds and angel investors”, the statement said.

The second debate is in regards to the over-‐valuation of startups–Are Chinese startups facing a possible bubble burst? Rui Ma, venture partner at 500 Startups, the Silicon Valley incubator and seed stage VC, said in June 2014 that she saw valuation of some early-‐stage Chinese startups are higher than comparable Silicon Valley startups. David Zhang, cofounder of Matrix Partners, a major VC that has invested in 190 companies in China, warned in September 2014 that after the hype around the Alibaba IPO dies down, there will be a cooling down in VC funding for Chinese startups.

In all the debates about whether there is too much or too little funding for startups, it is easy to forget that the quality of investment and investors also matters. In more advanced startup ecosystems, early-‐stage investors including angels and VCs contribute mentorship and practical assistance to help startups grow. For an early-‐stage startup with a strong value proposition, getting the right mentorship can be more difficult than getting funding.

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Equity Financing into China-‐Based, VC-‐Backed Companies, by Industry Group (3Q 2014)

Source: Dow Jones

In all the debates about whether there is too much or too little funding for startups, it is easy to forget that the quality of investment and investors also matters. In more advanced startup ecosystems, early-‐stage investors including angels and VCs contribute mentorship and practical assistance to help startups grow. For an early-‐stage startup with a strong value proposition, getting the right mentorship can be more difficult than getting funding.

18%

2%

48%

1% 5% 1%

25% Business and Financial Services

Consumer Goods

Consumer Goods

Energy & Uslises

Healthcare

Industrial Goods & Materials

Informason Tech

15%

1%

66%

3% 1%


Consumer Goods

Consumer Services

Energy & Uslises (0.4%)

Healthcare


Informason Technology

Figure 2. 3Q’14 Industry Breakdown By Amount Raised

Consumer Services

Information Technology

Source: Dow Jones

18%

2%

48%

1% 5% 1%


Consumer Goods

Consumer Services

Energy & Uslises

Healthcare


Informason Technology

Figure 1. 3Q’14 Industry Breakdown By Number of Deals

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CONCLUSION

Shenzhen is reinventing itself. Formerly the capital of shanzhai, it now aspires to become Asia's Silicon Valley for hardware innovation. Shenzhen is strongly positioned to assume this new identity–its supply chain and manufacturing capabilities can help hardware startups mitigate the risk of delay as they launch their first product and subsequently scale their business. However, the legacy of a shanzhai capital remains, and the lack of homegrown innovation and an incomplete funding environment still remains a roadblock to the future growth of Shenzhen.

Deborah Weinswig, CPA Executive Director – Head Global Retail & Technology Fung Business Intelligence Centre New York: 646 839 7017 Hong Kong: +852 6119 1779 [email protected] Marie Driscoll, CFA [email protected] John Harmon, CFA [email protected] Amy Hedrick [email protected] Aragorn Ho [email protected] John Mercer [email protected] Stephanie Reilly [email protected] Lan Rosengard [email protected] Jing Wang [email protected]

At the tipping point - fbicgroup Global... · 2016-09-06 · April 10, 2015 !! At the tipping point...

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Transcript of At the tipping point - fbicgroup Global... · 2016-09-06 · April 10, 2015 !! At the tipping point...