When Alibaba announced that it was investing in an unnamed start-up Quixey, many Silicon Valley start-ups were very embarrassing. Alibaba announced a total investment of USD 110 million to Quixey in 2013 and 2015 respectively. Simply put, as long as your entrepreneurial vision is in line with the direction of the tech giants, they will definitely not pocket their money.
However, the situation is not as beautiful as people think. According to people familiar with the transaction, Alibaba has returned! They are no longer paying Quixey's investment funds, and return to the negotiating table with conditions of harsh terms. They told Quixey that they will provide funds through loans and they will not allow them to sue Alibaba. After months of depressing negotiations, Quixey compromised. On Thursday, Alibaba and a group of investors announced that they had provided a loan of US$30 million to Quixey, and the latter no longer enjoyed the various preferential treatments in the previous financing terms.
It can be said that Alibaba has fought a beautiful war of investment reversals. Although the process is not smooth, this incident also shows the cultural conflicts between China and the United States. It promises to be beautiful, but there are also “turning faces†at any time. Risks, and the flood of investment from China has amplified the cultural conflicts between them.
On the other hand, in the past two years, Alibaba, Baidu and Tencent, which are known as China’s Amazon, Google and Facebook, and three giants, private equity funds, family funds, plus local governments, and even state-owned companies, have all started up Silicon Valley Technology. Startups. It was with the involvement of these large capital flows that it had a major impact on Silicon Valley's venture capital circle.
According to market research firm Rhodium Group, as of June this year, Silicon Valley has acquired more than US$6 billion of Chinese investment in addition to real estate. What is even more "terrible" is that most of them (about $3 billion) have been invested over the past year and a half. The reason why this happens is that there are two main reasons: First, in the past ten years, China’s wealth has increased exponentially; second, the government has also started to encourage companies to develop innovative technologies (including China’s current lagging behind). Virtual reality and artificial intelligence technology, and one of the means to quickly acquire technology is to acquire technology companies.
According to Stanford University’s famous physicist and founder of the Dan Hua Capital Venture Fund, who was also established for two years, the Chinese lion has realized that innovation needs to be modeled, especially as China is now in the process of manufacturing. In the transition period of technological innovation, it is necessary to use investment to open up a “Digital Silk Roadâ€.
On the other hand, U.S. start-up companies are very eager to engage with China’s technological “big brothersâ€, especially in today’s environment where overall financing is not optimistic. They are supported by Chinese investors and mean that they can not only get Funds can open the door to the Chinese market and have the opportunity to capture hundreds of millions of consumers.
For example, artificial intelligence startup Skymind.io got investment from Tencent and other Chinese investors. Its CEO, Chris Nicholson, said that investment from China can completely change the fate of a start-up company. Many startup companies in Silicon Valley Can not get the favor of domestic investors, and Chinese investors are changing the rules of investment games, so that some startup companies are not optimistic about the local investors have the opportunity to emerge.
However, there is still a problem of mutual distrust between Chinese investors and Silicon Valley startups. U.S. start-up companies have remained cautious about Chinese investors and are concerned that their technology has been plagiarized, and Chinese investors do not want to be a “stupid, rich, quick†investor.
According to a survey of US entrepreneurs, most American entrepreneurs believe that Chinese investors will not abide by the rules. Quixey is a lesson from this:
In 2013, Quixey won the first investment in Alibaba. After that, they began to work in accordance with the contract, custom development services for Alibaba, Quixey's powerful application built-in search function will be built on Alibaba cloud operating system YunOS (Editor's note: App application built-in search technology and web search Very different, even Google has not solved this problem.) The agreement between the parties provides that Quixey can obtain revenue sharing from Alibaba related services.
However, at the beginning of this year, things went awry and Alibaba declared that Quixey did not complete the work as scheduled and therefore would not pay income to Quixey. Quixey said that Alibaba has not paid the promised investment for several months. (About tens of millions of US dollars), leading to the company's normal operation. In 2015, Alibaba’s organizational structure has undergone a lot of changes, resulting in many of the startup companies that had been collaborating with it before being dragged down by various red tape systems and processes, and the lack of language between China and the United States. The contradiction between each other is growing.
Initially, Quixey company tried to sue Alibaba to the court, but once appealed, it must pay expensive litigation fees. For such a start-up company that has been established for a short period of time, the burden can be imagined. They are simply unable to compete with Alibaba. Afterwards, the Quixey company's senior management experienced a severe turmoil. Many core personnel left the company and the founder of the company resigned as CEO.
Finally, Quixey Spokesman Scott Samson reluctantly responded by saying:
We attach great importance to the cooperative relationship with Alibaba. They have always been our partners and investors.
However, up until now, neither Alibaba nor Quixey have commented on changes in investment.
In fact, although there are plenty of opportunities between Silicon Valley and China, due to cultural differences and misunderstandings, many investment transactions have failed. TransLink Capital, a well-known venture capital firm in Silicon Valley, focuses on startups in the early stage of investment and has been promoting exchanges between Silicon Valley startups and Asian investors. Similarly, as one of Quixey's investors, Jay Eum, general manager of the company, believes that cooperating with Chinese technology giants may seem exciting, but it still depends on the final investment implementation, not on paper contracts.
It is worth mentioning that Thilo Hanemann, an economist of Rongding Group, believes that China lacks the spirit of a legal contract and that the decisive role is often the administrative power of the government. Coupled with the fierce competition among local Chinese startup companies, entrepreneurs have become accustomed to tough investment strategies.
Connie Chan, investment partner of Andreessen Horowitz, a Silicon Valley venture company, said:
Silicon Valley has sometimes misunderstood Chinese investment strategies. In fact, they do not understand the cultural characteristics of Chinese people doing business. For example, Chinese investors will come up with some investment terms that seem too harsh in Silicon Valley, but these investment terms are actually commonplace in China. Chinese investors even got a start-up company to start a business idea and then turned to invest in another competitor.
Nicholson, CEO of Skymind.io, said:
American startups are not capable of escaping from a bad investment transaction. The company’s founder’s job is to keep the company alive. This is the most important opinion. So even if some investment terms are very harsh, you can't refuse, let alone put too much demands on investors.
However, Silicon Valley startups are gaining a lot of opportunities for Chinese investors. In 2011, CloudFlare, a web page performance and security startup, obtained investment from China. In 2015, the company reached a partnership with Baidu, and soon won millions of Chinese users. Artsy, an online art trading platform, is located in China. With the help of investors, the Hong Kong market has been expanded and its performance has grown rapidly. Also, virtual reality startup Magic Leap has received strong support from Alibaba.com, and has been given the opportunity to create hundreds of Chinese visitors at this year’s maker event in Shanghai. Do the theme presentation before the engineer.
Fyusion also recently invested in 3D graphics technology that will be applied to millions of Huawei mobile phones. The founder of the company, Radu Rusu, said that being able to get Chinese investors' favor is unbelievable for their 40-person small start-up company. At the same time, he also stated that Chinese investors are investing faster than American investors. "They work aggressively, as if there was no time to waste."
The history of Chinese investors investing in Silicon Valley startups can be traced back to 30 years ago. However, 2014 was a turning point in history. The number of investment transactions that year surged, setting a record of 101 records, three times that of two years ago. many. In fact, as many investment deals are not publicly announced, the number may be far more than this.
Taking the BAT Big Three as an example, Alibaba has invested US$795.50 million in Magic Leap and invested US$500 million in the e-commerce site Jet.com. It also invested in social networking application Snapchat, driving sharing service Lyft and e-commerce startup Shoprunner. And so on Silicon Valley startups. In Uber’s previous $1.2 billion in huge financing, the leading party was Baidu, and Baidu also made a high-profile move into the artificial intelligence field in Silicon Valley. Tencent focuses on investing in games, mobile payments, and artificial intelligence.
Alex Tze-Pin Cheng, general manager of Baidu America, explained his investment philosophy. He stated that Baidu is eager to find some start-up companies that can bring strategic value and use the coolest and latest technologies to serve the Chinese market.
However, Quixey should not develop technology for Alibaba.
VIA Washingtonpost
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