Tencent’s mixed bag for Q1: record profit despite weakest revenue growth yet

Tencent, Asia’s largest tech firm, had a horrific 2018 on account of a country-wide freeze on new game monetization in China, but there’s evidence it has turned the corner.

The company’s new mobile gaming hit Game for Peace has yet to kickstart the company’s recovery from a few weakening quarters, but its booming financial technology division has helped to neutralize the brunt to some degree.

The Chinese social media and gaming titan ended the first quarter of 2019 with its slowest revenue growth since going public to $12.69 billion, a 16 percent increase year-over-year.

Profit attributable to equity holders, however, logged a record $4 billion that beat analyst estimates.

Though most famous for WeChat, video games have fuelled Tencent’s earnings and stock prices for many years. The lucrative segment took a hit during a prolonged licensing freeze last year that prevented Tencent from monetizing a few blockbuster titles like PlayersUnknown Battleground, and the impact was still felt in the latest quarter.

Online games revenue for Q1 dropped to 28.51 billion yuan ($4.1 billion), compared to 28.78 billion yuan a year before.

The sluggish period may end soon as Tencent recently secured the official green light to start charging for its PUGB substitute Game for Peace, a less violent version than its predecessor. The new game grossed $14 million within the first three days of release, beating the $4 million Fortnite pocketed in the same duration, data provider Sensor Tower shows.

Fintech and enterprise-facing services made up Tencent’s second-largest revenue bucket with 21.79 billion yuan ($3.16 billion), a 44 percent growth year-over-year. In recent quarters, the firm began to single out its earnings for its booming fintech unit that contains its popular payments service WeChat Pay.

Unlike Facebook, Tencent hasn’t aggressively monetized its social media empire for advertising inventory until recently. Online ad revenues grew 25 percent to 13.38 billion yuan ($1.94 billion), accounting for 15.7 percent of total revenues.

That’s thanks to increased ad revenues from Weixin. All told, WeChat and its Chinese version Weixin crossed the 1.1 billion monthly active user benchmark. Its 20-year-old QQ, a legacy chatting app from the Chinese PC era, continued to grow and reached 823 MAUs.

Tencent’s Netflix -style video streaming service also contributed to increased ad earnings. Tencent Video, which has poured vast sums of money to license content in a bid to outrace Baidu’s iQiyi and Alibaba’s Youku, reached 89 million subscribers in the season.

Huawei launches AI-backed database to target enterprise customers

China’s Huawei is making a serious foray into the enterprise business market after it unveiled a new database management product on Wednesday, putting it in direct competition with entrenched vendors like IBM, Oracle and Microsoft.

The Shenzhen-based company, best known for making smartphones and telecom equipment, claims its newly minted database uses artificial intelligence capabilities to improve tuning performance, a process that traditionally involves human administrators, by over 60 percent.

Called the GaussDB, the database works both locally as well as on public and private clouds. When running on Huawei’s own cloud, GaussDB provides data warehouse services for customers across the board, from the financial, logistics, education to automotive industries.

The database launch was first reported by The Information on Tuesday citing sources saying it is designed by the company’s secretive database research group called Gauss and will initially focus on the Chinese market.

The announcement comes at a time when Huawei’s core telecom business is drawing scrutiny in the West over the company’s alleged ties to the Chinese government. That segment accounted for 40.8 percent of Huawei’s total revenues in 2018, according to financial details released by the privately-held firm.

Huawei’s consumer unit, which is driven by its fast-growing smartphone and device sales, made up almost a half of the company’s annual revenues. Enterprise businesses made up less than a quarter of earnings, but Huawei’s new push into database management is set to add new fuel to the segment.

Meanwhile, at Oracle, more than 900 employees, most of whom worked for its 1,600-staff research and development center in China, were recently let go amid a major company restructuring, multiple media outlets reported earlier this month.

Data provided to TechCrunch by Boss Zhipin offers clues to the layoff: The Chinese recruiting platform has recently seen a surge in newly registered users who work at Oracle China. But the door is still open for new candidates as the American giant is currently recruiting for more than 100 positions through Boss, including many related to cloud computing.

Tencent’s new alternative to PUBG is already topping the revenue chart

In a move clearly driven by economic interests and an urgency to meet stringent regulations, the world’s largest games publisher Tencent pulled its mobile version of PlayerUnknown’s Battlegrounds on Wednesday and launched a new title called Game for Peace (the literal translation of its Chinese name 和平精英 is ‘peace elites’) on the same day.

As of this writing, Game for Peace is the most downloaded free game and top-grossing game in Apple’s China App Store, according to data from Sensor Tower data. That’s early evidence that the new title is on course to stimulate Tencent’s softening gaming revenues following a prolonged licensing freeze in China. Indeed, analysts at China Renaissance estimated that Game for Peace could generate up to $1.48 billion in annual revenue for Tencent.

Tencent licensed PUBG from South Korea’s Krafton, previously known as Bluehole, in 2017 and subsequently released a test version of the game for China’s mobile users.

Game for Peace is available only to users above the age of 16, a decision that came amid society’s growing concerns over video games’ impact on children’s mental and physical health. Tencent has recently pledged to do more ‘good’ with its technology, and the new game release appears to be a practice of that.

Tencent told Reuters the two titles are from “very different genres.” Well, many signs attest to the fact that Game for Peace is intended as a substitute for PUBG Mobile, which never received the green light from Beijing to monetize because it’s deemed too gory. Game for Peace received the license to sell in-game items on April 9.

For one, PUBG users were directed to download Game for Peace in a notice announcing its closure. People’s gaming history and achievement were transferred to the new game, and players and industry analysts have pointed out the striking resemblance between the two.

“It’s basically the same game with some tweaks,” said a Guangzhou-based PUBG player who has been playing the title since its launching, adding that the adjustment to tone down violence “doesn’t really harm the gamer experience.”

“Just ignore those details,” suggested the user.

For instance, characters who are shot don’t bleed in Game for Peace. A muzzle flash replaces gore as bloody scenes no longer pass the muster. And when people are dying, they kneel, surrender their loot box, and wave goodbye. Very civil. Very friendly.

“It’s what we call changing skin [for a game],” a Shenzhen-based mobile game studio founder said to TechCrunch. “The gameplay stays largely intact.”

Other PUBG users are less sanguine about the transition. “I don’t think this is the correct decision from the regulators. Getting oversensitive in the approval process will prevent Chinese games from growing big and strong,” wrote one contributor with more than 135 thousand followers on Zhihu, the Chinese equivalent of Quora.

But such compromise is increasingly inevitable as Chinese authorities reinforce rules around what people can consume online, not just in games but also through news readers, video platforms, and even music streaming services. Content creators must be able to decipher regulators’ directives, some of which are straightforward as “the name of the game should not contain words other than simplified Chinese.” Others requirements are more obscure, like “no violation of core socialist’s values,” a set of 12 moral principles — including prosperity, democracy, civility, and harmony — that are propagated by the Chinese Communist Party in recent years.

Tencent promises its technology will ‘do good’

Tencent, one of Asia’s most valuable companies with a current market cap of around $460 billion, has introduced a new motto after co-founder and CEO Pony Ma said this week he wanted ‘tech for good’ to be part of the company’s vision and mission in the future.

The company has not yet officialized the new corporate philosophy and it’s unclear how the “don’t be evil”-like slogan will manifest in Tencent’s business strategy. Nor do we know if it will replace the old mission, which is still emblazoned on its website:

Tencent’s mission is to “improve the quality of life through internet value-added services”. Guided by its “user oriented” business philosophy, Tencent achieves its mission via the delivery of integrated internet solutions to over 1 billion netizens.

Episodes of recent events can probably provide some hints to what the new slogan might entail. The old mission, which focuses on the individual user rather than the wider society, has led Tencent to supremacy in video games and social media; the company is the operator behind the billion-user messager WeChat and several top-grossing video games. But these segments of businesses are under growing pressure as China’s changing regulatory environment and industry rivals create challenges for the 21-year-old behemoth.

A months-long gaming freeze last year put a squeeze on Tencent’s gaming revenues, wiping billions of dollars from its market cap. Rising short-video app Douyin, which is TikTok’s local version, threatens Tencent’s dominance in the social and content realms.

To stay competitive, the company underwent a sweeping re-organization last October to place more focus on enterprise businesses, such as cloud computing and other digital infrastructure for industries ranging from finance, healthcare, education to government services.

The new focus to upgrade entrenched industries not only opens up more revenue streams; these sectors also provide the testing ground for Tencent to put its ‘tech for good’ mission into practice.

As Ma pledged at the government-run industry conference Digital China Summit on Monday, Tencent believes “technology can bring benefits to the human race; humans should make good use of technology and refrain from its evil use; and technology should strive to solve the problems it brings to society.”

Ma pointed to three key areas where technology can generate positive changes: traditional industries, where Tencent could provide big data capabilities to beef up efficiency in production; government units, where Tencent could leverage its apps to digitize a slew of civil services such as applying for visas and renewing drivers’ licenses; and society, which is a broad and arguably vague definition but has seen efforts like tracing missing children using Tencent’s face recognition solutions.

“Looking at parallels across the globe, Google proposed ‘do no evil’ as its code of conduct ahead of its initial public offering 20 years ago. I think this kind of elevated mission is evidence of the amount of influence a company has accumulated,” Zhong Xin, a former Qualcomm engineer who founded the artificial intelligence-powered medical imaging startup 12 Sigma, said to TechCrunch.

“Technology is a double-edged sword. A company needs a guiding principle to determine its proper use, so I believe the purported mission to do good with technology is inevitable,” added Xin.

From the government’s standpoint, a corporate motto that focuses on doing good is clearly music to the ears. Tencent’s new code of conduct comes as China’s tech darlings face mounting public and government criticisms for their adverse impact on society, a movement mirroring Silicon Valley’s tech backlash. The charges range from video games’ role in causing bad eyesight among children, which put Tencent in the crosshairs; to clickbait content running rampant on Bytedance’s popular news app, Toutiao.

“‘Doing good’ should be an inherent value to all technology companies, including venture investors,” Wang Jing, partner at venture capital firm Sky9 Capital, suggested to TechCrunch. “When companies have to single out ‘doing good’ on a special occasion, it may be that something has already gone wrong.”

Many tech heavyweights in question have responded to backlashes by imposing stricter policies over their products. Tencent, for example, launched an underage-protection mode for all its gaming titles that would allow parents to monitor children’s play time. Toutiao, too, has hired thousands of auditors to root out content deemed inappropriate by the authority.

This is not the first time Tencent has weighed in on its own ethics. The phrase ‘tech for good’ was first unveiled by Tencent co-founder and former CTO Tony Zhang in early 2018, but it has probably garnered more attention among the executives after an essay titled “Tencent has no dream” sparked heated debate in the Chinese tech circle. Penned by a veteran journalist, the article argued that Tencent was fixated on seeking investment-worthy products rather than inventing its own.

“People argued that Tencent has no dream. By bringing up the slogan ‘tech for good’, Tencent seems to be proclaiming to the public that it does have a dream,” Derek Shen, who is chairman at shared housing startup Danke and formerly headed LinkedIn China, told TechCrunch. “And its dream is big, which is to do good things to people’s lives.”

India unseats China as Asia’s top fintech funding source

China’s massive fintech industry took a beating in recent months as the government continued to wind down online lending nationwide, rattling investor confidence.

Funding for fintech startups shrank 87.6 percent year-over-year to $192.1 million during the first quarter of 2019, a new report from data provider CB Insights shows. India, which recorded $285.6 million raised for fintech startups in the period, overtook China to be Asia’s top fundraising hub for financial technology. Both countries clocked in 29 fintech deals, suggesting a cooling investor sentiment in China which saw its height of 76 deals just three quarters ago.

cb insights china q1

Chart: CB Insights

The plunge in China has followed on the heels of tightened regulation around online lending, suggests CB Insights . Over the past few years, China has rolled out a flurry of measures to rein in financial risks arising from its fledgling online lending industry. Peer-to-peer lending, which matches an individual looking for a loan with someone looking to invest, has been the top target in a wave of government crackdowns.

This kind of service offers credit to unbanked individuals who cannot otherwise get loans in a country without a mature unified credit system. But a lack of oversight led to rampant frauds across the board. Thousands of peer-to-peer lending sites shut down due to increased regulation, which is estimated to leave as few as 300 players on the market by the end of 2019, Shanghai-based research firm Yingcai forecasted.

Like China, India’s enthusiasm for finance technology is in part a result of the country’s lack of financial infrastructure. Lending startups are gathering steam as they, like their Chinese counterparts, tailor services to the country’s large unbanked and underbanked consumers and enterprises. Moves from tech leaders are also set to send ripples through the rest of the industry. Amazon finally followed its rivals Paytm, Google Pay and PhonePe to start offering peer-to-peer payments in the country. Walmart is closely watching how Flipkart, which it bought out last year, applies data to payments solution.

cb insights china q1

Chart: CB Insights

Despite the setback in online lending, a new form of consumer-facing financing vehicle — so-called mutual aid platforms that let patients crowdfund for serious diseases — is enjoying an early boom in China, CB Insights noted in its report. As with peer-to-peer lending, internet-powered mutual aid is trying to fill gaps in a traditional industry. Though most Chinese people are part of a national public insurance scheme, surgical bills can easily bring down an average family.

The top two performers in the sector are unsurprisingly from the top two opposing camps in China’s tech world. Shuidihuzhu, which translates as “water drop mutual help” in Chinese, counts Tencent as a major investor. Users contribute as little as half a cent to a pool of funds that pays out when a patient needs financial aid. The three-year-old platform, which leverages Tencent’s billion-user WeChat messenger to sign up members, claims it has attracted 78.8 million users and paid out nearly 440 million yuan $65.34 million to more than 3,100 families so far.

Shuidihuzhu’s rival, which is called Xiang Hu Bao and means “mutual protection”, is run by Alibaba’s affiliate e-wallet Alipay. Launched only last September, the service said it had acquired over 50 million users by April and had set itself up for an ambitious goal: to reach low-income groups who can’t afford the premiums and advance payments attached to traditional health insurance and to acquire 300 million users in the next two years. That means almost a third of Alipay users, most of whom live in Chia. By the end of 2018, the digital wallet had over 1 billion annual users worldwide.

AWS wants a bigger share of Asia following Hong Kong launch

Amazon’s cloud computing unit is making further inroads into Asia after it opened a data center in Hong Kong this week, adding to the seven existing locations where it currently operates across the Asia Pacific and China.

The new entry will likely give the American giant some leg up in its regional battle with Alibaba’s cloud service, which, according to a new Gartner report, was the biggest cloud infrastructure provider in the Asia Pacific last year. But that won’t be the case with all countries, notably China where the cards are often stacked against foreign players.

Amazon Web Services has been operating in China for quite some time, albeit through rough and roundabout routes. A set of cyber laws enacted by Beijing in mid-2017 required foreign companies to store data locally and outsource their hardware parts to Chinese partners. In response, AWS teamed up with two separate local providers based out of Beijing and the hinterland province of Ningxia to run its cloud service while it provides the necessary “technology, guidance and expertise” to the allies. In practice, AWS’s China users are subject to terms and conditions set by its domestic partners.

With two data hubs, AWS managed to carve out a 6 percent share in China’s market for public cloud as an infrastructure service in the first half of 2018, according to research company IDC. Alibaba enjoyed a significant lead with a whopping 43 percent share, exceeding the sum of second to ninth-ranked players.

One main appeal of Alibaba Cloud, as well as many other Chinese offerings, is affordability. “Whether it’s price or service, AWS is at a real disadvantage in China,” Lin Rong, who runs a website called 91Yun that reviews cloud services and runs a forum for cloud computing, told TechCrunch.

In the meantime, an increasing number of Chinese companies are looking to host their servers in neighboring countries for global deployment as they take their apps, mobile games and other internet services overseas. Hong Kong is one popular hosting destination for export businesses, but even on the opposite end of the border, Alibaba has been a prime choice for many Chinese enterprises.

Just like on the mainland, Alibaba Cloud’s Hong Kong service is cheaper than its international rivals; it also delivers lower latency to mainland users than AWS, Lin observes, thanks to its tie-ups with China’s top three network providers.

At the very least, AWS’s foray into Hong Kong will heighten competition among cloud services targeting locally based companies. There are few places in the world where competition in cloud is as fierce, suggested Keith Yau, founder of Bootdev, a cloud-based platform for running websites.

“Hong Kong now has all the big cloud companies — Azure, AWS and Alibaba Cloud — as well as Google Cloud Platform, which is very unusual for any city in the world,” he told TechCrunch.

Hong Kong as a hub for international trade and financial services, alongside the government’s recent push to attract more tech-focused companies, means a substantial demand for data storing and processing power. Amazon, being “best in tech among all cloud services,” suggested Cyrus Wong, a data scientist at Hong Kong Institute of Vocational Education, will likely win some share away from existing players.

“Hong Kong is globally recognized as a leading financial tech hub and one of the top places where startups build their businesses, so we’ve had many customers asking us for an AWS Region in Hong Kong so they can build their businesses on the world’s leading cloud with the broadest and deepest feature set,” read a statement from Peter DeSantis, vice president of global infrastructure and customer support for AWS.

According to the Gartner report, AWS currently ranks second to Alibaba Cloud across the Asia Pacific. Its share declined 0.2 percent to 11 percent in 2018, while Alibaba Cloud added 4.7 percent to bring its slice to nearly 19.6 percent.

AWS wants a bigger share of Asia following Hong Kong launch

Amazon’s cloud computing unit is making further inroads into Asia after it opened a data center in Hong Kong this week, adding to the seven existing locations where it currently operates across the Asia Pacific and China.

The new entry will likely give the American giant some leg up in its regional battle with Alibaba’s cloud service, which, according to a new Gartner report, was the biggest cloud infrastructure provider in the Asia Pacific last year. But that won’t be the case with all countries, notably China where the cards are often stacked against foreign players.

Amazon Web Services has been operating in China for quite some time, albeit through rough and roundabout routes. A set of cyber laws enacted by Beijing in mid-2017 required foreign companies to store data locally and outsource their hardware parts to Chinese partners. In response, AWS teamed up with two separate local providers based out of Beijing and the hinterland province of Ningxia to run its cloud service while it provides the necessary “technology, guidance and expertise” to the allies. In practice, AWS’s China users are subject to terms and conditions set by its domestic partners.

With two data hubs, AWS managed to carve out a 6 percent share in China’s market for public cloud as an infrastructure service in the first half of 2018, according to research company IDC. Alibaba enjoyed a significant lead with a whopping 43 percent share, exceeding the sum of second to ninth-ranked players.

One main appeal of Alibaba Cloud, as well as many other Chinese offerings, is affordability. “Whether it’s price or service, AWS is at a real disadvantage in China,” Lin Rong, who runs a website called 91Yun that reviews cloud services and runs a forum for cloud computing, told TechCrunch.

In the meantime, an increasing number of Chinese companies are looking to host their servers in neighboring countries for global deployment as they take their apps, mobile games and other internet services overseas. Hong Kong is one popular hosting destination for export businesses, but even on the opposite end of the border, Alibaba has been a prime choice for many Chinese enterprises.

Just like on the mainland, Alibaba Cloud’s Hong Kong service is cheaper than its international rivals; it also delivers lower latency to mainland users than AWS, Lin observes, thanks to its tie-ups with China’s top three network providers.

At the very least, AWS’s foray into Hong Kong will heighten competition among cloud services targeting locally based companies. There are few places in the world where competition in cloud is as fierce, suggested Keith Yau, founder of Bootdev, a cloud-based platform for running websites.

“Hong Kong now has all the big cloud companies — Azure, AWS and Alibaba Cloud — as well as Google Cloud Platform, which is very unusual for any city in the world,” he told TechCrunch.

Hong Kong as a hub for international trade and financial services, alongside the government’s recent push to attract more tech-focused companies, means a substantial demand for data storing and processing power. Amazon, being “best in tech among all cloud services,” suggested Cyrus Wong, a data scientist at Hong Kong Institute of Vocational Education, will likely win some share away from existing players.

“Hong Kong is globally recognized as a leading financial tech hub and one of the top places where startups build their businesses, so we’ve had many customers asking us for an AWS Region in Hong Kong so they can build their businesses on the world’s leading cloud with the broadest and deepest feature set,” read a statement from Peter DeSantis, vice president of global infrastructure and customer support for AWS.

According to the Gartner report, AWS currently ranks second to Alibaba Cloud across the Asia Pacific. Its share declined 0.2 percent to 11 percent in 2018, while Alibaba Cloud added 4.7 percent to bring its slice to nearly 19.6 percent.

U.S. slams Alibaba and its challenger Pinduoduo for selling fakes

China’s biggest ecommerce company Alibaba was again on the U.S. Trade Representative’s blacklist over suspected counterfeits sold on its popular Taobao marketplace that connects small merchants to consumers.

Nestling with Alibaba on the U.S.’s annual “notorious” list that reviews trading partners’ intellectual property practice is its fast-rising competitor Pinduoduo . Just this week, Pinduoduo founder Colin Huang, a former Google engineer, wrote in his first shareholder letter since listing the company that his startup is now China’s second-biggest ecommerce player by the number of “e-way bills”, or electronic records tracking the movement of goods. That officially unseats JD.com as the runner-up to Alibaba.

This is the third year in a row that Taobao has been called out by the U.S. government over IP theft, despite measures the company claims it has taken to root out fakes, including the arrest of 1,752 suspects and closure of 1,282 manufacturing and distribution centers.

“Although Alibaba has taken some steps to curb the offer and sale of infringing products, right holders, particularly SMEs, continue to report high volumes of infringing products and problems with using takedown procedures,” noted the USTR in its report.

In a statement provided to TechCrunch, Alibaba said it does “not agree with” the USTR’s decision. “Our results and practices have been acknowledged as best-in-class by leading industry associations, brands and SMEs in the United States and around the world. In fact, zero industry associations called for our inclusion in the report this year.”

Pinduoduo is a new addition to the annual blacklist. The Shanghai-based startup has over the course of three years rose to fame among China’s emerging online shoppers in smaller cities and rural regions, thanks to the flurry of super-cheap goods on its platform. While affluent consumers may disdain Pinduodou products’ low quality, price-sensitive users are hooked to bargains even when items are subpar.

“Many of these price-conscious shoppers are reportedly aware of the proliferation of counterfeit products on pinduoduo.com but are nevertheless attracted to the low-priced goods on the platform,” the USTR pointed out, adding that Pinduoduo’s measures to up the ante in anti-piracy technologies failed to fully address the issue.

Pinduoduo, too, rebutted the USTR’s decision. “We do not fully understand why we are listed on the USTR report, and we disagree with the report,” a Pinduoduo spokesperson told TechCrunch. “We will focus our energy to upgrade the e-shopping experience for our users. We have introduced strict penalties for counterfeit merchants, collaborated closely with law enforcement and employed technologies to proactively take down suspicious products.”

The attacks on two of China’s most promising ecommerce businesses came as China and the U.S. are embroiled in on-going trade negotiations, which have seen the Trump administration repeatedly accused China of IP theft. Tmall, which is Alibaba’s online retailer that brings branded goods to shoppers, was immune from the blacklist, and so was Tmall’s direct rival JD.com.

Taobao has spent over a decade trying to revive its old image of an online bazaar teeming with fakes and “shanzhai” items, which are not outright pirated goods but whose names or designs intimate those of legitimate brands. Pinduoduo is now asked to do the same after a few years of growth frenzy. On the one hand, listing publicly in the U.S. subjects the Chinese startup to more scrutiny. On the other, small-town users may soon demand higher quality as their purchasing power improves. And when the countryside market becomes saturated, Pinduoduo will need to more aggressively upgrade its product selection to court the more sophisticated consumers from Chinese megacities.

Mejuri raises $23M Series B to serve women buying jewelry for themselves

New Enterprise Associates, the 42-year-old venture capital firm, has invested in the $23 million Series B round for Mejuri, a startup capturing millennial women’s penchant for affordable and treat yo’ self type of jewelry rather than diamonds and precious stones for special occasions.

It’s the latest instance of startups drawing investor interest with their direct-to-customer retail model. Based in Toronto and Buenos Aires, four-year-old Mejuri designs, makes and sells jewelry directly to women online and through offline showrooms, bypassing middle-person costs. Besides striving for reasonable prices, Mejuri also wants to upend an entrenched practice in its industry.

Traditional jewelry, the startup points out, targets men for gifting and makes higher markups acceptable. With its D2C play, Mejuri believes it’s putting the purchasing decision back with women; indeed, it found 75 percent of its customers are buying for themselves. Its team of 120 employees is constantly on the watch for trends and consumer feedback, a strategy made possible by its online presence of more than 422,000 Instagram followers. Instead of releasing large batches of seasonal pieces, Mejuri adapts the so-called “drop” model that introduces only a small quantity of products each week, which allows it to timely translate customer sentiments into designs.

Mejuri-Press-11

Photo source: Mejuri

Another enabling factor is the company’s female-led team: 80 percent of the staff are women, headed by founder Noura Sakkijha, a third-generation jeweler and a former industrial engineer who scored the company’s latest capital when she was seven months pregnant with two twins.

“Mejuri’s mission really hits home for me,” said NEA partner Vanessa Larco in a statement. “I noticed a shift in trends when none of my friends wanted to go to any of the traditional fine jewelry companies to purchase jewelry anymore, and I realized a lot of those big brands were in trouble.”

Natalie Massenet, founder of Net-a-Porter and partner at Imaginary, another venture fund that participated in Mejuri’s Series B, said the startup is set to “disrupt” the jewelry industry through supply chain standards that modern consumers demand, “like sourcing from conflict-free and socially responsible diamond suppliers and maintaining affordable prices to serve a consumer who is buying for herself and her friends.”

The user-centric focus has brought customer loyalty to Mejuri. The startup claims that 30 percent of its monthly transactions come from returning shoppers, and 70,000 customers are on the waitlist for its products. It’s accumulated a total of 20 million visitors to its website and released 1,500 designs since launch. Revenues have quadrupled year-over-year for the fourth consecutive year, and the company, one of TechCrunch’s favorite picks from 500 Startups’ Batch 15 Demo Day three years ago, said it’s on track to achieve the same level of traction in 2019.

The new proceeds bring Mejuri’s total funds raised to more than $29 million to date. Others in the new funding round include follow-on backers Felix Capital, BDC Capital, Incite Ventures and Dash Ventures. The company plans to spend its latest financial injection on offline expansion, overseas growth and investment in branding and customer experience.

Douyu, China’s Twitch backed by Tencent, files for a $500M U.S. IPO

Douyu, a Chinese live streaming service focused on video games, has filed with the U.S. Securities and Exchange Commission as it prepares to raise up to $500 million on the NYSE less than a year after its archrival floated on the same stock market.

Wuhan-based Douyu, whose name translates as “fighting fish”, is the second Twitch -like service backed by Tencent to go public in the United States. Its direct competitor Huya, who has a similarly fierce name “tiger’s teeth” and also counts Tencent as a major investor, raised $180 million from its NYSE listing last May.

It’s not surprising for Tencent to hedge its bets in esports streaming, given the giant relies heavily on video games to make money. For example, Tencent can use some of its portfolio companies’ ad slots to get the word out about its new releases. Indeed, Douyu’s filing shows it received a hefty 27.48 million yuan ($4.09 million) in advertising fees from Tencent last year.

As Douyu warns in its prospectus, its alliance with Tencent can be tenuous.

“Tencent may devote resources or attention to the other companies it has an interest in, including our direct or indirect competitors. As a result, we may not fully realize the benefits we expect from the strategic cooperation with Tencent. Failure to realize the intended benefits from the strategic cooperation with Tencent, or potential restrictions on our collaboration with other parties, could materially and adversely affect our business and results of operations.”

But there are nuances in the giant’s ties to China’s top two live streaming services that could mean more affinity between Tencent and Douyu. The social media and gaming behemoth is currently Douyu’s largest shareholder with a 40.1 percent stake owned through its wholly-owned subsidiary Nectarine. Over at Huya, Tencent is the second-largest stakeholder behind YY, the pioneer in China’s live streaming sector that had spun off Huya.

When it comes to the financial terms, the rivaling pair is in a head-on race. In 2018, Douyu doubled its net revenues to $531.5 million. Huya held an edge as it earned $678.3 million in the same period, also doubling the amount from a year ago.

Huya may have learned a few things about monetizing live streaming from 14-year-old YY as it managed to pull in more revenues despite owning a smaller user base. While Douyu claimed 153.5 million monthly active users in the fourth quarter, Huya had 116.6 million.

How the two make money also diverge slightly. In the fourth quarter, 86 percent of Douyu’s revenues originated from virtual items that users tipped to their favorite streaming hosts, with the remaining earnings derived from advertising and more. By contrast, Huya relied almost exclusively on live streaming gifts, which made up 95.3 percent of total revenues.

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Screenshot of a Douyu live streaming session 

As Douyu grows its coffers to spend on content as well as technologies following the impending IPO, competition in China’s live streaming landscape is set to heat up. Just earlier this month, Huya raised $327 million in a secondary offering to invest in content and R&D. Like many other businesses anchored in content, Huya and Douyu depend tremendously on quality creators to keep users loyal. Both have offered sizable checks to live streaming hosts, promising to grow the internet celebrities into bigger stars.

And they’ve extended the battlefield outside China as emerging media forms, most exemplified by short video services Douyin (TikTok’s China version) and Kuaishou, threaten to steal people’s eyeball time away. Both bite-size video apps now enjoy a much bigger user base than their live streaming counterparts.

“We intend to further explore overseas markets to expand our user base through both organic expansion and selective investments,” noted Douyu in its IPO filing.

In a similar move, Huya’s overseas expansion is also well underway. “In addition to our vigorous domestic growth, we have successfully leveraged our unique business model to enter new overseas markets. We believe we are delivering long-term value through strategic investments in overseas markets in 2019 and beyond,” said Huya chief executive Rongjie Dong in the company’s Q4 earnings report.