Shared housing startups are taking off

When young adults leave the parental nest, they often follow a predictable pattern. First, move in with roommates. Then graduate to a single or couple’s pad. After that comes the big purchase of a single-family home. A lawnmower might be next.

Looking at the new home construction industry, one would have good reason to presume those norms were holding steady. About two-thirds of new homes being built in the U.S. this year are single-family dwellings, complete with tidy yards and plentiful parking.

In startup-land, however, the presumptions about where housing demand is going looks a bit different. Home sharing is on the rise, along with more temporary lease options, high-touch service and smaller spaces in sought-after urban locations.

Seeking roommates and venture capital

Crunchbase News analysis of residential-focused real estate startups uncovered a raft of companies with a shared and temporary housing focus that have raised funding in the past year or so.

This isn’t a U.S.-specific phenomenon. Funded shared and short-term housing startups are cropping up across the globe, from China to Europe to Southeast Asia. For this article, however, we’ll focus on U.S. startups. In the chart below, we feature several that have raised recent rounds.

Notice any commonalities? Yes, the startups listed are all based in either New York or the San Francisco Bay Area, two metropolises associated with scarce, pricey housing. But while these two metro areas offer the bulk of startups’ living spaces, they’re also operating in other cities, including Los Angeles, Seattle and Pittsburgh.

From white picket fences to high-rise partitions

The early developers of the U.S. suburban planned communities of the 1950s and 60s weren’t just selling houses. They were selling a vision of the American Dream, complete with quarter-acre lawns, dishwashers and spacious garages.

By the same token, today’s shared housing startups are selling another vision. It’s not just about renting a room; it’s also about being part of a community, making friends and exploring a new city.

One of the slogans for HubHaus is “rent one of our rooms and find your tribe.” Founded less than three years ago, the company now manages about 80 houses in Los Angeles and the San Francisco Bay Area, matching up roommates and planning group events.

Starcity pitches itself as an antidote to loneliness. “Social isolation is a growing epidemic—we solve this problem by bringing people together to create meaningful connections,” the company homepage states.

The San Francisco company also positions its model as a partial solution to housing shortages as it promotes high-density living. It claims to increase living capacity by three times the normal apartment building.

Costs and benefits

Shared housing startups are generally operating in the most expensive U.S. housing markets, so it’s difficult to categorize their offerings as cheap. That said, the cost is typically lower than a private apartment.

Mostly, the aim seems to be providing something affordable for working professionals willing to accept a smaller private living space in exchange for a choice location, easy move-in and a ready-made social network.

At Starcity, residents pay $2,000 to $2,300 a month, all expenses included, depending on length of stay. At HomeShare, which converts two-bedroom luxury flats to three-bedrooms with partitions, monthly rents start at about $1,000 and go up for larger spaces.

Shared and temporary housing startups also purport to offer some savings through flexible-term leases, typically with minimum stays of one to three months. Plus, they’re typically furnished, with no need to set up Wi-Fi or pay power bills.

Looking ahead

While it’s too soon to pick winners in the latest crop of shared and temporary housing startups, it’s not far-fetched to envision the broad market as one that could eventually attract much larger investment and valuations. After all, Airbnb has ascended to a $30 billion private market value for its marketplace of vacation and short-term rentals. And housing shortages in major cities indicate there’s plenty of demand for non-Airbnb options.

While we’re focusing here on residential-focused startups, it’s also worth noting that the trend toward temporary, flexible, high-service models has already gained a lot of traction for commercial spaces. Highly funded startups in this niche include Industrious, a provider of flexible-term, high-end office spaces, Knotel, a provider of customized workplaces, and Breather, which provides meeting and work rooms on demand. Collectively, those three companies have raised about $300 million to date.

At first glance, it may seem shared housing startups are scaling up at an off time. The millennial generation (born roughly 1980 to 1994) can no longer be stereotyped as a massive band of young folks new to “adulting.” The average member of the generation is 28, and older millennials are mid-to-late thirties. Many even own lawnmowers.

No worries. Gen Z, the group born after 1995, is another huge generation. So even if millennials age out of shared housing, demographic forecasts indicate there will plenty of twenty-somethings to rent those partitioned-off rooms.

China’s Didi pares back ‘hitchhiking’ car service following passenger murder

Didi Chxuing is making big changes to Hitch, its inter-city carpooling service, following the murder of a passenger at the hands of a driver earlier this month.

Last week, Didi — China’s dominant ride-hailing service by some margin — expressed its “deep remorse” for the murder, and suspended Hitch for a week to conduct a review of the service.

Hitch, as the name suggests, is a hitchhiking-style service that groups people who are headed in the same direction together. Unlike Didi’s other services, it isn’t commercial; passengers give the driver their share of fuel and any other costs they want to cover. That makes it affordable and hugely popular, but it has also made the service less professional than Didi’s other modes of transport. Indeed, many in China have claimed the service is ‘sleazy,’ with many comments left about passenger appearances, particularly those who are female.

The primary change will see Hitch available limited to daytime when the service resumes, with no new rides able to start between the hours of 10pm and 6am.

In an apparent nod to the unsavory elements, Didi is scrubbing all Hitch driver and passenger reviews and ratings. Personal information for users will no longer be public, and profile photos will be replaced by generic images, Didi said.

Beyond Hitch, Didi is also making changes to its driver authentication program.

That’s down, in a large part, to the fact that the suspect in the murder of the passenger was not a verified Didi driver. He was able to use the app (on more than one occasion) by taking the smartphone belonging to his father, who is a verified Didi driver. Didi’s facial recognition technology, which verifies a driver’s identity before granting them access to the service, failed in this instance — Didi said it was “defective” that day.

Didi is closing down the option for its drivers to use other people’s cars with their permission, and implementing a “zero tolerance policy” on matching cars with their registered owners — a strange loophole that drew concern.

The Didi service added an SOS button two years ago, and now it is aiming to refine that further by introducing automatic audio recording which is passed in real-time to a customer support agent once an SOS is activated. The firm said it is also weighing up adding video in the future. Conscious of privacy concerns, the company said the audio would be stored remotely, not on a passenger’s device, and deleted within 72 hours if not needed for longer.

“We understand that not everyone is comfortable with having their trips recorded. Additional user authorization may also be needed if in-vehicle video monitoring were to be introduced in the future,” the company said.

“Nevertheless, this could be a most effective means to enhance safety standards, and to ensure adequate evidence support for potential dispute resolution,” Didi added. “Would this be an acceptable solution in the eyes of our users?”

That’s one of a series of questions put out by Didi, which said it will solicit opinions for potential safety measures. The company said it has booked “proactive consultation sessions with relevant authorities and experts” and it will also put out a call for comment on its social media channels.

Didi is facing pressure from rival Meituan Dianping, which started out in local services but recently introduced ride-sharing services and moved into dockless bikes with the acquisition of Mobike.

This is not the first time that Didi, which became China’s single-largest ride-hailing company when it bought out Uber’s local business in 2016, has dealt with the murder of a customer. Two years ago, a woman in Shenzhen was robbed and murdered by a Didi driver.

China’s Didi Chuxing suspends carpooling service following murder of a passenger

Didi Chuxing, China’s largest ride-hailing service, has suspended its Hitch, one of its carpooling services, for one week as it investigates the murder of a passenger.

The victim was a 21-year-old air stewardess identified only as Ms. Li. State-run news agency Global Times reports that the incident took place in the evening of May 5, when she used Hitch — which lets people headed to the same destination take a ride together — to summon a ride home from Zhengzhou airport, Henan Province, after finishing work. The publication cites police reports that say Li was murdered by her driver using a weapon.

Didi has used facial recognition technology to verify its drivers since 2016. The technology is used to speed up registration of drivers when they initially sign-up, and also to prevent fraud when they log in to start a shift. The idea is that the app will only unlock when the driver account owner takes a selfie which should match with the record Didi has.

In the case of this tragic incident, that safeguard failed.

The suspect — who has been named as Liu Zhenhua — is not registered on its platform, according to Didi, but he was able to access it, and take rides, using a verified driver account belonging to his father. Didi said it did not prevent this because its facial recognition feature was “defective” that day.

It looks like there was a warning sign, however. The company said that the account had received a sexual harassment complaint before the incident — it isn’t clear if that was from the father, or his son accessing the account — but Didi was unable to reach the account despite trying to make contact an apparent five times. Yet, despite the complaint, the account was allowed to log-in and take rides.

“Due to the imperfection of the arbitration rules of the platform, the complaint was not handled properly in subsequent days,” Didi admitted in a statement.

Hitch is an inter-city carpooling service focused on commuting and distance-traveling that lets passengers cover the cost of fuel and a driver’s basic costs. Didi’s commercial carpooling services are not affected. The Hitch suspension starts tomorrow — May 12 — and Didi said it will use the time to review all of its registered drivers for “any cases involving mismatch of drivers and vehicles.”

The company also pledged to revamp its operational approach and customer support system.

In a prior statement provided to TechCrunch, Didi expressed its “deep remorse” at the incident which it said it has “undeniable” responsibility for. The company added that it must “step up to win the trust of our users.”

We are deeply saddened by and sorry about the tragedy that happened to Ms. Li while using DiDi Hitch. No words can express our deep remorse in the face of such an enormity. We give our sincere condolences and apologies to the family of Ms. Li. We need to step up to win the trust of our users. Our responsibilities in this case are undeniable.

Our special task force is working closely with law enforcement agencies with the utmost effort. The murderer needs to be brought to justice; and Ms Li and her family deserve a just answer.

We apologize again to the family of the victim and the public. Please be assured we will review thoroughly all our business practices to prevent such an incident from happening again.

Global Times reported that Didi is offered a reward of one million yuan (just over $150,000) for information about the alleged murdered, although Didi did not confirm that when we asked.

Didi is facing pressure from rival Meituan Dianping, which started out in local services but recently introduced ride-sharing services and moved into dockless bikes with the acquisition of Mobike.

This is not the first time that Didi, which became China’s single-largest ride-hailing company when it bought out Uber’s local business in 2016, has dealt with the murder of a customer. Two years ago, a woman in Shenzhen was robbed and murdered by a Didi driver.

Uber and Lyft have had fatal incidents, too.

In the U.S., those range from a seven-year-old girl being run over by an Uber driver in San Francisco in 2014, to a driver in Michigan murdering six people while on duty for the ride-hailing service in 2016. Other fatalities have taken place in Australia, Lebanon, Singapore and India.

This year, Uber’s autonomous vehicles have also been involved in civilian deaths. In March, a woman died after being struck by a self-driving Uber SUV in Tempe, Arizona. While police said Uber wasn’t responsible for the incident, the company paused its autonomous vehicle testing following the fatal crash.

How 3D printing is revolutionizing the housing industry 

If you build it, they will come. And if you 3D-print it, they will come faster, cheaper and more sustainably.

We live in an era of overpopulation and mass housing shortages. Yet we also live in a time of phenomenal digital innovation. On the one hand we have major crises affecting the health, liberty and happiness of billions of people. But look at the other hand, where we have potential for life-changing technological breakthroughs at a rate never before seen on this planet.

Our challenges are vast, but our capabilities to produce solutions are even greater. In the future, we will remember this moment in time as a pivotal one. It is now — not tomorrow, and certainly not five years from now — when technology and innovation are disrupting multiple major industries, including those of housing and construction, at breathless and breakneck speed.

Innovators around the world are hard at work to change the way we design, build and produce our homes, and all of this will result in massive change to the housing status quo. Harnessing the revolutionary power of 3D printing, companies from Russia to China, the U.S. and the Netherlands have already proven that not only can a home be 3D-printed, it can be done cheaply, efficiently and easily.

Here are just a few ways 3D printing is already transforming the way we live.

Speed

In March 2017, Apis Cor, 3D-printing specialists with offices in Russia and San Francisco, announced they had produced a 3D-printed home in just 24 hours. That means that from the time you drank your coffee yesterday to the time you sat down for cereal this morning, they produced the self-bearing walls, partitions and building envelopes of an entire home, installed it on site and added the roof and interior finishings. It happened in the dead of winter in a tiny Russian town named Stupino, and it was done using Apis Cor’s on-site printer, which means that the massive cost and logistical hurdle of transporting parts and building materials from factories to a home site was almost entirely eliminated.

Think about the possibilities: You select the site where you want to build your home, Apis Cor brings in their 4.5-meter-long printer, the raw materials are set up and within one single day, your home is printed and ready for you. Compare that to the traditional six- or seven-month construction time the industry is used to, and you’ll begin to understand the scope of potential disruption.

The speed of technological innovation here is also exponential and mind-blowing; just one year before Apis Cor’s breakthrough, we in the 3D-printing industry were marveling over Chinese construction company HuaShang Tengda, who set their own record by 3D-printing a two-story home in a month and a half. Consider that, for a moment: This industry is moving so quickly that construction time has been slashed from 45 days to 24 mere hours in the span of a single year.

Image: shanelinkcom/iStock

Cost

Housing prices in America have skyrocketed over the past 50 years, with the average price for a home now surpassing $200,000. And remember, that’s just the average — if you live on the East or West Coast, chances are you’re going to be shelling out something closer to the half-million dollar mark (or more!).

According to a report from the McKinsey Global Institute, a full one-third of people who live in cities will find decent housing out of their reach due to cost by the year 2025. And construction costs are the primary barrier — the report also states that it will take between $9 trillion and $11 trillion just to build the necessary houses to flip that supply-demand ratio and make housing affordable in that time.

Of course, that’s taking only traditional methods of construction into account. But Apis Cor’s 24-hour home was made for around $10,000. HuaSheng Tenga’s homes were made with only 40 percent of the materials traditional construction usually requires, in 30 percent of the time. That represents massive savings in labor and material costs. And these companies aren’t alone — dozens of other firms are exploring cheaper and less complicated methods for building the roofs we all need over our heads, and slashing prices in the process. 

New Story, a Silicon Valley-based nonprofit that builds housing in the developing world, just unveiled a new 3D printer at SXSW that can print a house in less than a day for $4,000. DUS Architects — a Dutch architecture studio that has been 3D-printing houses since 2012 — has unveiled the KamerMaker, a huge 3D printer that can build using local recycled materials. This slashes transport, material and manufacturing costs, all driving down costs. 

The bottom line

What’s so revolutionary about 3D printing is that its potential is limited only by our imaginations. If the past few years have taught us anything about this industry, it’s that barriers of size, scope and material do not apply to the potential that 3D printing brings to the manufacturing market. From cars to food, to the houses we live in, the industry isn’t just gearing up for a shakeup. It’s in the throes of it already, because change is happening now.

China said to be discussing ZTE ban with U.S. officials

The Chinese government is reportedly going to bat for ZTE over a seven-year ban that would have broad ranging consequences for the phone maker. According to a new report from Reuters, the subject was broached during a meeting with between senior Chinese and U.S. officials in Beijing this week.

The ban imposed by the Department of Commerce is the result of a violation against U.S. Iranian sanctions. ZTE pled guilty, agreeing to pay a fine and penalize employees. After the DOC insisted it failed to do the latter, it barred US companies from selling software or components to the phone maker for seven years. Between chip makers like Qualcomm and software providers including, most notably, Google, the restrictions will prove next to impossible for ZTE to circumvent.

For many, the steep penalty appears to be part of a larger looming trade war between the two countries that’s also found ZTE and Huawei caught in the crosshairs over ties to the Chinese government. U.S. officials, however, have insisted that the ban isn’t related to trade issues between the two countries.

Earlier this week, the Pentagon banned the sale of both companies’ phones on military bases — just the latest in a long line tough breaks here in the States.  ZTE has largely weathered the broader U.S. spying concerns better, due in part to a broader footprint in the States than Huawei, but the company admitted that this latest ban would be downright devestating. 

“The Denial Order will not only severely impact the survival and development of ZTE,” the company told TechCrunch, “but will also cause damages to all partners of ZTE including a large number of U.S. companies.”

ZTE has also reportedly been in talks with U.S. companies like Google and has suggested it will take judicial action, if necessary. 

China could beat America in AR/VR long-term

America delivered more AR/VR revenue than China last year, but Chinese growth in the next five years could see it dominate AR/VR long-term — and not by a small margin. With the potential to take more than $1 of every $5 spent on AR/VR globally by 2022, the natural advantages of the Chinese AR/VR market are a golden opportunity (or threat) for domestic and international players. Combine China with other major countries in the region, and Asia could deliver around half of AR/VR global revenue in five years’ time. Western companies might need to adopt a “we try harder” approach to compete at the same level.

Since 2015 we’ve said that ubiquitous AR could dominate focused VR long-term. While the two markets might merge into unified “XR” (or some other acronym) one day, they could have very different dynamics for the foreseeable future. AR (mobile AR, smart glasses) could approach 3.5 billion installed base and $85 billion to $90 billion revenue by 2022, while VR (console, PC, mobile, standalone) might deliver 50 to 60 million installed base and $10 billion to $15 billion revenue in the same time frame(Note: Digi-Capital’s base case is that even with 900 million installed base for ARKit/ARCore by the end of this year, AR/VR revenue will only start to scale in 2019.)

To understand what’s happening across the 55 major AR/VR countries and regions, let’s start with VR.

America might win the battle for VR

VR’s smaller installed base, lower mobility and exclusive immersion (i.e. limited plurality) focuses it on entertainment use cases and revenue streams. Entertainment (games, location-based entertainment, video) could take two-thirds of VR sector revenue long-term, with hardware taking just over a quarter due to limited unit sales and price competition.

The VR market’s country dynamics have much in common with the wider video games market. The U.S. has a significant installed base of Sony’s VR capable games consoles (banned in China until recently) and high-end VR-capable PCs. It also has highly profitable core gamer economics, which could give it an advantage if premium standalone VR (neither PC nor mobile tethered) hits its stride in a few years. While China has a much larger mobile installed base, mobile/standalone VR’s trajectory took a fundamental hit last year, following the launch of mass-market mobile AR. Combined with lower ARPU for mobile/standalone VR, China is at a relative disadvantage to the West on a per user basis.

The U.S. could take around one-fifth of global VR revenue by 2022, making it slightly larger than China. But while the U.S. could win the VR battle, it might be a small victory. Combining China with other countries in the region (particularly Japan and South Korea), Asia could deliver just under half of global VR revenue in five years — over twice North America. Europe (led by the U.K., Germany, France) could also deliver, but the European region combined might only be slightly larger than either the U.S. or China individually.

China could win the war with AR

The dynamics of AR look very different. An installed base in the billions is coming for mobile AR. If and when Apple launches smartphone-tethered smart glasses (we’ve been forecasting 2020 for a while now), that market could grow from hundreds of thousands to tens of millions installed base in five years. Because of this distribution potential, a Cambrian explosion of new use cases and business cases is beginning to emerge. E-commerce sales (goods & services, not IAP), hardware sales, ad spend, app store (non-games and games), enterprise and location-based entertainment hold significant promise for AR long-term.

So where VR looks like a subset of the games market, AR’s long-term dynamics could be more like mobile. That’s where China’s natural advantages give it the edge over every other country on the planet (including the U.S.).

Chinese ARCore could have an installed base approaching ARKit’s scale globally long-term. Add to that ARKit itself in China, plus domestic Chinese mobile AR from Tencent, Alibaba and others, and a clearer picture of Chinese scale emerges. Then from 2020, smartphone-tethered smart glasses could become premium peripherals to Apple and others’ phones, again leveraging China’s inherent mobile strength. This could see China dominate global mobile AR and smart glasses’ installed bases long-term.

Then there’s China’s market dynamics, business models and economics to consider:

What does all this mean for AR?

E-commerce could be the largest AR business model, where China (particularly Alibaba) might dominate. Smart glasses hardware sales could come next, with premium Chinese iPhone users core to Apple’s potential long-term smart glasses dominance (whether they call them iGlasses or not). Tencent is in prime position for the third-largest business model of AR advertising, which explains its  battles with Alibaba (although Facebook Camera Effects could generate more revenue internationally). And that’s not to mention Chinese iOS and Android AR app store revenues (both non-games and games), enterprise AR and location-based AR entertainment at scale.

Combining China’s impending AR installed base, business models and economics, and it could see nearly one-quarter of all AR revenues globally by 2022. This is almost half again what the U.S. might produce in a similar time frame. Merging all the country data for a regional view, and Asia could take more than half, Europe less than one-quarter and North America less than one-fifth of global AR revenues.

It’s a small world after all

Installed bases, use cases and economics are great levelers in tech markets, and so it is for AR/VR. While the U.S. might win VR, China could dominate much larger AR. So whoever wins AR also wins AR/VR globally — right now that looks like China by a country mile.

This is not to say that the U.S. and other western countries can’t do very well from AR/VR long-term (indeed, we forecast that they should). However Asia, China in particular, is critical to the future of the market. Global players need to find a way to compete, or risk being left behind. While Apple could do well as always, for everyone else it’s all to play for.

Chinese authorities dish out $5M in fines for developers of PUBG hack software

There has long been speculation and evidence of cheating software for PlayerUnknown’s Battlegrounds (PUBG), but action is being taken to stamp it out. The makers of the smash-hit game have confirmed that they have worked with authorities in China who have dished out over $5 million in fines to at least 15 people caught developing hacks that help players cheat.

PUBG, in case you missed it, is one of the top-grossing games in the world this year. A shoot-up battle royale game that sees players battle to survive to the end, PUBG grossed $700 million in revenue via PC sales last year and that’s only increased in 2018 as the title landed on mobile. It’s particularly big in China where internet giant Tencent is the publishing partner.

That Tencent link might have proved useful, as Bluehole — the company behind PUBG — revealed in a statement that Chinese authorities have helped it clamp down on hacking programs, handing out the huge number of fines in the process:

Here’s some translated information from the local authorities we worked with on this case:

“15 major suspects including “OMG”, “FL”, “火狐”, “须弥” and “炎黄” were arrested for developing hack programs, hosting marketplaces for hack programs, and brokering transactions. Currently the suspects have been fined approximately 30mil RNB ($5.1mil USD). Other suspects related to this case are still being investigated.

While the programs were being developed in China and there were users there too, it isn’t clear whether that reach extended to gamers in the U.S. and other countries.

Beyond just cheating, there is also a significant risk for those who use the hacked software.

Bluehole said it found evidence that the programs were used by their developers to infect host PCs in order to “control users’ PC, scan their data, and extract information illegally.” Some, it is said, used Trojan Horse software to steal user information — that could mean information from when they shop online (like credit card numbers), the content of emails, and more.

Chinese government admits collection of deleted WeChat messages

Chinese authorities revealed over the weekend that they have the capability of retrieving deleted messages from the almost universally used WeChat app. The admission doesn’t come as a surprise to many, but it’s rare for this type of questionable data collection tactic to be acknowledged publicly.

As noted by the South China Morning Post, an anti-corruption commission in Hefei province posted Saturday to social media that it has “retrieved a series of deleted WeChat conversations from a subject” as part of an investigation.

The post was deleted Sunday, but not before many had seen it and understood the ramifications. TenCent, which operates the WeChat service used by nearly a billion people (including myself), explained in a statement that “WeChat does not store any chat histories — they are only stored on users’ phones and computers.”

The technical details of this storage were not disclosed, but it seems clear from the commission’s post that they are accessible in some way to interested authorities, as many have suspected for years. The app does, of course, comply with other government requirements, such as censoring certain topics.

There are still plenty questions, the answers to which would help explain user vulnerability: Are messages effectively encrypted at rest? Does retrieval require the user’s password and login, or can it be forced with a “master key” or backdoor? Can users permanently and totally delete messages on the WeChat platform at all?

Fears over Chinese government access to data held or handled by Chinese companies has led to a global backlash against those companies, including some countries (including the U.S.) banning Chinese-made devices and services from sensitive applications or official use altogether.

Baidu brings group of PE firms into its financial services business via $1.9B investment

Baidu has turned to the financial industry to bolster its consumer finance business. The Chinese search giant confirmed that it has sold a majority share in its Financial Services Group (FSG) business to a consortium of private equity firms in a deal worth $1.9 billion.

The business is in the consumer finance space and its services include credit and wealth management. Its competition, beyond traditional financial businesses, includes digital efforts from the likes of Tencent and Alibaba.

The deal — which had been speculated at the end of last year — sees FSG renamed to Du Xiaoman. The group of investors is led by TPG and The Carlyle Group, and it will pay around $1.06 billion for a majority stake. A further $840 million will be given to Du Xiaoman.

Following the transaction, Baidu will own 42 percent of the business, which will operate independently. Guang Zhu, who had been Baidu senior VP and GM of FSG, will become Du Xiaoman CEO.

It’s fairly common for China’s tech giants to incubate business which, when ready, are they spun out to raise capital from segment-specific investors. Indeed, JD.com — Tencent’s e-commerce partner — brought in a range of investors when it granted its financial services division independence via a spin-out two years ago.

Alibaba itself has long-courted investors for Ant Financial, its affiliate division that runs its Alipay mobile money business, its digital banking arm and other financial services. Ant was valued at $60 billion when it raised over $3 billion in 2016 and now the business — which is reportedly closing in on an IPO — is said to be raising as much as $10 billion more at a valuation that could hit $100 billion.

Outside of finance, Baidu’s iQiyi video streaming unit operates independently of the business in a similar model to Du Xiaoman. iQiyi raised over $1.5 billion from a clutch of private equity firms in 2017, before going on to list on the Nasdaq this past March. That’s very much the blueprint in this strategy.

“This transaction marks another milestone for Baidu to incubate new businesses with large opportunities and strong synergies with Baidu’s core business, on the heels of iQiyi’s public listing,” Robin Li, Chairman and CEO of Baidu, added in a statement.

But Baidu has also offloaded businesses that it deemed to be fringe. In food delivery for example, a space where it was out-manoeuvered by the competition, it sold its Waimai business to Ele.me, and then later sold its Ele.me shares to Alibaba when the e-commerce firm moved for a full buyout.

Startup ecosystem report: China is rising while the US is waning

Startups are a gamble, but it’s possible to better understand why some thrive and many more die by looking at the ecosystems in which they operate. Such is the mission of eight-year-old Startup Genome, composed of a group of researchers and entrepreneurs who, every year, interview thousands of founders and investors around the world to get a better handle on what’s changing in the regions where they operate, and what remains stubbornly the same.

The larger objective is to figure out how to help more startups succeed, and the outfit — which this year surveyed 10,000 founders with the help of partners like Crunchbase and Dealroom — produced some data that should perhaps concern those in the U.S. To wit, China looks positioned to overtake U.S. dominance when it comes to numerous tech sectors. Consider: In 2014, just 14 percent of so-called unicorns were based in China. Between the start of last year through today, that percentage has shot up to 35 percent, while in the U.S., the number of homegrown unicorns has fallen from 61 percent to 41 percent of the overall global number.

You could argue that investors are simply assigning China-based startups overly lofty valuations, as happened here in the U.S., and we partly believe that to be true. But China is also clearly “in it to win it,” based on a look at patents, with four times as many AI-related applications and three times as many crypto- and blockchain-related patents registered in China last year. With so much of the tech industry now focused on deep tech, it’s worth noting. In fact, though we loathed the January Financial Times column penned by famed VC Michael Moritz, who suggested U.S. companies follow China’s lead, his underlying call to arms was probably, gulp, prescient in its own way.

What else should startups know? According to Startup Genome’s findings, in addition to the rise of AI, blockchain and robotics manufacturing, there are clearly declining sub sectors, too, including, least surprisingly, adtech, which has seen a roughly 35 percent drop in funding over the last five years. No doubt that ties directly to the growing dominance of Facebook and Google, which accounted for 73 percent of all U.S. digital advertising last year, according to the equity research firm Pivotal.

That doesn’t mean adtech startups are cooked, notes the study’s authors. Rather, declining sub-sectors are often “mature” but can be revived by new technologies. In this case, while funding for adtech has dropped, virtual reality and augmented reality could well inject some new growth into the industry at some point. Maybe.

Either way, to us, the most interesting facets of this report — and it really is worth poring over — are the connections it’s able to make by talking with so many people around the world. It addresses, for example, how Stockholm, a relatively small startup ecosystem, is able to produce sizable startups at a meaningful rate, versus Chicago, whose ecosystem is ostensibly three times bigger. (The answer: Stockholm’s startup founders are apparently better connected to the world’s top seven ecosystems.)

Also quite interesting is the report’s findings about women founders, who build more relationships with regional founders and are more locally connected than their male counterparts — except with investors. That’s bad news for both women founders and investors, as local connectedness is associated with better startup performance.

To read the report in full, click over here. You have to fork over your email address, but with 240 pages filled with fascinating nuggets and other useful information, you’ll likely find it worth it.