China Firms Accelerate Fundraising in Push for Advanced Car Tech
NIO Capital Is Said Close to Completing $500 Million Auto Fund
(Bloomberg) -- Two Chinese firms are accelerating fundraising efforts to expand their foothold in self-driving and other advanced auto technologies, part of the country’s push to increase its influence as the car industry transforms.
NIO Capital, the investment firm affiliated to electric-vehicle startup NIO, is close to completing the first round of its $500 million offshore fund that will put money in new automotive technologies, according to people with direct knowledge of the matter. Horizon Robotics Inc., a startup seeking to dominate a market of 30 million autonomous-driving vehicles in China by 2025 with its chips, said it is to close a new round of financing to boost its research capabilities.
China has vowed to build a world-leading manufacturing sector with its Made in China 2025 plan as the second-largest economy moves upward in the value chain. Chinese investors have been pouring billions of dollars in developing or acquiring overseas technologies in the automobile sector as the electric, autonomous and shareable-vehicle concepts disrupt the industry.
Fueling the push is the U.S.’s effort to make it harder for Chinese competitors to access its technology market, Zhang Junyi, NIO Capital’s co-founder, said in an interview on Bloomberg TV. Those hurdles are a good incentive for Chinese companies to invest in fundamental technologies and basic research, he said.
“In the short term, it does have some impact on the economy,” Zhang said. “But in the long run, it will help us build a more solid 2025.”
Expanding Research
Yu Kai, founder and CEO of chipmaker Horizon Robotics, echoed Zhang’s comments in his interview on Bloomberg TV.
“The Trump administration’s decision probably will urge the Chinese government to spend more money on the type of core technology-oriented business,” Yu said.
Horizon Robotics is raising several hundred million dollars and is set to complete the round in May, with a global semiconductor company other than Intel Corp. and some Chinese and foreign carmakers becoming its new strategic investors, said Yu. The Beijing-based company plans to spend the money on expanding its research and development teams by hiring more software engineers and pushing forward its hardware architecture design, he said.
“For sure we are going to be the No. 1 player in China,” said Yu, confident the chipmaker understands what its carmaker customers desire. “We know exactly what their pain is and what their need is.”
Horizon Robotics and NIO are among companies touting their latest products at the Beijing International Automotive Exhibition starting this week.
Dollar Fund
NIO Capital company is discussing with sovereign-wealth funds, as well as energy and insurance companies in Asia and Europe as potential investors for its first dollar fund, said the people familiar with the matter, who asked not to be identified as the discussions are private. The first phase of the financing will be settled in a month or two, they said.
NIO Capital will also consider investing in the offshore units of some Chinese companies, the people said. A company spokeswoman declined to comment on the fundraising.
Shanghai-based NIO Capital has already invested in about 15 companies in car-sharing, autonomous driving, new automobile material sectors in China with a Renminbi fund targeted to raise 10 billion yuan ($1.6 billion) in total. Sequoia Capital is among its partners.
The investments include last November’s bet in Beijing-based Shouqi Limousine & Chauffeur, a state-owned ride-hailing company banking on demand for premium mobility services in China.
Horizon Robotics raised $100 million in December in a round led by Intel Capital Corp. The Chinese startup also counted Harvest Global Investments Ltd., Hillhouse Capital Management Ltd., Morningside Venture Capital Ltd., Linear Ventures and Wu Capital as investors in that round of financing.
To contact Bloomberg News staff for this story: Yan Zhang in Beijing at yzhang1044@bloomberg.net, Tom Mackenzie in Beijing at tmackenzie5@bloomberg.net, Haze Fan in Beijing at hfan40@bloomberg.net.
To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Ville Heiskanen, Sam Nagarajan
©2018 Bloomberg L.P.
With assistance from Yan Zhang, Tom Mackenzie, Haze Fan