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China swarmed into the capital of Silicon Valley, but investment in technology is not so simple money

via:博客园     time:2016/8/12 18:00:35     readed:1857

Quixey ever let the same at many Silicon Valley start-up companies envy when they get announced billions of dollars of investment from Chinese technology giant Alibaba place, surrounded by jealous eyes.

This gross Quixey received $ 110 million investment in 2013. Year 2015 and two rounds of financing. The financing value was once seen as deep-pocketed Chinese investors to the shares in the hottest Silicon Valley start-up companies and willing to spend big bucks to pay a premium of evidence.

However, after the things are not as imagined well, there are some things start to go wrong: According to informed sources, Alibaba stopped Quixey pay. After Alibaba broke up Quixey development very difficult, Alibaba uses a fairly demanding as bargaining fight back: we still give your company a loan, but you must promise not to sue. After a few months of tense negotiations, Quixey accepted the new terms. The public last Thursday said that it has got a $ 30 million loan, the money of course, by the Alibaba out, but to its more stringent provisions concerning the relevant than the original set.

Alibaba had hoped Quixey's search technology can improve the App's search experience, not wanted and would allow both Quixey experiencing a very painful and does not dispute the outside world for the secret is known, in this dispute the core of the conflict but the cultural conflict. This is not a simple dispute between the companies, which symbolizes the very delicate and complex relationship between Silicon Valley and China investors. Silicon Valley investors and Chinese relations have reached a new turning point, with the unprecedented influx of funds from China's Silicon Valley, the relationship between the two will become more complicated.

Chinese investors VS Silicon Valley entrepreneurs: not easy to say love you

From China flooding into the capital for the business boom in Silicon Valley have had a profound impact. In the past two years, from China's Internet giants such as Alibaba, Baidu and Tencent, China as well as many private investors, wealthy families managed funds, local government and state-owned enterprises are competing to enter the Silicon Valley, trying to secure the area's most cutting-edge technology company's shares.

According to market research firm Rhodium Group data until the first half of 2016, investment from China's Silicon Valley area (not including real estate) has exceeded $ 6 billion, of which more than half of the investment occurred in the last 18 months of . With the growing wealth of Chinese society in the past decade, coupled with the Chinese government to develop innovative technologies, the number of science and technology investors in China also have been rising, VR (virtual reality) and AI (artificial intelligence) field in particular is China Science and technology of concern to investors, because China's development in two technical areas still lags behind.

"China has realized that they need to find a transition from traditional manufacturing industries to upgrade innovation role model", the famous Stanford University physicist Zhang first Sheng said so, he launched two years ago in Silicon Valley set up Dan Fund (ie Zhongguancun emerging Stanford technology venture investment Fund), the Silicon Valley investment hope that through original and innovative technologies have disruptive technology and the introduction of talents for China's development, "for China, this is open up a new era of digital Silk Road."

In contrast the US start-up companies, they catch the relationship than ever before and more eager Chinese money is not bad company and local tyrants who flourishes, especially considering today's financing environment of Silicon Valley has gradually tightened. Chinese investors not only money, but also for those start-up companies to open the way to more than a billion Chinese consumers the door, while American products and services market has become saturated.

Such investment has been enough to change a new start-up companies development path. "In Silicon Valley venture capital financing if less money from China could not handle it," Chris Nicholson is a newly established company Skymind.io two AI's CEO, his company has got from Tencent and other Chinese investment by financing. Nicholson also said that even those start-up companies are located in the dunes on the way arrogant exclusive venture capital firm rejected also get financial support from China. "This has changed the pattern of Silicon Valley entrepreneurs."

Although both sides need each other place, but still there is no trust between the two. US start-up companies to get tough with Chinese investors might be taken carefully, there are some entrepreneurs worry that their innovations will be copied plagiarism, this is a problem for a long time many Chinese companies to cooperate with US companies most concern. Meanwhile, as new technology investments, investors from China does not want to be ignored, nor want to be treated as just childish stupid money.

Quixey secret battle with Alibaba

Chinese investors usually are not familiar with the Silicon Valley investment circles that set the rules of the game, Quixey company got the painful lessons of the struggle with the Chinese investors from the practice.

In 2013 Quixey Alibaba got a first round of financing Soon after, the company began to Alibaba a custom work, this work is the use of a special technology allows Chinese consumers can operate based Alibaba YunOS App search within the system, and they also do this alone Alibaba signed a development contract. (From a technical standpoint to search within App is very difficult, and it is on the page row searching not the same thing; even Google is also difficult to solve this problem.) The development contract that Alibaba will work with Quixey share any profits generated when the technology application in China.

Earlier this year, Alibaba and Quixey dispute began. Alibaba side said that this development results delivered by start-up companies have lagged behind; Quixey also claimed that Ali Baba owed several months in front of tens of millions of dollars in development costs.

Meanwhile, revenue in the Chinese market, the two companies will produce the expected no-show. Alibaba for Quixey technology did not make his own company to diversify sources of income frustrated. Meanwhile, Alibaba is experiencing a huge organizational changes, those who seek to cooperate with Alibaba various start-up companies, including Quixey, feel they have been changes in the organization of corporate politics and dazzling priority projects adjust the level confused and disoriented. Because there is still a language barrier between the two, which increased the start-up companies and Alibaba cooperation discomfort.

Quixey considering suing Alibaba recover development costs, but the court also found that it is worth the candle. Few start-ups can afford and own major customers and investors exorbitant legal costs of litigation, and this internal scuffle not only allow start-up companies is difficult to achieve their revenue targets, resulting in the key executives leave, often founder also resigned from the CEO position.

"We certainly value the partnership with Alibaba, they have become an indispensable partner for companies and investors." Quixey spokesman Scott Samson said so. Alibaba declined to respect the position on the grounds that the company not to discuss the current investment policy.

Risks and opportunities, Chinese investors to bring Silicon Valley hot gift

There are many investors have expressed Silicon Valley start-ups between Chinese investors and filled with opportunities for cooperation, but there are also many cultural misunderstandings between the two, there are many cases of failure of cooperation is for this reason. "Although partners from China's commitments made exciting, the contract looks very beautiful, but into practice, but some need a good trade-off." Startups focused venture capital Jay Eum said so, where he venture company specializes in helping start-ups and technology giants Asian matchmaking.

"Sometimes those terms seem harsh and bloody competition strategy is not out of cultural misunderstandings, but a Chinese-style business culture norms reflected in reality. Those conditions required by Chinese investors in Silicon Valley may be deemed too radical, but these terms in China was considered quite unfair. "Andreessen Horowitz investment company in China focused business Connie Chan said so.

For example, investors from China after start-up companies here are creative and invest in the company's competitors, this kind of thing is not uncommon.

Skymind.io's CEO Nicholson represents many US startups even knowing caught in a bad deal, it is difficult to withdraw. "As a founder, your job is to find ways to help the company to survive, if someone may not be so perfect with the financing terms to come to you not too picky." But he also stressed Nicholson and cooperation between Chinese investors has been very positive and excited.

In general, entrepreneurs and investors have said investment from China as they opened the door to many new world. For example CloudFlare companies that focus on improving web performance and security, the company in 2011, has been withdrawn from the Chinese market. In 2015 CloudFlare and Baidu established an unusual partnership, then the company's technology has been brought back to the Chinese number one million in the hands of consumers. Artsy look at this online art market, investors from China to help it lose ground in the Hong Kong market. Magic Leap make this virtual reality products company this year received a substantial investment from Alibaba, also invited to face hundreds of engineers in a keynote speech at Alibaba Developer Conference in Shanghai.

Chinese investment in Silicon Valley can be traced back at least thirty years ago, in 2014 was a turning point. According to market research firm CBInsights figures show that in that year investors from China to accelerate the pace of advance in Silicon Valley: Chinese Investors appeared at up to 101 transactions, the value is three years ago times. The actual number may be much larger than the statistics to figure because there are a lot of investment is not disclosed to the public.

Like the US real estate and bond industries, science and technology industry, Silicon Valley has been a rich Chinese who want to seek opportunities to increase investment objectives of wealth outside their own country. Especially domestic political situation unstable when the outflow of wealth even faster.

New homework Silicon Valley entrepreneurs: how to deal with Chinese investors

Alibaba generous investment in Silicon Valley continues, it is Magic Leap has invested $ 799.5 million for the electricity supplier website Jet.com invested $ 500 million for Snapchat, Lyft and Shoprunner each vote on a specific number of unknown number One million U.S. dollars. Just last year, Uber obtained by Baidu lead investor $ 1.2 billion investment. And it has a strong social tool in the hands of Tencent micro letter is a relatively silent investor, for hundreds of Silicon Valley start-up companies were small investments, which covers the areas of gaming, mobile payments and artificial intelligence.

"We value the strategic value of these start-up companies brought, they can bring some cool new technology for the Chinese market." Baidu, general manager of the United States Alex Tze-Pin Cheng said. Like other Chinese investors, Baidu is also actively seeking to build relationships with those close to Sand Hill Road influential venture capitalists.

Fyusion founder Radu Rusu recently applied their company's 3D imaging technology to Huawei's millions of smart phone, Rusu indicates that this arrangement will be for their own employees only 40 start-up companies bring enormous changes. Like all Chinese investors and founder of the deal to the experience, Rusu represents the single business at a rapid rate is stabilized. "Before talking about cooperation with Chinese investors in the process than I have ever handled any US company much faster," Rusu sigh, "They have a very strong entrepreneurial spirit, do not want to waste any time."

Quixey the short term and it will take time to repair Alibaba differences between the two. Quixey and have been developed for Search App of new technology, is the contact number of new potential customers and partners. Quixey seems no longer to do the technical development of Alibaba.

(Article Source: The Washington Post, The text images from The Washington Post. )

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