All is not lost for China’s start-ups focusing on frontier-tech amid COVID-19 crisis, says GlobalData

Despite a considerable drop in the overall investment activity due to the COVID-19 crisis, the Chinese start-up ecosystem remained relatively resilient, with start-ups focusing on frontier technologies (frontier-tech) such as autonomous driving, enterprise AI and space exploration managing to attract investor attention, says GlobalData, a leading data and analytics company.

The pandemic has brought many businesses across China to a complete standstill in first quarter of 2020. Despite the gradual recovery in business activity in April, the overall situation has been far from favorable. The liquidity crunch has hit even the venture capitalists, the single most important source of financing for start-ups, making them extremely cautious and wary of allocating funds for new start-up ventures.

However, even amidst the grim outlook, the investor community continued to advance their strategies, which saw them quickly shift their focus from traditional start-ups such as travel, event planning, ride-and space-sharing platforms, which have been struggling of late, to the start-ups focusing on new age technologies that have been catapulted to the forefront amidst the pandemic.

Sandeep Kolakotla, Technology Analyst at GlobalData, says: “While the investors have been generally wary of funding new ventures, they have retained their appetite for select class of start-ups, particularly those working on frontier-tech, including autonomous driving, enterprise AI and space exploration.”

Some of the notable funding developments in the frontier-tech over the last few months include the Toyota-led US$400m funding round for Guangzhou-based autonomous driving start-up Pony.ai in February 2020, a series C funding round of US$42m for Laiye, which develops AI-enabled intelligent robots and other assistant products in the same month, and US$14m raised by the Chinese private aerospace start-up MinoSpace in March 2020. 

Kolakotla concludes: “The COVID-19 pandemic has compelled many traditional sectors like healthcare and retail to accelerate the adoption of disruptive technologies like robotics, AI and autonomous vehicles at an unprecedented scale. This indicates a shift towards an economy that delivers efficiency without the need for human intervention. Frontier-tech start-ups in China have largely been able to ride out the economic crisis unscathed and will continue to raise funding for the foreseeable future.”

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