Cross-Border Technology Transactions with China in a

Post-Brexit World

Bruno Bensaid @Brexit and Global Expansion Summit

Oct 17, 2016

布鲁诺 | Bruno | @brubrushanghai

Investment banker

Former VC

Angel Investor in China/US startups

Community builder

Mentor to incubators & Startups

Advisor to Government Agencies, Media,Universities, Funds…

Keynote to ENGIE delegation of top executives (www.engie.com one of the largest energy companies worldwide) on the New ways to do business in and with China – Horizon 2030 (2015)

Keynote at INSEAD exec program for CBEAD (China Business Executives Academy Dalian), China Government elite training academy. Presentation in Mandarin on the Lessons From Experience & Advice to Chinese Investors in Europe (2015)

Shanghaivest, a recognized Specialist and Coach In the China Cross-border Investment field

Coach to Michelin China and teams of in-house entrepreneurs on building a venture, including deal sourcing for the Group (2016)

Coach to BNP Paribas (strategic initiatives teams) to study possibilities of China venture investing and deal sourcing for the Group (2016)

Keynotes at different conferences on Investment and Cross-border M&A (Bruno Bensaid – 2015)

On Chinese TV (Ghislain de Mareuil - 2016)

Ghislain De Mareuil, Interviewed by Phoenix TV on the important role of the Asian investment bank for China-EU cooperation

20-25% of the world’s Unicorns are Chinese

China’s Technology Giants rank 2nd behind the US

Total Number of Investments from BATQX in past 4 years

Baidu: ~80Alibaba: ~165Tencent: ~175Qihoo 360: ~45Xiaomi: ~95-------------------------Total: ~ 560!!!

Source: Marbridge Consulting

Feeding China’s Unicorns Overseas

Investing outside of China has become of key driver of technology growth for China’s Unicorns (Baidu, Alibaba, Tencent, Xiaomi, Qihoo360, Cheetah Mobile…)

What are China’s interests in UK companies

Artificial Intelligence, machine learning & ApplicationsAutonomous vehicle technology and applicationsRoboticsInternet of Things (IOT)Sea-based technologies (clean and traditional)Deep technology in generalFinancial and insurance technologiesHealthcareE-commerce, industrial design, online creative skills

and the usual: Sports Teams, Brands, Real Estate etc.

Post-Brexit - On June 28, 2016, “Huawei confirmed to the UK Government that its planned 1.3 billion GBP ($1.73 billion) investment in the UK will go ahead as planned, despite UK voting to leave the European Union" Sajid Javid (then Business Minister)

Beijing Kunlun putting £23 million ($34 million) into peer-to-peer mortgage lending marketplace Lendinvest (2015)

For Chinese investors, the UK remains a strong opportunity

Chinese PR Group BlueFocus Buys London-Based We Are Social (acquired 82.8% for $30 Mil)

Huawei buys Cambridge Internet of Things pioneer Neul

(pre-Brexit) The $25Mil Transaction will enable Huawei tostrengthen its position in Narrowband IoT (part of future 3GPPcellular standards for connecting low data rate devices thathave exceptionally long battery life) and most importantly,consolidate a prized relationship with Vodafone UK…

Chinese Firm CSC Group to Fund Artificial Intelligence Incubator in Britain (2016)

Chinese state-backed private equity firm CSC Group has inked a multimilliondeal with British startup incubator Founders Factory.Planning on hiring 60 people and investing in five early-stage AI startupsPlans to launch two new companies every year. CSC Capital is the thirdlargest private equity fund in China (more than $60 Bil AUM)

China getting wise inspiration from the US in AI…

The UK has innovative artificial intelligence technology andChina has a very big market and the business modelinnovation” … “We want to fuse the technology we find in theUK with the Chinese Market”

Dania Zhou, senior managing director, of CSC Group

But this is hardly a new vision…In the past 3 years, US companies have snatched the best UKcompanies in AI (acquisitions of Swiftkey by Microsoft, VocalIQby Apple and DeepMind by Google)

Chinese private equity fund Angel Plus unveils new incubator for startups in the UK (2016)

Chinese private equity fund Angel Plus ($760 AUM!!) led the launch of anew incubator called IUIA – A+Labs to help technology-oriented Britishfirms commercialize in ChinaThe new incubator is said to provide office space, engineering tech support,manufacturing partnership and financial investment in the form of equity toUK startups in smart city, Internet of Things, and financial technology

New Chinese VC Cocoon Networks Opens For Business In London With A GBP 500 Mil ($713 Mil) Fund in 2016

“We believe that in the past 15 years China has been very focused on theUS market, but not so much on early stage investments in the UK”“In China, valuations are quite high, and we see the same quality ofcompanies in Europe at one-third of value in China and one-fifth of thevalue of the same companies in the U.S” and “there is real innovation inEurope too!” John Zai, CEO of Cocoon Networks.

Backed by China EquityGroup and Hanxin CapitalPlans to invest in UK andEuropean startups in areaslike fintech, creativeindustries and biotechCocoon also partnering withUniversity of London to build“London’s biggest incubator”

What about IP management? Should the UK be worried?

Mysterious factory break-in in 2011 raises suspicions about Chinese visit(Source: The Guardian)

The Scottish Pelamis wave-power device (Company is now defunct, having burnt through GBP 95 Mil of funding).

Hailong 1 by Chinese Shipbuilding Industry Corporation

Solowheel Patent Nightmare in China – what lessons?

IP Matters, but Speed, Cash & Partnerships matter more

bruno.bensaid@shanghaivest.com

Brubrushanghai