Hand Me the Paper #14: Promises and Perils of Chinese Investments in Tech Startups in Germany
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What I Read This Week:
Exploring the Promises and Perils of Chinese Investments in Tech Startups: The Case of Germany by Sabrina Korreck for Observer Research Foundation. [Link, Link with my scribbles].
What You Should Know:
German startups face a funding gap in later stages when they are planning market entry and next stages of growth. While domestic investments in the space have increased, foreign investments have grown twice as fast. China is a big reason why.
Chinese investments ramping up in Germany also present an opportunity for German companies to get aid in entering the Chinese market. But this comes with a few risks:
Depending on the value of their stakes, investors gain control and influence on startup activities and may lead companies to a direction the management may not be comfortable with.
Can lead to a sell-out or loss of technology.
Investors like Alibaba and Baidu create ecosystems of interconnected players and make the norms and standards that govern them, acting as gatekeepers in the process.
There are data security concerns.
Data Sufficiency and Graphs (from the source):
TL;DR: Most transactions occurred in the fin/insurtech sector, while others are in the field of mobility/transportation, e-commerce, and data processing technologies. Investments include those made in four of Germany’s currently 15 unicorns\
What I Have Been Reading:
Music to my ears: