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Not that comfortable with Tencent starting to acquire up so many European digital companies. I'm not sure profit is their only motivation here. I feel like in

by s_dev 5y ago

Not that comfortable with Tencent starting to acquire up so many European digital companies. I'm not sure profit is their only motivation here. I feel like in a decade us Europeans will be sitting around wondering why we sold off promising startups to China like we did US tech companies the previous decade.

ABS 5y ago
Tencent co-lead and invested in the Series B round, it didn't "acquire" Scalapay
- Lascaille 5y ago
  Semantics aside that differs how?
  - ABS 5y ago
    from "a lot" to "massively" depending on the terms
- s_dev 5y ago
  I'm not sure what distinction you think you're making. They bought a lump of the company at whatever valuation and that's termed an "investment". However my point is that I don't suspect they're strictly after a return on investment here.
  - ABS 5y ago
    no, they very explicitly co-lead the round with Willoughby Capital and the participation from Tiger Global, Gangwal, Moore Capital, Deimos, and Fasanara Capital. Buying something to own/control it and investing in something for an expected future return are very, very, extremely different things and even more so in this context. Both formally (terms and conditions signed by all the parties involved, and there are many here and it's Series B, the clauses regarding equity, control, debt, exits and so forth) and practically.
  - oefrha 5y ago
    If you can’t see a distinction here, then Tencent was “acquired” by Naspers of South Africa in 2001 by your logic.
    - OJFord 5y ago
      And also by me, at various times, through various different funds.
      - oefrha 5y ago
        You didn’t own a 46.5% stake in 2001 or a 30.86% stake in 2021, but in principle, yes.
        OJFord 5y ago
        No absolutely, I was just offering a silly example to make the point.
  - jasode 5y ago
    >I'm not sure what distinction you think you're making. They bought a lump of the company at whatever valuation and that's termed an "investment". However my point is that I don't suspect they're strictly after a return on investment here. The distinction is that "acquire" means controlling interest. Investing $497 million when the valuation is over $1 billion means... (doing the math) ... Tencent has less than 50% ownership. At this point, Tencent only has an investment and not a controlling interest. Therefore, Tencent did not acquire Scalapay (yet). This isn't being pedantic about semantics. Instead, it's being very clear about who controls Scalapay based on how much ownership percentage was purchased. Another example of the difference... in 1997 when Microsoft invested $150 million in Apple, it did not purchase enough ownership % to consider it an acquisition. The $150m is a lot of money but MS didn't acquire Apple with that transaction. (https://www.google.com/search?q=microsoft+invests+%24150+million+in+apple+1997 https://www.google.com/search?q=microsoft+invests+%24150+mil...) EDIT reply to: >Valuation has nothing to do with controlling interest. They are unrelated. Setting aside a multi-class stock arrangement with 10x voting rights which would be unusual for non-public company at this early stage because it requires approval by the previous investors & founders, the post-money valuation is mathematically related to the ownership percentage purchased -- and therefore determines if there's a controlling interest.
    - IncRnd 5y ago
      > Investing $497 million when the valuation is over $1 billion means... (doing the math) ... Tencent has less than 50% ownership. > This isn't being pedantic about semantics. You are quite simply wrong. Valuation has nothing to do with controlling interest. They are unrelated. A company can have 100 shares, each worth $1, and be valued at $2,000,000,000.
      - aetherson 5y ago
        You're wrong.
        IncRnd 5y ago
        In what way am I wrong?
- lmeyerov 5y ago
  One down round later and investor preference shares+rights means Tencent, and effectively China, owns. It sounds like revenue (profit) is nowhere near these levels, so long time for that to change. For all consequential purposes, their huge preference means they already do. You can bet there is strong language where Tencent (China) can veto big decisions, and hold that over the teams head for smaller ones.
ovi256 5y ago
> Europeans will be sitting around wondering If you tax away capital formation (or vote for people who do it) it's useless to wonder why European entrepreneurs take foreign capital. Most of them outright emigrate anyway so you don't even get to notice it.
ChemSpider 5y ago
- Barrin92 5y ago
  I've been using TikTok for a while and is that claim based or anything? I've been fed cat videos and unless that is now subliminal communist propaganda I have to say Chinese firms and American firms seem to have only one goal, which is to get me to click on more stuff given that the party is seemingly trying to dismantle them to the best of their ability I'm inclined to think even they agree
  - msrenee 5y ago
    I'm more worried about what information may be leaving my phone if I install the app.
    - toqy 5y ago
      Any reason to believe it’s not the same as when you install any other app and grant it various permissions? Or are you insinuating that TikTok is exploiting the platforms and getting data it shouldn’t have access to?
      - msrenee 5y ago
        It's more that it's possibly ending up in the hands of the Chinese government. Not that it's good when it ends up in the hands of Google, but that's less of a national security concern.
  - mbesto 5y ago
    https://en.wikipedia.org/wiki/Boiling_frog https://en.wikipedia.org/wiki/Boiling_frog
- Shadonototra 5y ago
  > US tech companies use their power to censor some boobs and nipples and competitors! let's not forget alstom, alcatel, nokia and many more
jollybean 5y ago
Profit is definitely their primary motivation. Chinese companies are a bit nationalist, and they definitely have some internal actors from the CCP there for purposes of oversight, and in a pinch can very easily have their arms twisted - but - they are just companies wanting to make money really. Tencent is just Tencent. They will follow internal censorship laws, but it's likely just a matter of moderation much the way FB does it, but with different parameters, and taking some direction from the state. My guess is that for the most part Chinese companies are fine with it. For products they control outside the country my estimation is that it's censored in a completely different way, much more liberally, but some things might get scrubbed. Of course investing in a company is different than owning it (i.e. >50%) and it's very different if it's based in China vs. a European company. China has huge trade surplus. What this means, is that we send them USD/EUR for 'stuff'. Eventually, they have to use those USD/EUR for 'something'. What are they going to buy? Well - stocks, real estate, companies etc.. It's actually rational for EU/USD to sell them things at hugely inflated price tags, it's a nice way to bring the cash back in on good terms. If they are cash-flush, then they might just be looking to protect their money as much as anything. In most cases, it's unlikely that having a Chinese investor will make a huge difference in terms of anything happening out of China. It's unlikely the could or would make censorship demands on anything happening outside of China, that said, if they gain control, it's a bit of a different story.
netcan 5y ago
>> I'm not sure profit is their only motivation here. Not disagreeing or trying to get capital P political, just giggled a bit at "not profit" being the ominous factor. "Only in it for the profit" is now, perhaps, the devil we know. More seriously, I get the point you are making. I don't know what I think of it all, honestly. There could be arguments in both directions. Maybe I'm overly considering the current crisis in Ukraine, but doesn't having holdings in the west disincentivize conflict and rifts? At some point along a conflict ladder, foreign assets get seized. Maybe it's good to be exchanging hostages. I suppose it's just ambiguous/arguable what counts as who's hostage.
- JumpCrisscross 5y ago
  > doesn't having holdings in the west disincentivize conflict and rifts? WWI and China’s accession to the WTO say no.
nicoburns 5y ago
Would it be good if profit was their only motivation? IMO the main problem with this is precisely that it ends up sending control of profits abroad. Of course, that's true with any multinational company. Anything else beyond profiteering can always be reversed by simply taking back control of the company in the worst case. Ownership is always with the grace of governments.
- dahfizz 5y ago
  > Anything else beyond profiteering can always be reversed by simply taking back control of the company in the worst case. Ownership is always with the grace of governments. Lol. You think it would be so simple for Italy to take control of a Chinese owned company? You think they could just do that at the snap of their fingers, with no repercussions?
  - nicoburns 5y ago
    I think it depends where the actual operations were. If most of the staff and physical assets were European based then absolutely. China pretty much already do this with companies operating in China.
- chii 5y ago
  > Would it be good if profit was their only motivation? yes, because the profit in the future would be priced into this sale today - presumably owned by italian. This means the funds could be reinvested in a different company today - a new start up perhaps - which creates more profit in the future. The problem with buying control for more than just profit (or regardless of profit) is that those who are buying control is seeking to control more than just commercial interest. If an unfriendly gov't were to instruct such holders to perform certain tasks, they would comply.
- mc32 5y ago
  I think the preference is that the acquiring companies aren’t subject to extrajudicial influence by their governments where one might be cautious of Chinese or Russian ownership because their governments have embeds in these companies. So it’s usually safer to have a Korean, Japanese, W European or Anglophone company take a stake. Obviously, all companies have some ties with their governments but the difference is degree and independence as well as a non-rubber stamping judiciary. Revolving doors can be an issue but it’s much less an issue than actual gov officials embedded in companies.
arbuge 5y ago
I think the lack of unicorns in Europe has a lot more to do with the regulation culture and lack of ecosystem around starting new companies than with the US or China acquiring them away before they have the chance to fully bloom. You can see this even within Europe. Lots more unicorns in the UK than in Italy for exmaple.
amelius 5y ago
Or why we kept shouting that IP law needs a reform, without taking serious action.
johndfsgdgdfg 5y ago
[flagged]
azth 5y ago
Exactly. Haven't people learned from what's literally happening right now? Why wouldn't China taking over Taiwan be next if they see what's happening?
HWR_14 5y ago
> I feel like in a decade us Europeans will be sitting around wondering why we sold off promising startups to China like we did US tech companies the previous decade. While what you're saying is true, might it be a brilliant time to sell a chunk to Tencent? If you believe that China is likely to invade Taiwan soon, and western countries will respond by freezing any Chinese assets overseas (see: Russia/Ukraine), might this be a great way to pocket cash and then have the equity revert back to you in a few months? That said, Tencent seems to own a chunk of most important private tech companies and most mid-level game companies.
- pankajdoharey 5y ago
  Western countries will respond by being frozen, i dont think west has power anymore, especially after their exit from Afghanistan.
pankajdoharey 5y ago
I am just shocked that it is Italys first unicorn for a european power thats shocking, i thought EU had highly developed economy.
- RNiK 5y ago
  It's not Italy's firs unicorn, it's the third, after Yoox and Depop.
  - deleted 5y ago
    [deleted]
  - pankajdoharey 5y ago
    My point was that say India had 44 Unicorns in 2021, 10 in 2020 , 9 in 2019 totalling to a 88 Unicorns till now. So I was expecting higher for a EU economy.

by s_dev 5y ago

ABS 5y ago

Tencent co-lead and invested in the Series B round, it didn't "acquire" Scalapay

Lascaille 5y ago
Semantics aside that differs how?
- ABS 5y ago
  from "a lot" to "massively" depending on the terms
s_dev 5y ago
I'm not sure what distinction you think you're making. They bought a lump of the company at whatever valuation and that's termed an "investment". However my point is that I don't suspect they're strictly after a return on investment here.
- ABS 5y ago
  no, they very explicitly co-lead the round with Willoughby Capital and the participation from Tiger Global, Gangwal, Moore Capital, Deimos, and Fasanara Capital. Buying something to own/control it and investing in something for an expected future return are very, very, extremely different things and even more so in this context. Both formally (terms and conditions signed by all the parties involved, and there are many here and it's Series B, the clauses regarding equity, control, debt, exits and so forth) and practically.
- oefrha 5y ago
  If you can’t see a distinction here, then Tencent was “acquired” by Naspers of South Africa in 2001 by your logic.
  - OJFord 5y ago
    And also by me, at various times, through various different funds.
    - oefrha 5y ago
      You didn’t own a 46.5% stake in 2001 or a 30.86% stake in 2021, but in principle, yes.
      - OJFord 5y ago
        No absolutely, I was just offering a silly example to make the point.
- jasode 5y ago
  >I'm not sure what distinction you think you're making. They bought a lump of the company at whatever valuation and that's termed an "investment". However my point is that I don't suspect they're strictly after a return on investment here. The distinction is that "acquire" means controlling interest. Investing $497 million when the valuation is over $1 billion means... (doing the math) ... Tencent has less than 50% ownership. At this point, Tencent only has an investment and not a controlling interest. Therefore, Tencent did not acquire Scalapay (yet). This isn't being pedantic about semantics. Instead, it's being very clear about who controls Scalapay based on how much ownership percentage was purchased. Another example of the difference... in 1997 when Microsoft invested $150 million in Apple, it did not purchase enough ownership % to consider it an acquisition. The $150m is a lot of money but MS didn't acquire Apple with that transaction. (https://www.google.com/search?q=microsoft+invests+%24150+million+in+apple+1997 https://www.google.com/search?q=microsoft+invests+%24150+mil...) EDIT reply to: >Valuation has nothing to do with controlling interest. They are unrelated. Setting aside a multi-class stock arrangement with 10x voting rights which would be unusual for non-public company at this early stage because it requires approval by the previous investors & founders, the post-money valuation is mathematically related to the ownership percentage purchased -- and therefore determines if there's a controlling interest.
  - IncRnd 5y ago
    > Investing $497 million when the valuation is over $1 billion means... (doing the math) ... Tencent has less than 50% ownership. > This isn't being pedantic about semantics. You are quite simply wrong. Valuation has nothing to do with controlling interest. They are unrelated. A company can have 100 shares, each worth $1, and be valued at $2,000,000,000.
    - aetherson 5y ago
      You're wrong.
      - IncRnd 5y ago
        In what way am I wrong?
lmeyerov 5y ago
One down round later and investor preference shares+rights means Tencent, and effectively China, owns. It sounds like revenue (profit) is nowhere near these levels, so long time for that to change. For all consequential purposes, their huge preference means they already do. You can bet there is strong language where Tencent (China) can veto big decisions, and hold that over the teams head for smaller ones.

ovi256 5y ago

> Europeans will be sitting around wondering If you tax away capital formation (or vote for people who do it) it's useless to wonder why European entrepreneurs take foreign capital. Most of them outright emigrate anyway so you don't even get to notice it.

ChemSpider 5y ago

Barrin92 5y ago
I've been using TikTok for a while and is that claim based or anything? I've been fed cat videos and unless that is now subliminal communist propaganda I have to say Chinese firms and American firms seem to have only one goal, which is to get me to click on more stuff given that the party is seemingly trying to dismantle them to the best of their ability I'm inclined to think even they agree
- msrenee 5y ago
  I'm more worried about what information may be leaving my phone if I install the app.
  - toqy 5y ago
    Any reason to believe it’s not the same as when you install any other app and grant it various permissions? Or are you insinuating that TikTok is exploiting the platforms and getting data it shouldn’t have access to?
    - msrenee 5y ago
      It's more that it's possibly ending up in the hands of the Chinese government. Not that it's good when it ends up in the hands of Google, but that's less of a national security concern.
- mbesto 5y ago
  https://en.wikipedia.org/wiki/Boiling_frog https://en.wikipedia.org/wiki/Boiling_frog
Shadonototra 5y ago
> US tech companies use their power to censor some boobs and nipples and competitors! let's not forget alstom, alcatel, nokia and many more

jollybean 5y ago

Profit is definitely their primary motivation. Chinese companies are a bit nationalist, and they definitely have some internal actors from the CCP there for purposes of oversight, and in a pinch can very easily have their arms twisted - but - they are just companies wanting to make money really. Tencent is just Tencent. They will follow internal censorship laws, but it's likely just a matter of moderation much the way FB does it, but with different parameters, and taking some direction from the state. My guess is that for the most part Chinese companies are fine with it. For products they control outside the country my estimation is that it's censored in a completely different way, much more liberally, but some things might get scrubbed. Of course investing in a company is different than owning it (i.e. >50%) and it's very different if it's based in China vs. a European company. China has huge trade surplus. What this means, is that we send them USD/EUR for 'stuff'. Eventually, they have to use those USD/EUR for 'something'. What are they going to buy? Well - stocks, real estate, companies etc.. It's actually rational for EU/USD to sell them things at hugely inflated price tags, it's a nice way to bring the cash back in on good terms. If they are cash-flush, then they might just be looking to protect their money as much as anything. In most cases, it's unlikely that having a Chinese investor will make a huge difference in terms of anything happening out of China. It's unlikely the could or would make censorship demands on anything happening outside of China, that said, if they gain control, it's a bit of a different story.

netcan 5y ago

>> I'm not sure profit is their only motivation here. Not disagreeing or trying to get capital P political, just giggled a bit at "not profit" being the ominous factor. "Only in it for the profit" is now, perhaps, the devil we know. More seriously, I get the point you are making. I don't know what I think of it all, honestly. There could be arguments in both directions. Maybe I'm overly considering the current crisis in Ukraine, but doesn't having holdings in the west disincentivize conflict and rifts? At some point along a conflict ladder, foreign assets get seized. Maybe it's good to be exchanging hostages. I suppose it's just ambiguous/arguable what counts as who's hostage.

JumpCrisscross 5y ago
> doesn't having holdings in the west disincentivize conflict and rifts? WWI and China’s accession to the WTO say no.

nicoburns 5y ago

Would it be good if profit was their only motivation? IMO the main problem with this is precisely that it ends up sending control of profits abroad. Of course, that's true with any multinational company. Anything else beyond profiteering can always be reversed by simply taking back control of the company in the worst case. Ownership is always with the grace of governments.

dahfizz 5y ago
> Anything else beyond profiteering can always be reversed by simply taking back control of the company in the worst case. Ownership is always with the grace of governments. Lol. You think it would be so simple for Italy to take control of a Chinese owned company? You think they could just do that at the snap of their fingers, with no repercussions?
- nicoburns 5y ago
  I think it depends where the actual operations were. If most of the staff and physical assets were European based then absolutely. China pretty much already do this with companies operating in China.
chii 5y ago
> Would it be good if profit was their only motivation? yes, because the profit in the future would be priced into this sale today - presumably owned by italian. This means the funds could be reinvested in a different company today - a new start up perhaps - which creates more profit in the future. The problem with buying control for more than just profit (or regardless of profit) is that those who are buying control is seeking to control more than just commercial interest. If an unfriendly gov't were to instruct such holders to perform certain tasks, they would comply.
mc32 5y ago
I think the preference is that the acquiring companies aren’t subject to extrajudicial influence by their governments where one might be cautious of Chinese or Russian ownership because their governments have embeds in these companies. So it’s usually safer to have a Korean, Japanese, W European or Anglophone company take a stake. Obviously, all companies have some ties with their governments but the difference is degree and independence as well as a non-rubber stamping judiciary. Revolving doors can be an issue but it’s much less an issue than actual gov officials embedded in companies.

arbuge 5y ago

I think the lack of unicorns in Europe has a lot more to do with the regulation culture and lack of ecosystem around starting new companies than with the US or China acquiring them away before they have the chance to fully bloom. You can see this even within Europe. Lots more unicorns in the UK than in Italy for exmaple.

amelius 5y ago

Or why we kept shouting that IP law needs a reform, without taking serious action.

johndfsgdgdfg 5y ago

[flagged]

azth 5y ago

Exactly. Haven't people learned from what's literally happening right now? Why wouldn't China taking over Taiwan be next if they see what's happening?

HWR_14 5y ago

> I feel like in a decade us Europeans will be sitting around wondering why we sold off promising startups to China like we did US tech companies the previous decade. While what you're saying is true, might it be a brilliant time to sell a chunk to Tencent? If you believe that China is likely to invade Taiwan soon, and western countries will respond by freezing any Chinese assets overseas (see: Russia/Ukraine), might this be a great way to pocket cash and then have the equity revert back to you in a few months? That said, Tencent seems to own a chunk of most important private tech companies and most mid-level game companies.

pankajdoharey 5y ago
Western countries will respond by being frozen, i dont think west has power anymore, especially after their exit from Afghanistan.

pankajdoharey 5y ago

I am just shocked that it is Italys first unicorn for a european power thats shocking, i thought EU had highly developed economy.

RNiK 5y ago
It's not Italy's firs unicorn, it's the third, after Yoox and Depop.
- deleted 5y ago
  [deleted]
- pankajdoharey 5y ago
  My point was that say India had 44 Unicorns in 2021, 10 in 2020 , 9 in 2019 totalling to a 88 Unicorns till now. So I was expecting higher for a EU economy.