2020 Q1 CM Venture Capital Newsletter
New Infrastructure Construction Capital Investment Report
The beginning of the year 2020 has seen unprecedented
economic turmoil in the global market caused by COVID-19 as it
spreads around the world. Concurrent with fighting the health
consequence of the pandemic, everyone's attention, from both business
and political sides of the spectrum, are also deeply concerned with
On March 4, 2020, in the light of hedging the economic downturn and facilitating economic transformation, the Political Bureau of Chinese government once again emphasized on accelerating the new Infrastructure Construction projects which has been the part of the National Plan for China and reiterated its strategic importance for the Chinese economy and the full-support from the government.
Unlike previous infrastructure spending bills that focus on physical infrastructure such as roads and airports, the New Infrastructure Construction projects is termed "New" as it largely covers seven high-tech business areas, which totals over RMB 1 trillion capital investment. Among the investment areas, 5G Telecommunication is one of the utmost priorities, with the goal to reach the penetration rates over 30% of total population in China by 2022. Other areas of focus include Ultra High Voltage (UHV), Intercity Transit System, Renewable Energy Charging Stations, AI, IDC, and Industrial IoT.
Among CM Venture Capital portfolio companies, Crowntech and Nanotop will benefit from 5G infrastructure build-out, and we are always actively in search of the opportunities that arise from the hard technology within 5G, Renewable Energy, Industrial IoT and more. Please find the presentation summarizing the government initiative in New Infrastructure in China.
Zenithnano - Large size touch panel released
Zenithnano is the company that provides most attractive transparent conductive film technology that offers low electrical resistance, high transparency, low haze and high uniformity, which allows higher performance at lower cost compared to the metal mesh, silver nanowire or indium-tin-oxide (ITO) based films. The company has achieved the technology by using multi-step and -target silver nanolayer sputtering and we are confident that its remarkable technology will be the standard-setter for future electronics
After CM Venture Capital's seed investment one year ago, Zenithnano has successfully set up a manufacturing line for its film, qualified its touch products and started shipping films from end of 2019, More recently, the company has successfully passed
the test for its newly introduced 86-inch touch panel sensor that offers extraordinary transparency, high sensitivity and low energy consumption, outperforming silver nanowire solution that is the mainstream choice for large touch panels today.
Zenithnano has set up a joint-venture with China Touch, a leading touch panel manufacturer, to commercialize the product. It has been highly recognized and attracted attention from customers. The joint-venture has received orders that will fill up production line scheduled to come online in June.
Skysys - Sky Patrol to fight COVID-19 pandemic
In order to prevent the further deterioration of the pandemic, it is essential for the local and national government to put efforts into implementing the disease control and prevention advises, and there are two main advises to follow during this particular period of hardship: wearing masks in public and keeping the social distance. However, tracking of such activities would be extremely difficult, which is even more so for the country like China, the country of a great size with the largest population in the world, and yet the task has been accomplished by utilizing the drone technology developed by one of our portfolio companies.
Skysys is industry standard setter in providing drone airport and cloud software products for industry users to realize automatic drone charging, scheduling, flying, data collection and analysis, with the core purpose to make drone a truly unmanned system.
Under high-risk and complex scenario, drones can play an irreplaceable role. During the COVID-19 pandemic, Skysys quickly developed AI recognition function to accurately detect abnormal behaviors such as not wearing masks in public and crowd gathering. The drone is equipped with loudspeaker to persuade related personnel once detected. In February, the unique system performed more than 120 missions and a total mileage of 1,000 kilometers, which greatly relieved the patrol pressure on local police.
CM Venture Capital seeded Skysys in 2018 with an angel round. The company has since then closed Pre-A round financing in 2019, led by Light House Capital (angel investor of DJI) and an A round financing in Q1 2020, led by Ivy Capital , a domestic leading hard tech VC fund.
Nanotop - EMI Shielding for 5G
A significant pillar of China's New Infrastructure Construction is 5G deployment. After investing in 2018 in Crowntech, which provides optical communication components, CM Venture Capital has picked another investment in the 5G space - this time a company that provides key material for 5G handsets as well as stations.
Nanotop is the domestic leader in silver paste and ink used in 5G communication, touch panel and LED packaging market. The company is founded by Dr. Yanlin Song, a senior research fellow from China Academy of Science who has done research in this space for over 20 years, and published numerous papers on conductive inks.
With the adoption of 5G technology, high growth is expected for conductive silver paste and EMI material segments as many more antennas and components are needed compared to 4G handsets. Although the market has been traditionally dominated by MNC companies, Nanotop has developed its own IP and qualified its products through relentless research and development effort and joint-development with end-customers.
Nanotop has won contracts to supply 5G cell phone unit in conductive silver paste and passed EMI strip & seal strips for 5G stations. The funding by CM Venture Capital, leading the current B round of investment, will support Nanotop to further strengthen R&D and fund cashflow for fast revenue growth beyond the inflection point.