
Deal focus: Ninebot's innovation keeps it rolling
China's legendary traffic jams are a source of frustration to countless tourists and locals, not to mention a major cause of pollution. With studies putting the average speed of traffic in Beijing at 7.5 miles per hour, there is a clear opportunity for a company that can bring commuters relief.
Scooter maker Ninebot aims to fill that need. The company, which is best known for its two-wheeled, self-balancing personal transport vehicles for one person, recently raised an $80 million Series A round from smart phone maker Xiaomi and VC firms Shunwei Capital Partners, WestSummit Capital, and Sequoia Capital.
Xiaomi and Shunwei - which share a co-founder - have been pursuing investments in the internet of things space and Ninebot is a good fit. "One of the core areas for us is smart devices, including any hardware that can be digitalized," says Cheng Tian, a partner at Shunwei.
Xiaomi specifically was drawn to the work that Ninebot had already put into making its vehicles internet-capable, and hopes to add the vehicles to its own ecosystem of smart devices.
Ninebot's designs inevitably invite comparison to the Segway Personal Transporter, made by the US-based company of the same name that Ninebot recently purchased. Segway's two-wheeled scooter was revolutionary at its introduction, and the name immediately took hold as a generic term for any similar product. Ninebot itself has been referred to as the "Chinese Segway."
WestSummit Managing Partner Raymond Yang believes that Ninebot's purchase could help Segway, which he feels never reached its potential. High prices and lack of innovation are some of the factors that have kept the brand from catching on among the consumers that should be its natural market. "They were great at invention 15 years ago, but then at a certain point, they stopped," Yang says.
Segway's own previous innovation was one of Ninebot's targets in the purchase. In a recent interview, Ninebot founder Wang Ye highlighted the acquisition of Segway's patents. These had been a source of tension between the companies, and Segway filed a patent infringement complaint against Ninebot last year.
In addition to the patents, Segway's presence in foreign markets represents another opportunity for Ninebot. Although Segway has not caught on among consumers, it has seen limited success in business and tourism settings, and enjoys name recognition that Ninebot has not yet achieved outside of China. Ninebot could make use of Segway's distribution channels, either by selling the two brands side-by-side or by rebranding its own vehicles under the Segway name.
Both Shunwei and WestSummit believe they have strengths that Ninebot can leverage: the former has intimate experience in the connected device market through its frequent collaboration with Xiaomi; and the latter offers support through its US presence. The goal is to help Segway and Ninebot finally reach their potential.
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