- Narwal’s financing reflects investor confidence in self-cleaning robot vacuum systems.
- Funding alone does not solve pressure from Roborock, Ecovacs and Dreame.
- The company needs to convert product differentiation into durable scale and channel strength.
Today, the cleaning appliance industry is in a state of distress due to the impact of the pandemic. However, one company has defied the trend by recently announcing some financing information.
According to 36Kr, Narwal Intelligent Technology completed a near-one-billion-yuan B round financing recently, led by Yuan码 Capital and ByteDance, with old shareholders such as Yingfeng Capital and Dami Venture Capital following. The financial advisor for this transaction was Shengen Capital.
Narwal Intelligent Technology was established in 2016 and is an innovative company in the field of cleaning robots. According to public information, Narwal had received an angel round financing from Qingshuiwan Fund in early 2017. Qingshuiwan Fund was jointly established by Li Zexiang, Gao Bingqiang, Professor Gan Jie with Sequoia Capital and GGV Capital as investors. In late 2017, Narwal received a pre-A round financing of millions of yuan from Mingshi Capital and Qingshuiwan Fund. In April 2019, it secured an A round investment of several million yuan, most of which were strategic investments covering manufacturing, marketing, and major appliance companies.
We reported on Narwal, this company, as early as May 2019, when they were still crowdfunding on Kickstarter.
Detailed information can be found in our previous article.
Narwal's products were quite distinctive at the time, featuring a simple and elegant design. Since Narwal launched this product, self-cleaning cloth systems have become a focal point of research within the robot vacuum industry.
Narwal also conducted a round of releases on Taobao previously, reportedly selling over 10,000 units. Selling such a quantity at the 4,000 RMB price point is already quite remarkable.
However, at the price point of over 4,000 yuan, we can expect limited sales. Currently, the main selling segment for robot vacuums should still be around 1,500 to 2,500 yuan. Higher price segments are mainly occupied by iRobot, but even their sales are not optimistic.
Optimistically speaking, if this model could sell between 20,000 and 30,000 units a year, it would be considered quite successful.
What piques my curiosity more is the newly added investor, Beijing Quantum Leaps Technology Co., Ltd., which is a wholly-owned subsidiary of ByteDance. ByteDance is the parent company behind well-known platforms such as Toutiao (News Republic), Douyin (TikTok), and Xiaowei Video. It is said that the valuation of Douyin has already reached 100 billion US dollars, making it one of the top five players in the internet industry.
So, how did this internet giant start showing interest in hardware?
A friend suggested that maybe because Roborock went public quickly, ByteDance came to occupy a spot. This explanation is not very convincing. The market capitalization of companies like Roborock and Ecovacs, which are industry leaders, is around 20 billion RMB. In contrast, the valuation of Douyin is at 100 billion US dollars (700 billion RMB). Therefore, ByteDance's interest would not be in a single company but in an entire platform, such as the Mi Home system and the Xiaomi ecosystem.
A simple search on Beijing Quantum Leaps Technology Co., Ltd. reveals that some of its recent investments include:
- On August 23, 2019, ZeroX (Beijing) Technology Co., Ltd. had a change in investors, with Beijing Quantum Leaps Technology Co., Ltd. adding as an investor holding 10% equity. ZeroX was founded on April 4, 2018 and is a voice intelligent interaction platform offering services such as technology development, technology promotion, software development, etc. Its core product, "Moses Brain," is based on natural language understanding, multi-turn dialogue, knowledge graphs, deep learning, and other advanced technologies, which can be widely used in areas like intelligent customer service, intelligent sales assistants, online training, and more.
- In November 2019, Beijing Quantum Leaps Technology Co., Ltd. invested in Suzhou Zongshiti Tong, a video technology company with current main technologies including video compression and transmission. Their website lists products such as video conferencing and smart watches.
- On December 10, 2019, the wholly-owned subsidiary of ByteDance, Beijing Quantum Leaps Technology Co., Ltd., added an external investment inThe Paper Audiovisual Technology (Jinan) Co., Ltd., holding a 49% stake. The first major shareholder is Shanghai Dongfang News Media Co., Ltd., which operates People's Daily Online and holds a 51% stake.The Paper Audiovisual Technology (Jinan) Co., Ltd.'s business scope includes software development, blockchain-related software and services, artificial intelligence public service platforms, internet data services, and artificial intelligence application software development.
In summary, the subsidiaries of ByteDance are already making early moves in smart hardware businesses, and it is quite normal for companies like Narwal, which have technological expertise and industry giants backing them, to receive investments.
Will Alibaba and Tencent also start ramping up their efforts?