Legend Capital Lends $14 Million to Chinese Auto Tech Startup in Series B Funding

Chinese automotive technology startup Zongmu Technology has received $14 million in Series B funding from Legend Capital, an investment firm that has been focusing on China.

Timothy Healey
    Mar 05, 2017 1:25 PM  PT
Legend Capital Lends $14 Million to Chinese Auto Tech Startup in Series B Funding
author: Timothy Healey    

Legend Capital, an investment firm with a focus on China, is the co-leader in an effort to provide $14 million in Series B funding to Shanghai-based Zongmu Technology, a company that works on tech for self-driving cars.

The move was done through a private placement share transaction, according to China Money Market.

According to the report, the other co-investor was a private equity firm based in Xiamen, China.

Zongmu was established in 2013, and it works on advanced driver-assistance systems, such as lane-departure warning and lane-keep assist systems.

It also works on self-parking and driver-recording systems. Many of its products are used in cars produced by Chinese automakers Geely, SAIC Motor, and Yema Auto.

Its revenue jumped from RMB111,300 ($16,124) in 2014 to RMB3.2 million ($463,600) in 2015 and RMB42 million ($6,084,752 in 2016). That amount of growth in such a short time got them listed on the Chinese New Third Board on February 21.

"Advanced driver assistance system and self-driving technology are the important future directions of the global automotive industry. It is a potentially huge market," said Legend Capital's managing director Fan Qihui.

Earlier in February, Legend Capital, which is the venture capital arm of China's Legend Holdings, said that it has raised $243 million in funding for vehicle number seven, with a goal of about $374 million.

Legend Capital was founded in 2001, with an interest in companies that were focusing on growth and innovation and had operations in China or related to the country. Right now, the 16-year-old company has assets under management of over RMB300 billion. Legend Capital has so far invested in over 300 companies. Fifty of those companies are listed on capital markets and 40 have exited through mergers and acquisitions.

This should serve as a reminder that not only is advanced new-car tech hot in the U.S., but it is in China, too – and the Chinese auto market continues to grow (not to mention, Chinese automakers continual dip their toes in the U.S. auto market). It's also a reminder that the automotive industry is truly global, with suppliers and start-ups all over the world – Zongmu might be supplying Chinese automakers right now, but it could be supplying other markets in the future.

Certainly, its investors are happy with the rapid growth. Now it's up to the future to see if that growth with continue.

Deal Street Asia