China's latest electric car upstart outpaces Tesla in early fundraising

Dearcc secures $294 million in funding after selling just 1,000 cars. It shows the opening of China's market to foreign competition isn't scaring investors off this red-hot sector.

Look away for a moment and China's electric car industry is likely to have sped past you.

The breakneck pace of development in the industry took another hairpin turn in late June when regulators removed electric vehicles from the list of industries out of bounds to overseas investors. That allows the likes of Tesla – which this month revealed plans for a wholly-owned factory in Shanghai – to enter the industry without finding a local partner.

That's a sign of Beijing's confidence in local players and comes on top of a change in subsidy rules last month to favour companies with oustanding technology.

To underline the heat around the industry, Dearcc announced on Tuesday it had secured Rmb2 billion ($294 million) in a pre-A round of funding in the first half of 2018. Its series-A round is now under way.

That's on top of the Rmb500 million the Zhejiang province-based company raised in its angel round last year. The company has not yet disclosed the identities of any of its backers.

The breakneck pace of its fundraising reflects just how far the electric vehicle market has developed; by contrast, Tesla raised just $275 million in its series A-E rounds and debt financing between 2004 and 2009, Crunchbase figures show.

But Dearcc isn't out of line with its Chinese peers. WM Motors, for instance, raised $1 billion in its series-A round in August 2016, according to Cruchbase data.

So what are investors getting a piece of? Dearcc has launched just one model of car since its founding in 2015, the small EV10, and had reported just 1,000 sales as of late May.

With no financial statements yet available, it's impossible to say how fast the startup is burning through cash so far.

Certainly, its peers are not slow to spend cash as they snap up the best talent, develop facilities and design new models. As venture capitalist Jarlon Tsang put it, being unprofitable is fine as long as "the entrepreneurs are spending the money well enough”.

Tsang, managing partner at Fidelity-backed Eight Roads Ventures, said this meant “spending on developing breakthrough technologies that will ultimately lead to revenues and profits”.

Dearcc appears to be doing just that; according to its statement it plans to use the capital raised to turbo-charge its research and development budget and lure more high-profile tech talent.

Two weeks ago, the company began presales of its updated model, the EV10 Pro300. It hopes to start delivering the new models later this month or early next month.


While the momentum behind the electric vehicle sector is clear, it's unlikely every startup will survive the race without crashing. By FinanceAsia's count, at least 25 startups are battling it out in China alone.

The picture is similar when it comes to the other hot technology trend in Chinese motoring – the rise of the autonomous car. But while startups like and giants such as ride-hailing firm Didi are fighting to put the cars on the road, investors are also finding opportunity with companies developing the technology that will underpin the driverless car.

Also on Tuesday, Chinese intelligent location service provider closed its $80 million series-A funding. The startup’s founder, Vincent Tao, announced the news via a post on Sina Weibo, China's answer to Twitter.

But autonomous driving is nowhere near as far down the road as electric vehicles. For one thing, there's no way truly driverless vehicles will hit the roads without a fully-operational 5G mobile data network to support them – an area in which China is a major investor.

Still, investors like Eight Roads Ventures' Tsang are keen to be first movers in a sector that could revolutionise transportation across the world.

“We want to make multiple bets on the autonomous driving space, as well as other high value verticals within the space,” Tsang said.

¬ Haymarket Media Limited. All rights reserved.
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