In June, Chinese SaaS platform Xiaoetong secured $120 million in a Series D round from investors including Hillhouse Capital, IDG Capital, GGV Capital, and Qiming Venture Partners.
This news arrived just as B Capital Group, the venture capital fund formed by Facebook co-founder Eduardo Saverin and Bain Capital veteran Raj Ganguly, promised to allocate $500 million to $1 billion of its fund into Chinese tech companies over the next few years.
The existing notion that Chinese companies are reluctant to invest in software is “very backward-looking thinking,” Ganguly told TechCrunch.
It’s this renewed focus that has experts suggesting that China is the next frontier in the SaaS revolution. It’s been a couple of years of struggling to raise money for Chinese start-ups, in part due to the pandemic, but there is increasingly more interest from venture capitalists as the boom in the US trickles over the pacific.
According to ITjuzi, the number of venture deals in China rose 56% in the first quarter from a year earlier, which makes it the fourth consecutive quarter of rising activity, as start-ups brought in $55 billion in investment.
Though, there are many factors that have hampered the proliferation of SaaS adoption, including a history of pirated software and cheap labour to handle some of the same functions that software is proving to automate. Chinese organizations often don’t conceptualize their issues as software problems, which leads to a lack of concrete inbound and outbound sales channels for SaaS sellers.
So why now? Firstly, Chinese companies are very willing to change and adopt new software if they see high ROI. Not to mention that cloud infrastructure spending in China has increased from about $107 billion in 2019 to $142 billion in 2020, with a 32% increase in the last quarter of the year. This accelerated cloud migration is caused by long-term structural trends in the digitalization of the country's economy plus increased business acceptance of cloud and SaaS solutions, all indicative of massive sector growth.
Today, China is also in a position to export its enterprise software, similar to how many Indian companies have succeeded overseas.
One SaaS company leading the charge in SaaS China is Infobird, a leading SaaS provider of patented, innovative AI-powered, customer-engagement solutions. Now, Infobird is looking to expand its target market by transitioning to providing more standardized SaaS services to various enterprises across China.
Infobird intends to use its already developed standardized SaaS modules and its proprietary no-code development platform to more readily create new SaaS modules with preprogrammed microservices at extremely low cost and therefore quickly adapt to the changing market demands and opportunities.
If all goes well, Infobird will not only be able to expand its target market and roll out its standardized modules successfully, but also looks set to capture the lion’s share of the SaaS market.