By AVCJ Larissa Ku
Investors are gradually returning to China’s software-as-a-service space with an appetite for industry specialists rather than generalists. The CDH Investments-led Series B for 1Data is a case in point.
Chinese software-as-a-service (SaaS) start-ups have experienced feast and famine over the past two years. Now, though, they appear to be back on the menu, albeit at more reasonable valuations and with a more nuanced view as to which industry verticals can generate the most traction.
The enduring SaaS question was whether domestic enterprise customers would be willing to pay for standardised, subscription-based products. Investors appeared to put all doubts to one side during the post-pandemic technology boom of 2021, with consumer internet specialists picking SaaS as they made their first forays into business services.
These investors left abruptly last year following a string of public market corrections that wiped billions off the maket capitalisations of leading US players like Snowflake, Shopify, and Atlassian. New investment activity in China came to a virtual standstill.
“SaaS was overheated in 2021 and then it became too cold last year and this year – so cold that many local investors stopped looking at the industry,” said Qizhi Guo, a senior partner at CDH Venture and Growth Capital.
“But I believe in the SaaS business model. It means efficiency gains and zero maintenance costs for customers; it generates stable cash flows and strong growth for suppliers; and entrepreneurs can make headway if they focus on service quality to retain customers.”
Read More: https://www.avcj.com/avcj/official-record/3028946/deal-focus-china-saas-gets-specific
By AVCJ Larissa Ku
Investors are gradually returning to China’s software-as-a-service space with an appetite for industry specialists rather than generalists. The CDH Investments-led Series B for 1Data is a case in point.
Chinese software-as-a-service (SaaS) start-ups have experienced feast and famine over the past two years. Now, though, they appear to be back on the menu, albeit at more reasonable valuations and with a more nuanced view as to which industry verticals can generate the most traction.
The enduring SaaS question was whether domestic enterprise customers would be willing to pay for standardised, subscription-based products. Investors appeared to put all doubts to one side during the post-pandemic technology boom of 2021, with consumer internet specialists picking SaaS as they made their first forays into business services.
These investors left abruptly last year following a string of public market corrections that wiped billions off the maket capitalisations of leading US players like Snowflake, Shopify, and Atlassian. New investment activity in China came to a virtual standstill.
“SaaS was overheated in 2021 and then it became too cold last year and this year – so cold that many local investors stopped looking at the industry,” said Qizhi Guo, a senior partner at CDH Venture and Growth Capital.
“But I believe in the SaaS business model. It means efficiency gains and zero maintenance costs for customers; it generates stable cash flows and strong growth for suppliers; and entrepreneurs can make headway if they focus on service quality to retain customers.”
Read More: https://www.avcj.com/avcj/official-record/3028946/deal-focus-china-saas-gets-specific