How we early-backed Cootek, now China’s most global software company, with 132 Million DAU in 240 countries, going Public on the NYSE on September 28
By Denis Barrier and Nicolas du Cray
Denis, Nicolas, with the Founder of Cootek Karl Zhang in March at the company headquarters in March 2018
Sometimes, taking a company public only takes only three years, like with Cathay Innovation invested Pinduoduo, but most of the time it takes much longer. September 28 2018 is a very special day for us, because it is the day CooTek is going public on the NYSE (NYSE:CTK) at a multi billion dollar valuation. We invested with NIcolas in their Series A in 2010, eight years ago, on behalf of Orange Capital, the corporate venture arm of Orange / France Telecom, and want to share what insights we get from this great story
CooTek may not be a household name. Yet you may use it 70 times per day !
The app has over 130 million daily users. Remarkably, the app is launched more than 70 times a day on average! CooTek developed TouchPal, one of the most installed and widely used soft keyboard and smart input tool in the world. Used across a wide variety of mobile applications such as social apps, e-commerce apps, and browsers, it supports 110 languages. As an overlay app that appears above most apps in the phone, it generates valuable real estate on the screen that can be used to recommend personalized content, products and services to the phone’s user. The app also provides animated emojis and can also be used as a virtual assistant to which users can ask questions.
The user base of Touchpal has shown a continuous growth since we invested. When we invested, Touchpal had very few DAU (DAily Active Users). By distributing its app directly to end users, the company managed to attract a large and highly sticky user base, with 55 million daily active users in early 2017, 75 million in June 2017, and 132 million DAU now.
On the top of the soft keyboard, the company develops a few AI-powered mobile content apps, and a Dialer app for the Chinese market. It has been successful since it allows Chinese users to call each other for free, using VoIP. For that purpose, the company has built a global VoIP infrastructure in China, on par with what the Twilios of the world have built. More than 100 Million of people in China call each other everyday in China using Cootek VOIP network !
China tech going global
For many years, commenters have noticed that Chinese tech companies have difficulties expanding their business overseas. Other than major players like Alibaba and Tencent, it is rare to see Chinese apps be widely adopted in countries other than China. CooTek’s Touchpal is one of the rare exceptions and a blatant proof that Chinese software developers can create world-class software and provide value to users from all over the world.
Originally from Microsoft Advanced Technology Center in Shanghai, the CooTek team, spearheaded by his visionary chief architect and chairman Karl Zhang, however managed to build a world-class Chinese product, which is adopted in almost all countries in the world. It is a real pride for us to have invested in the series-A round of financing of CooTek in 2010 and to have seen the company achieve its goals and execute its vision in a very consistent manner in the last 8 years.
We had invested at a $9 million valuation, and are happy it will deliver a substantial investment return to Orange. We also are very proud to be still involved to support Orange in the IPO process 6 years after we went for other adventures, showing a link of trust, fidelity, and reciprocal commitment that is rarely seen in today corporate business world.
Paving our road
The Cootek story was important for us, as it is the kind of story that announced in fact the rise of Cathay Innovation for two important reasons. First, it demonstrated the need to build a global venture capital firm : Cootek is an example of the globalization of technology trends and the rise of the China ecosystem. We believe there is a need to bridge global ecosystems, spanning Europe, US and China. Second, it demonstrated the value-add of corporates : Orange became one of the first clients of the company, preinstalled CooTek’s software in many of the Orange-branded phones it sold to its customers over the years, which supported the rise of the company. And the early Orange business reference paved the way for Cootek to become mainstream and now lead its industry
Congratulations to the CooTek team! And of course, thank you for helping us develop nextgen global strategic venture capital fund!