In what is now the largest-ever single financing in China’s Robotic Process Automation (RPA) + AI field, we are excited to announce the close of Laiye Technology’s Series B+ funding round of $US35 million, led by Cathay Innovation. With this investment, we are happy to partnering again with existing investors as Sequoia China, Lightspeed China, and also companies as Microsoft who lead the field.
Laiye was so far known to be the leading natural language processing chatbot company in China, developing one of the most impressive Chinese AIs. In addition to this meaningful funding, Layie has also announced having amassed the largest RPA community in China. So far the company has partnered with and been trusted by a variety of clients, such as China Mobile, China Power Grid, Taiping Life Insurance, Wyeth, Walmart, McDonald, Nike, Roche, Astrazeneca, Ctrip, Meituan and so on. In just the last 6 months, the company has gained over 300,000 downloads and 30,000 registered users, and more than 6,000 enterprises registered. Layie seems now to be clearly in pole position to build the leading RPA + AI platform in the country and perfectly illustrates a massive trend that has gained speed over the years: the rise of AI driven BtoB software in China.
The AI Driven Software Revolution in China: A Cathay subject of interest for long
Back in 2016, we led the US$12 million B round of ifchange.com, which at the time was a recruitment marketplace connecting companies and job seekers in China. The platform used AI on its largest Chinese data pool of both company and individual profiles to assess the best match between supply and demand of jobs. While this resulted in good growth, it wasn’t until the company really embraced a new strategy to become a real AI-centric software business that it began to realize its full potential and its mission in positively impacting the Chinese workforce.
Three years ago already, our common idea was to leverage ifchange assets to shift its product strategy to create a true AI driven software. This software platform would be used by Chinese enterprises to hire and better manage their resources. On the other hand, the community of individual users could have direct benefits, by not only sourcing new job opportunities, but also profoundly enhancing their professional lives through additional services tailored to improve and upgrade the necessary skills to progress in their careers. Our vision was that the combination of China largest two sided HR marketplace and a BtoB AI software platform would be be a killer on the market, and a positive element for the Chinese ecosystem.
It took around 18 months for the Ifchange to evolve its marketplace with a real AI-driven software sold to large businesses operating in China ; and has since been chosen by numerous companies as Alibaba, Tencent, Ping.an, Vale China, Cisco etc… to run their hiring processes. The new SaaS inspired business model had its roots in the work done by hundreds of engineers hired with determination by the company founder. A few months only after the launch of the BtoB offer, Ifchange turned profitable in, which is a prowess as people know it’s extremely hard even with stellar unit economics to turn high growing SAAS business profitable while you invest heavily also in the sales and marketing. And by the way, the size of the platform expanded also dramatically since our investment to more than 100,000 enterprises and 250 million connected profiles, ensuring best quality data for the AI engine, and consequently a longstanding competitive advantage.
Ifchange is neither a LinkedIn or Workday copycat, but a company clearly leading the field in China by leveraging AI in its own way to transform human resources management. And the next phase where the company could even release a product directly usable by SME is even more exciting, while ifchange could combine at the same time the benefits of a marketplace, plus BtoC and BtoB business models combined @scale !
Currently, we feel that ifchange is a pioneer in the usage of software by Chinese companies, and that we are at the very beginning of a tsunami similar to the explosion of mobile commerce and payments we saw in the country in the last 10 years. Overcoming a lack of retail and payment infrastructure, compared to Western countries, China has quickly become the most digitalized BtoC economy in the world in the last 15 years, and we believe the same may occur on the enterprise side. With the use of e-commerce technology, China accomplished in only a few years what has taken Western countries much longer to achieve. The Chinese economy now greatly benefits from an innovative ecosystem, which for instance enabled our early invested Pinduoduo to massively roll out its group-buying on wechat concept, becoming the second largest ecommerce platform in China in less than 4 years.
As Chinese companies are generally ill equipped with legacy systems, dramatically reducing the adoption speed of new technologies, we believe that a huge traction should now happen in BtoB software. As we just have seen with Ifchange, China is on the brink of experiencing fast adoption of AI-driven software at scale. This will result in meaningful improvements in productivity for the Chinese economy and bring a wealth of new opportunities in development for VC funded software companies. Our strong faith in this paradigm shift is also pushing us to look for and even participate to the birth of those new software actors who will be the new spine of the modern Chinese economy.
New generations of BtoB softwares are currently rising only 18 months later compared to Western countries
To come back to our newly invested Laiye, RPA is the automation or augmentation of manual repetitive tasks to improve user productivity. By recording processing rules and operational behavior of a business, RPA systems or bots, can automatically execute a series of specific mundane workflows, reduce error and allow human workers to focus more on value-adding tasks. While use-cases vary by industry, RPA systems are generally used to automate clearly defined business processes. Common bot tasks include opening, executing, and closing applications, as well as extracting, processing, and transferring data among applications, documents and databases. Looking forward, there’s a substantial opportunity for RPA to further integrate into larger process automation.
Globally speaking, the size of the RPA market is estimated by IDC to be $US680 million in 2018 and predicted to reach $US3.7 billion by 2022, indicating a 50% compound annual growth rate (CAGR) in 4 years. According to market intelligence company IDC, RPA will be the fastest-growing sector under 2B services / SaaS sectors globally. This market growth was illustrated in the West by the rise of US RPA company UiPath, who recently grew extremely fast to more than US$200 million annual recurring revenue (ARR) and also reached a US$7 billion valuation.
Interestingly, IDC also predicts the market size of RPA in China will increase from $US46 million in 2018, when the technology first emerged in the country, to $US1.4 billion in 2022, indicating a 135% CAGR during 4 years. As we have long believed in the “softwarization” of the Chinese economy and the potential impact of RPA, we wanted so much to be a useful player in the field. Armed with our faith in the rise of BtoB software in China, we are strong believer of the fast emergence of a Chinese UiPath. As Layie is now the best funded player in the field, with a unique customers and partners base, and currently the best set of products fueled by unmatched brainpower capabilities in the field, all the patterns are showing that Layie should lead the rapid expanding field of RPA+AI in China in the coming year. We are extremely proud to be part of this journey of Wang Guanchun and the whole team, and to be granted the honor to lead their last financing round.