Temasek leads $100m Series C round in Chinese SaaS firm Xforceplus

Xforceplus, a Chinese corporate software as a service (SaaS) and industrial solutions provider, announced on Thursday the completion of a $100-million Series C round of financing led by Singapore state-owned investment firm Temasek Holdings.

Hillhouse Capital Group and Chinese supply chain-focused investment company Eastern Bell Capital also poured money into the new round, according to a statement released on the company’s website.

Wu Yibing, Temasek’s head for China, will serve as a director of Xforceplus upon the completion of the transaction.

Xforceplus, formally known as Shanghai Xforceplus Information Technology, was founded in June 2015 to specialise in the development and application of industrial solutions in the field of SaaS-based cloud computing software services.

The company serves large-scale enterprises in various industries, such as manufacturing, retail, real estate, medicine and logistics. Its customers include Chinese real estate developer Vanke, Chinese state-owned China Poly Group, British contract foodservice firm Compass Group and McDonald’s.

The four-year-old company is developing in China’s young yet burgeoning SaaS-based enterprise collaboration market where SaaS – a kind of cloud computing – is offered by third-party providers to manage applications and make them accessible over the internet. It enables corporate clients to save the cost of hardware acquisition, provisioning and maintenance while accessing more convenient communication among employees.

The SaaS-based enterprise collaboration market in China is projected to increase at a compound annual growth rate (CAGR) of 35.3% in the next five years, according to industry research platform IDC. The report shows that the traditional enterprise collaboration market, led by domestic players like Seeyon, Wearver and Smartdot with an 80.2% market share in 2018, will shrink to 68.2% in 2023 as the SaaS-based new model is becoming trendy and attracting more customers.

“For enterprises, the capabilities of leveraging data or adopting key data management tools are the key to success in the future,” said Zhang Lei, founder, and CEO of Hillhouse Capital Group, in the statement.

The company will use the proceeds to finance the upgrade of its products, technologies, and services.

The investment took the total capital raised by Xforceplus to over 1 billion yuan ($140.41 million) across six funding rounds. Most recently, Xforceplus completed a Series B round from Hillhouse Capital Group, Boston-born IDG Capital, and Beijing-based private equity firm Jolly Capital in February 2019. Financial details of the previous round were not disclosed.

California-based venture capital firm DHVC, Chinese private equity firm Ivy Capital, wealth management company Fortune Fountain Capital, and Shanghai-based Yonghua Capital were among investors in its previous rounds.