China's MiningLamp gets $200m Series E extension

Existing investors Tencent Holdings and Hundreds Capital – a local private equity firm with RMB10 billion ($1.5 billion) in assets and exposure to a range of internet and new economy businesses – re-upped. Oriental Pearl Media Industry Fund, Greater Bay Area Homeland Investments, CITIC Securities, UOB Venture Management, Capthrone, and China Sky Global Investments came in as new investors.

MiningLamp said in a statement that it would concentrate on productizing its strategy and investing in technology and market development. It also referenced expansion opportunities under the Belt & Road Initiative and China’s “new infrastructure” digitalization push.

The company is leading the transition from software-as-a-service (SaaS) to platform-as-a-service (PaaS) in China. PaaS is shorthand for middle platform solutions that enable customers to collect and manage data, as well as run business applications from outsourced cloud-based systems. Well-funded start-ups like MiningLamp and 4Paradigm have entered the space, alongside technology giants including Alibaba Group and Tencent.

The SaaS challenge in China is monetization, specifically getting companies to pay for a standardized rather than a customized, or project-based, solution. Some investors see more potential in PaaS because middle platforms can become standardized layers, while front-end software products are tailored to meet the needs of individual users. A PaaS player can therefore rely on upstream and downstream partners to deliver customized products.

However, much of MiningLamp’s business is still SaaS-based. “We’re working towards PaaS because we want to do more than just simplify approvals processes or solve basic analytical problems,” Ping Jiang, the company’s co-founder, told AVCJ in May. “We want to assist in core decision-making by drawing data from different departments into a single platform and then apply our big data capabilities to that data.”

Jiang stressed that MiningLamp was not yet a PaaS player because it delivers customized rather than standardized solutions. In this respect, the company is much like its industry peers. Kyle Liu, a principal at Redpoint China Ventures observed that comparisons made between Palantir Technologies and China PaaS operators are flawed because the latter rely on standardized products for just 30-40% of total contracted revenue.

Most of the country’s mainstream SaaS and PaaS companies work on a project basis. These projects typically are small, low margin, and the customer pays on delivery, which can lead to unreliable cash flows. Investors do not dispute that a project delivery model could become a PaaS solution in the future, but they are wary of valuations based on ambitions rather than operational realities.

Founded in 2014, MiningLamp started out helping e-commerce platforms crack down on fraud in online advertisement and then expanded into public security and then corporate services. It has designed big data-powered systems for several Chinese banks aimed at improving efficiency in risk assessment. In addition, it claims that its analytics tools used by more than 200 companies in the Fortune 500, ranging from Procter & Gamble and Coca Cola to LVMH and China UnionPay.

MiningLamp received Series A funding from Heaven-Sent Capital in 2015, and a Series B of RMB200 million in 2016 led by Sequoia Capital China. A RMB1 billion Series C followed in 2018 and a RMB2 billion Series D a year later, led by Huaxing Growth Capital and Tencent, respectively. The first tranche of the Series E was led by Temasek Holdings and Tencent, and also featured short-video sharing platform Kuaishou.

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• Topics
• Greater China
• Technology
• Expansion
• China
• enterprise software
• Russia
• Tencent
• Greater Bay Area
• CITIC Securities
• UOB Venture Management
• Hundreds Capital