Deal focus: Chubao targets mass market appeal

Chinese mobile software developer Chubao is first and foremost an international operator – in terms of revenue and undeserved notoriety. The company launched its third-party smart phone keyboard app TouchPal nine years ago and quickly posed a threat to Nuance Communication, then the dominant US player. Nuance first tried to buy Chubao, then took legal action against the company, accusing it of patent infringement. The US International Trade Commission ruled in favor of Chubao.

The company is now even stronger. With 100 million daily active users across 158 countries typing in 120 languages, TouchPal is the largest keyboard app in the world. It is the default keyboard for smart phone brands like Samsung, HTC, ZTE and Huawei. But Chubao wants to reach deeper into the global mass market.

As such, the company recently raised a $100 million Series D round co-led by CCB International, an investment unit of China Construction Bank, and HG Capital. Existing investors including Sequoia Capital China, Qiming Venture Partners, and SIG Asia also re-upped. Most of the capital will go towards R&D and recruitment.

“We used to license the keyboard app to smart phone makers under a B2B model,” says Michael Wang, Chubao’s co-founder and CEO. “But we have switched it to a ‘freemium’ model, which allows us to deal directly with end users. We are pushing our business to a new level because we want to gain deeper insights into our users.”

The freemium model means users can download TouchPal’s keyboard app for free, but pay for premium services such as interface designs and predictive typing services customized for professionals. TouchPal is popular for its swipe feature – which allows users to run a finger across the keypad to form a word without typing out individual letters. Chubao’s technology interprets the gesture and identifies the appropriate word.

Wang sees improvements to these predictive capabilities as essential to the company’s objective to sign up users directly. “Companies like Google and Facebook only license technology but they get much more insight into user habits – and once they have these data, they can create new products. The main reason we changed our approach is that we see more long-term value in becoming a user-targeted business.”

Separately, Chubao runs a dialer app called TouchPal Contacts for the Chinese market only. Using a database of more than 10 million local merchants, the app filters incoming cold calls. It has surpassed Tencent Holdings’ WeChat Phonebook app to become the largest player in this space.

The next goal is to develop a voice-based social networking feature, whereby users can share audio clips instead of making calls. “There should be something to replace phone calls – a very traditional way of mobile communication, and we want TouchPal Contacts to do that,” says Wang. 

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• Topics
• Greater China
• Expansion
• Technology
• China
• TMT
• Venture
• CCB International Asset Management
• Qiming Venture Partners
• Sequoia Capital
• Susquehanna Asia Investment