Deal focus: Whale takes a bite of big data

Whale is not a typical software-as-a-service (SaaS) business. The China-focused digital marketing platform started out as an offline operation and then expanded online to offer customers a closed-loop solution.

“Our principle is first to identify real industry problems or pain points and then collect data to tackle those problems. We found that in many cases online or offline data alone is not enough, so we aim to combine the two and offer the best product,” says Jerry Ye (pictured), Whale’s founder and CEO.

He points to bubble-tea chain stores as a typical example. As retail recovered post-COVID-19, these businesses flourished, often attracting long queues of customers. Waiting times lengthened as online orders – which are usually assigned to the store closest to the customer – rose in volume.

Whale came up with a different approach. Using video footage, it collects real-time data of each store’s traffic flow and online orders are routed to locations where in-person traffic is lightest, which leads to a better customer experience all around.

Ye founded the company in late 2017, having previously worked for Facebook where he was responsible for the world's largest machine learning data pipeline. CTO Shukun Xie is another Facebook alumnus, while other senior team members came from MiningLamp, JD.com, and Xiaomi.

Source Code Capital led a Series A in 2020, supported by BAI and Linear Capital, and then Nio Capital led an extended round. Whale recently secured a $50 million Series B. Temasek – which learned about the company as an LP in some of the funds with existing exposure, according to Ye – took the lead. Nio Capital, Linear, and Alpha Startups Fund were among the re-upping investors.

While falling valuations in the secondary market have influenced the primary market, Ye is optimistic for the long-term: “My expectation is that the valuations of strong companies will rise. The current market pullback is more like a filter, filtering out mediocre companies. The good ones will still be well supported because it ultimately depends on real value and potential.”

Whale targets medium to large-sized corporates, counting the likes of electric appliance manufacturer Midea, restaurant chain Xibei, health and beauty retailer Watsons, and Unilever as customers. It also serves emerging consumer brands like fashion toy retailer Pop Mart and electric vehicle maker Nio, which was signed up following an introduction from Nio Capital.

Whale helps Pop Mart monitor how customers move inside its stores and track traffic flows in specific areas. Merchandise displays are adjusted accordingly. For example, new products that Pop Mart wants to promote are placed in high-traffic areas, but steps are also taken to divert traffic or keep it moving so that customer concentration doesn’t reach uncomfortable levels.

Working with domestic skin-care brand Dr Plant, Whale focuses on real-time interaction with customers. Whenever someone picks up a product, an electronic screen immediately displays relevant information such as prices, special offers, and ingredients. The screen also offers insights into the production process, demonstrating the brand's safety and quality.

While data are Whale’s lifeblood, Ye emphasizes that the company doesn’t take ownership of customer information. It claims to comply with legal standards across the US and Europe, as well as China’s recently introduced data protection legislation. “We are a technology firm. We don’t own data, and we require customers to use data collected under the correct legal framework,” he adds.

China has also released draft guidelines intended to police the use of algorithmic recommender systems by internet information service providers. Ye points out that the key concern is what data are fed into algorithms, not the algorithms themselves. “An algorithm is just a tool,” he says. “The core of regulation is what data can and cannot be used.”

The expectation is that strict controls will be imposed on facial or other biological data. Any company that offers solutions based on this kind of information will be impacted, Ye asserts.

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• Topics
• Greater China
• Early-stage
• Media
• Technology
• China
• enterprise software
• Temasek Holdings
• Source Code Capital
• Linear Capital
• Nio Capital
• Bertelsmann Asia Investments