The household home appliance brand Haier’s subsidiary COSMOPlat announced that it had raised CNY 950 million (USD 133 million) in a Series A, setting a new record in the Industrial Internet area.
The deal was led by state-owned China Structural Reform Fund. They were joined by Shanghai government-led fund Chengding Fund and SAIF Partners, among others.
Founded in April 2017, the company offers three main categories of products, from mass customization to operation and product design for more than 11 industries, from clothes, models, electronics to agriculture, and so on.
We see three attributes that support its staggering fundraising ability.
The company has matched the growing pace of the Internet of Things (IoT) era.
To detect, transfer, read and analyze data collected from sensors and thus manage the production workflow from IoT is giving a competitive edge to the solutions that industrial Internet platforms can offer to factories. The systems can save procurement costs, increase production capacity and order amounts.
We see a booming demand for such needs as China is accelerating to transform from high-speed to high-quality growth. Besides, IoT also connects to China’s speeding-up ‘new infrastructure,’ which is comprised of fields including 5G networks, new energy station piles, data centers and artificial intelligence capacity.
In China, venture capitalists are also ramping up efforts in investing in industrial applications that improve manufacturing efficiency – for instance, Linctex (clothing, invested in Feb 2020 by Gorong Capital) and Sany-backed (600031.SH) RootCloud (IIoT, June 2019 by Hejun Capital).
Originating from Haier’s internal practices, the platform can find clients’ pain points faster than competitors.
For instance, its Mass Customization Solutions allow customers to send customization orders on devices and arrange manufacturing and assembly with production lines accordingly. The user-centered and end-to-end innovation supports flexible manufacturing, which we see will be a growing need in the coming years.
The company has a clear exit path to follow and imitate.
Haier has a proven record of incubating a billion-yuan enterprise. Haier Biomedical (read the IPO story of Haier Biomedical) designs and manufactures facilities to store biomedical samples; it is now trading at a 52.91 earnings multiple on the Star Market. It will thus be easier for Haier to build another successfully listed company out of the firm itself.