In a move that represents its first investment on Chinese soil, Sequoia Capital US and Sequoia Capital China on Thursday chose territory previously vetted by other U.S. venture capitalists.
Backing Worksoft Creative Software Technology in a $30-million second round, Sequoia chose to bet outsourcing software development is a trend that is in no danger of going away. This round is aimed at expanding the Beijing-based company’s IT outsourcing business, blow out its marketing program, and give it a war chest for mergers and acquisitions.
Worksoft Creative Software TechnologyWorksoft currently provides software development, testing, globalization, and business process outsourcing for corporations in the United States, Europe, and Japan. Key customers include firms like IBM, Microsoft, Hewlett-Packard, Oracle, General Electric, and Sony.
The company had previously received an undisclosed first round of financing from DCM-Doll Capital and Legend Capital Management in April 2005, both of whom joined Sequoia in backing the second round.
The company had previously received an undisclosed first round of financing from DCM-Doll Capital and Legend Capital Management in April 2005, both of whom joined Sequoia in backing the second round.
The earlier round was aimed at expanding the company’s business in both the U.S. and China, and DCM general partner Rob Theis and Chen Hao of Legend Capital took board seats with the firm.
It’s notable that the company, formed in 1995, didn’t take venture money until it was a decade old. And once it did, it used the cash infusion to more than double in size.
At the time of its first round, the company employed 800 people, with offices in five major cities in China, plus the U.S. and Japan. It has since opened two new offices in X’ian and Changsha, and grown to about 2,000 employees worldwide.
Kui Zhou, principal of Sequoia Capital China said the company has emerged as an outsourcing powerhouse, after 11 years in business. Noting that the IT outsourcing industry in China is continuing to grow rapidly, he added that the company “has the potential to achieve many breakthroughs in the coming years.”
Global marketing intelligence firm IDC estimates that China's software outsourcing exports reached $600 million in 2004 and predicts it will grow by better than 50 percent a year, to about $4.7 billion in 2009.
Chris Chen, Worksoft’s chief executive, described the latest investment as an endorsement of his company’s core strategy, as well as its array of services.
Contact the writer:SWolfe@RedHerring.com