B Capital Group, a six-year-old venture capital fund founded by Facebook co-founder Eduardo Saverin and Bain Capital veteran Raj Ganguly, is doubling down on China, with plans to invest $500 million to $1 billion in Chinese digital businesses over the next three years.
B Capital, which has $1.9 billion in assets under management, is targeting corporate software companies in China, an industry that has witnessed “rapid growth” but is still just a “fraction of the scale of the U.S. SaaS market,” according to Ganguly in a TechCrunch interview.
He said that the notion that Chinese corporations are hesitant to spend money on software is “extremely backward-looking thinking.”
Surging labour costs are one factor driving the growth of B2B enterprises in China. As a result, B Capital is on the lookout for software that may increase the productivity of labour and company operations, giving enterprises a competitive advantage. Covid-19 hastened the transition, since well-digitized businesses have shown to be far more robust to pandemic-related interruptions.
B Capital is able to predict what businesses require because to its strong connection with Boston Consulting Group, which has a slew of customers aiming to digitise everything from healthcare to banking to transportation.
These huge firms “understand that their own technology cannot be the sole solution,” according to Ganguly. “They must go outside and be willing to work with early-stage, high-growth, or late-stage digital businesses.” In comparison to scrappy, cash-strapped startups, they are also more prepared to pay for software.
B Capital began investing in China earlier this year and has already completed three transactions. It will fund 15-20 initiatives in China over the next five years, regardless of the stage – however, growth-stage firms are the goal. Hong Kong and Beijing are home to about 15 of the company’s investment and operational workers. It employs around 110 people worldwide.