For years, founders and investors in China had little interest in open-source software because it did not seem like the most viable business model. Zilliz‘s latest financing round shows that attitude is changing. The three-year-old Chinese startup, which builds open-source software for processing unstructured data, recently closed a Series B round of $43 million.
The investment, which catapults Zilliz’s to-date raise to more than $53 million, is a sizable amount for any open-source business around the world. Storied private equity firm Hillhouse Capital led the round joined by Trustbridge Partners, Pavilion Capital and existing investors 5Y Capital (formerly Morningside) and Yunqi Partners.
Investors are going after Zilliz as they increasingly recognize open source as an effective software development strategy, Charles Xie, founder and CEO of Zilliz, told TechCrunch at an open-source meetup in Shenzhen where he spoke as the first Chinese board chairperson for Linux Foundation’s AI umbrella, LF AI.
“Investors are seeing very good exits for open-source companies around the world in recent years, from Elastic to MongoDB,” he added.
“When Starlord [Xie’s nickname] first told us his vision for data processing in the future digital age, we thought it was a crazy idea, but we chose to believe,” said 5Y Capital’s partner Liu Kai.
There’s one caveat for investing in the area: Don’t expect to make money in the first three to five years. “But if you’re