Edianzu, a Chinese enterprise IT leasing company, has raised $60 million Series D funding from existing investor Source Code Capital and an undisclosed sovereign wealth fund, the company said on Tuesday. Funds raised will be used to expand the business into more Chinese cities.
The company that conveys the idea of “sharing economy”, one of the hottest topics in China over the past year. Edianzu provides IT devices for corporates, including computers, work stations, printers, handsets, and even air filters.
The startup is headquartered in Beijing, and has four branches acros the country. It also provides door-to-door maintenance and software installation services within four hours in 10 Chinese cities.
Founded in 2015, this is Edianzu's fifth round of funding. The company completed Series C fundraising in March, with $32 million investment from Source Code Capital, Matrix Partners China, Shunwei Capital, Aplus Capital aka Hongtai Capital Holdings, fintech company Lakala.
Edianzu has raised $130 million in three years (including this round), with constant support from Matrix and Shunwei.
The startup now boasts more than 20,000 corporate clients, over 300,000 devices, and says that it owns 80% of the IT leasing market in China.
Chief executive Ji Chengpeng has said that he intends to expand the company's within-four-hours door-to-door IT service to more cities, and to set up more outlets.
Investors still see potential in the company. Kaisi Chang, partner of Source Code Capital, said that the penetration rate for IT leasing is still very low, which indicates room for growth.
According to Chinese research firm Qianzhan, small and medium size enterprises (SMEs) in China buy more than 15 million copy machines and printers a year but phase out about 500,000 copy machines annually.
With over 50 million SMEs, the market size for IT leasing could easily exceed Rmb100 billion ($14.4 billion) and it makes financial sense for small companies. Leasing devices are around 30% cheaper than purchasing one.
Edianzu is not the only player in the market. Its rival, Little Bear Rental raised over Rmb100 million investment from JD.com and Fortune Capital in May this year. JD is already an internet giant for the sale of IT devices, and such a partnership will definitely pile the pressure on Edianzu.
More to the point, there are mutterings about Edianzu’s aftersales service. There have been complaints about endless junk email from the company, as well as the issue that deposits often seem to be more expensive than the device itself.
And there is a broader issue with the industry itself that the company needs to address. Because electronic devices are updated so much more quickly than they used to, companies may not want to find themselves stuck in a 36-months contract with outmoded devices.
These could all prove to be speed bumps on Edianzu’s road to growth.
