Serving business clients using huge social media data has long been Tencent’s dream and its latest bet reflects that, coming just a few weeks after quarterly results underlined the benefits of its diversification efforts.
On Thursday, the Chinese gaming and social media giant announced a sole investment into a customer relationship management platform. Forming its Series E fundraising, Beijing-based IngageApp received $120 million from Tencent.
The proceeds will be used for research and to help develop the technology in Tencent's ecosystem. IngageApp, a software-as-a-service platform, will also use Tencent’s resources to search for more corporate clients.
It is the third time Tencent has invested in IngageApp as part of a broader bid to diversify its business away from being just a gaming and social media company to being a conglomerate that serves both individuals and businesses in an array of ways.
Tencent also participated in IngageApp’s Series D and follow-on round in 2017 and 2018, respectively. IngageApp received a total of Rmb380 million ($53 million) in its D round from not just Tencent but also investors such as Matrix Partners China, Sequoia Capital and Zhen Fund.
IngageApp mainly provides apps on mobile devices for customer management. It also embeds the function in Wechat’s Mini Programme to include some social media features.
Currently, it serves corporate clients such as Industrial and Commercial Bank of China, Lenovo, Sinotrans and Shanghai Electric.
MUTUAL GAIN
Tencent’s partnership with IngageApp benefits both sides. Tencent gains access to more transaction data while IngageApp uses Tencent to grow its own presence.
It is an example of Tencent's ultimate aim to gain more corporate clients, which has at times proved a bumpy road to follow for the Chinese corporate champion.
Decades ago, Tencent failed when it tried to start its own e-commerce platform. It then benefited from almost 10 years of mobile user growth before coming to a plateau again.
But recent company numbers highlight the potential benefits to Tencent as it presses on trying to diversify its operations.
On August 14, Tencent posted a lower-than-expected 21% year-on-year improvement in second-quarter sales. The vast majority of revenue still came from games, videos, music services and online advertising, but it was the company's newly configured 'fintech and business services' segment that caught the eye with a 37% gain in revenues.
Mobile internet user growth in China has slowed in the past two years, according to data from CEIC, even though mobile penetration levels are still some way short of what they are in more developed countries.
In contrast, online corporate transactions are growing fast. Total sales in this respect almost doubled in 2018 to Rmb60 billion ($8.4 billion), according to research firm 100EC.
By investing in IngageApp, Tencent hopes to get more of a foothold in the business-to-business market.
“Tencent and IngageApp share the same view of connecting companies,” IngageApp chief executive Shi Yanze said. “We will provide a full-range solution for corporates to connect with their suppliers and market.”
