Why we invested in JiHu GitLab: Riding on the wave of the open-source DevOps platform in China
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Enterprise software has always been a focus area for NGP Capital, and localized DevOps tools is one of the particular areas that our China team has followed closely. As the first project out of Silicon Valley to enter the China market with the "Sino-foreign joint venture 3.0" structure, JiHu GitLab (JiHu) attracted our attention early on. As such we are thrilled to announce our participation in JiHu GitLab’s Series A round, announced this week.
The open-source software market in China is emerging fast and has reached over 100 billion RMB in size currently. Our team in China is on the ground to ride the wave.
The main reasons why we decided to invest in JiHu are summarized below:
1. Market need for localized DevOps tools
We have noticed that R&D or IT teams of many enterprises, including foreign companies in China have a strong need for localized DevOps tools, and JiHu is the right fit for the market. We believe that JiHu owns a complete DevOps platform for lifecycle integration, and as the domestic market matures, it is promising that it will be able to offer products that meet the needs of Chinese enterprise users and become the leader in local DevOps platforms.
2. Undisputed competitive advantages
We chose JiHu from the many DevOps tools we have come across because we believe it has the advantage of having both the leading global technology and the ability to respond to the local Chinese market in execution. GitLab, being one of the world's leading one-stop DevOps tool providers, already has nurtured a mature open-source community, with leading brand image and a wide user base. In addition, with complete autonomy in strategy, product and operation, JiHu will be able to localize its product GitLab JH version by 100% and operate totally independently, which is also in line with domestic enterprise customers' requirement on independent and controllable software tools.
3. Dynamic and diversified team
During the communications with the JiHu team, we were impressed by their ideas and pragmatism. CEO Sam Chen, who comes from a technical background, has been working in the open-source field for many years and has a deep understanding of the product and the industry. The sales team, led by Yue Chen, is very professional and responsive to the customer's needs. The R&D team is energetic and dynamic, fitting perfectly the temperament of their product.
Open-source is also one of the key reasons why we chose JiHu. Open-source is a fast and continuous way for product improvement, which enables projects to acquire users at the lowest cost and get feedback and code contributions from users faster, thus iterating and maturing faster. In addition, the collaborations between open-source community contributors and the core project R&D teams make product development far more efficient. This feature of open-source is ideal for basic layer and platform-based software.
With the deepening of the digital transformation within Chinese enterprises and the increasing requirements for information security, domestic supply and demand, policy support, etc. the landscape is becoming favorable toward open-source software. More good projects are successfully commercialized and obtain recognition by the capital market. Of course, compared to the traditional software companies, the commercialization process of open-source projects may be longer and more complex, and as investors, we need to have enough patience. We see the demand for advanced features and services from enterprise customers and believe that cloud computing is the trend, and more open-source projects will be commercialized as SaaS in the future.
Our future expectations for JiHu
We are excited to announce our participation in this round of investment in JiHu, together with other major investors who share the same confidence in JiHu as well as open-source technology.
Tools are the starting point of digital transformation for enterprises. We expect JiHu, as the tool provider, can be deeply involved to accelerate and drive the future of digital transformation for Chinese enterprises. Building on GitLab's strong product base, we believe that JiHu can take their local product to new heights by leveraging China's excellent R&D and operational strength.
Let’s work together.