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English|How a Chinese Investor Discovered China’s First PLG Unicorn Lanhu

English|How a Chinese Investor Discovered China’s First PLG Unicorn Lanhu
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The Internet industry in China no longer boasts massive investment opportunities like it used to do. But this did not stop GSR Ventures, a renowned investment firm that invested in Didi, Eleme and Xiaohongshu, to discover new investment opportunities like Lanhu – an online work collaboration platform that is extremely popular among Internet companies.
Known as China’s first PLG (product-led growth) unicorn, Lanhu was launched in January 2017 by Beijing Jinwei Zhiguang Information Technology Co., Ltd. It has completed its series C+ round financing upon raising one billion yuan in October 2021.
One of Lanhu’s early investors, Zhu Xiaohu, partner at GSR Ventures, attended the press conference on the C+ round financing. Zhu revealed at the press conference that GSR Ventures had shifted its focus to companies that are in the line of the To-B business.
Zhu first saw the product demonstration of Lanhu and the company’s founder Ren Yanghui in June 2020 at Lanhu’s office at Wangjing SOHO’s 42nd floor. It took Zhu less than 20 minutes to make up his mind on investing in Lanhu.
“I decided to make the investment after seeing the product,” Zhu recalled, explaining his rationale behind the investment decision. “Companies that focus on making a good product are rare in China.”
GSR Ventures later led Lanhu’s 300-million-yuan B round financing in April 2021. Zhu also invested in Lanhu’s recent C+ round financing.
How did Zhu discover China’s first unicorn of product-led growth? Zhu shared his insights into digitalization services for businesses in an interview with TMTPost.
English|How a Chinese Investor Discovered China’s First PLG Unicorn Lanhu
文章图片

Lanhu's C+ round financing press releaase. Photo courtesy of interviewee.
Finding China’s PLG companiesMost Chinese Internet companies that people know are using Lanhu. The platform has already achieved a 98% penetration rate in top players in the Internet industry in China.
Lanhu first amassed a lot of users who did design and development work through a freemium model in its early phase. It later rolled out a paid premium version in June 2020, which has been earning the platform very good revenues. According to statistics released by Lanhu at its C+ round financing press conference, there are already over 500,000 registered teams on Lanhu.
Zhu learned about Lanhu before its commercialization.
“Why do people use Lanhu? It’s because it’s good. People need to use it. That’s why they would pay for it,” Zhu told TMTPost.
Zhu discovered the PLG SaaS sector of China’s cloud software industry.
In short, product-led growth (PLG) is a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself. It is a growth model that is centered around users and promotes the product through word-of-mouth promotion. Before contacting a salesperson, users would have already experienced the product themselves and understand most of the value the product offers.
PLG was originally coined by American venture capital firm OpenView. According to OpenView, companies with a PLG strategy can grow faster and more efficiently by leveraging their products to create a pipeline of active users who are then converted into paying customers. A company with a PLG strategy designs products for the end users, who will tell their boss which SaaS product to buy. It will also deliver value before capturing value through a self-serve free trial, freemium model or open-sourced model so that end users would know what they are getting and become accustomed to using the product. Investing in the product with go-to-market intent is also essential for a company with a PLG strategy.

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