Kingsoft Cloud Showered With $200 Million in Latest Round

Kingsoft Cloud, the cloud-computing service unit of China software giant Kingsoft Corp., has raised $200 million in its latest fundraising round, giving the company a valuation of $2.4 billion and a boost to help it compete in the emerging sector.

For this round, FutureX Capital and parent company Kingsoft Corp. will each invest $100 million, Kingsoft Cloud said in a statement on Monday.

The news comes weeks after the company secured $220 million in a round led by Forebright Capital Management Ltd., Liyue Investment Management Co. and Shunwei China Venture Capital.

Kingsoft Corp. now owns 51.58% of Kingsoft Cloud, followed by Liyue Investment Management (4.32%) and FutureX Capital (4.21%).

“The series of funding shows that investors think highly of Kingsoft Cloud’s advantage in the cloud-computing sector,” said company CEO Wang Yulin.

With the new funding, Wang hopes to strengthen Kingsoft’s position in a sector that is worth billions of dollars but, at least in China, is dominated by Alibaba Group Holding Ltd.

As of last June, Alibaba’s cloud computing unit, Aliyun, accounted for 47.6% of China’s public cloud service market, far higher than number two player Tencent Holdings Ltd.’s 9.6% and Kingsoft’s 7%, according to industry adviser IDC.

Kingsoft is also facing challenges from newcomers — most notably traditional hardware-makers such as Huawei Technologies Co. Ltd. — who are shifting focus to cloud computing platforms, which allow users to access and store files using remote servers.

However, Wang said his company will reach a 30% market share in the next three years. To do that, Kingsoft will attempt to lure clients from numerous sectors, including finance, e-commerce and government agencies. Going abroad, Wang added, will be the company’s next move.

In December, Kingsoft Cloud announced it would significantly lower prices for some of its key products. The price of its cloud database system Redis, for example, has decreased by 50%.

Industry analysts expect intense battles before the market landscape is settled, but they also said only two or three surviving competitors are likely to dominate the market.

Contact reporter Mo Yelin (yelinmo@caixin.com)