5Y News｜Zilliz Raises $43 Million, Setting New Global Record for Series B in Open-Source Infrastructure Software

五源资本·November 13, 2020

Zilliz announced the completion of a $43 million Series B funding round, with continued support from 5Y Capital.

On November 13, Zilliz, an AI-powered unstructured data processing and analytics software company, announced the completion of a $43 million Series B round. The round was led by Hillhouse, with follow-on investments from Trustbridge Partners and Pavilion Capital. 5Y Capital (formerly Morningside Capital), the lead investor from the Series A, and Yunqi Capital, the lead investor from the angel round, both continued to invest above their pro-rata. YiBai Capital served as the exclusive financial advisor. This marks the largest single Series B financing in the global open-source infrastructure software space to date. To date, Zilliz has raised over $53 million in total funding.

Charles Xie

Founder and CEO, Zilliz

What has been your biggest obsession since starting the company? Has it changed?

Charles Xie: In 2015, I returned to China from Silicon Valley with a dream — to build Zilliz into a foundational software company with global influence, starting from China. That was my obsession. For decades, nearly all the world's well-known foundational software companies have been based in Silicon Valley, while China has had virtually none. Lu Xun put it beautifully: "Originally there was no path in this world; it is only when many people walk on it that a path appears." I believe China will inevitably produce a cohort of world-class foundational software companies.

My obsession has since evolved. Over the past few years of building the company, I've felt this shift happening in real time. I've witnessed Zilliz's journey toward global influence — our open-source vector search engine Milvus now serves over 400 enterprise users across more than 30 countries and regions, with over 120 contributors. It's all happened so quickly, so tangibly. As someone who has lived through it, my former obsession has transformed into conviction.

In your industry, what "contrarian" thinking do you hold? What's the biggest market misunderstanding you've faced?

Charles Xie: For decades, everyone knows that relational database systems for structured data have grown into a market worth hundreds of billions of dollars — that's consensus. Meanwhile, unstructured data like images, video, behavioral profiles, 3D compound structures, and gene sequences has long lacked effective processing methods, leaving it underutilized. This has led many to conclude that unstructured data holds little value, and that processing and analyzing it is a niche market — another widely held consensus.

What we observe is that 80% of human data exists in unstructured form. This data offers vivid, authentic depictions of every facet of human production and life. More importantly, we've seen that recent advances in heterogeneous computing power and efficient AI algorithms have made it possible to process unstructured data using high-dimensional data and models (feature vectors, embeddings) — just as relational databases once enabled efficient structured data processing. If we can provide analysis, understanding, indexing, and search capabilities for unstructured data, we can accelerate data intelligence transformation across industries and elevate human society's digitalization to an entirely new level.

Why did you choose 5Y Capital's investment?

Charles Xie: [Laughs] Because 5Y Capital is willing to bet on crazy ideas. I clearly remember in November 2017, I met Yuan Ye, a partner at 5Y Capital, through a chance introduction. We talked about the then-trending AI and big data technologies, and also about my vision for the future of data processing technology — roughly two and a half hours in total. Right before parting, Yuan Ye suddenly said, "I really like your crazy idea. We'd like to invest in Zilliz." Then 5Y Capital led our Series A with lightning speed. Looking back, 5Y Capital's investors are themselves seen as crazy by others — that's why they support crazy ideas, and why they can accompany crazy founders all the way until they start to be believed.

Liu Kai

Partner, 5Y Capital

5Y Capital led Zilliz's Series A in 2018, and continued to support this round. What's the investment thesis?

Liu Kai: When we first invested in Charles two years ago, what moved us most was the team's strong vision for the future evolution of computing architecture. At that time, Nvidia's stock was still deeply undervalued, GPUs and heterogeneous computing's long-term value weren't recognized by the industry, and AI's mainstream focus remained on algorithms and frameworks. But Charles's strong technical vision and persistence deeply impressed us.

At 5Y Capital, we've also been thinking about how AI and heterogeneous computing as innovation variables will reshape the industry. We strongly believe in heterogeneous computing as a paradigm-shifting force with far-reaching impact, and we're confident that such companies will emerge from China's industrial soil.

Over two years of working with Charles's team, we've witnessed the company's rapid growth — from a technically leading company to one with global technical influence. We've also watched Charles's own rapid evolution from a technical geek to CEO. Every conversation with him reveals his intense curiosity and learning ability.

We're delighted the company has completed this new financing round, and that 5Y continues to stand shoulder-to-shoulder with the company as a significant shareholder. We hope the company maintains its original aspiration and continues striving toward the goal of building a company with world-class technical influence.

What has most impressed you about the Zilliz team since you started working together?

Liu Kai: Charles is an exceptionally open and humble leader. After 5Y's initial investment in Zilliz, we had a conversation where we suggested the company consider shifting to an open-source model. To my surprise, Charles carefully took our advice to heart, quickly researched it, and executed on it. In just over a year, the company became the most well-known open-source startup in the global heterogeneous computing space. The team's execution is extraordinarily formidable — deeply impressive.

Charles Xie, Zilliz's founder and CEO, stated that the proceeds from this round will primarily be used for global talent recruitment, building out the open-source software ecosystem, developing cloud-based products and services, and further promoting the global adoption and application of AI-powered unstructured data processing and analytics technologies.

"Eighty percent of human data exists in unstructured form, and it hasn't been effectively utilized," Charles explained. "For decades, we've been able to efficiently process structured data like numbers and text using computers. But for widely prevalent unstructured data such as images, video, behavioral profiles, 3D compound structures, and gene sequences, effective processing methods have been lacking. Zilliz focuses on AI-powered unstructured data processing and analytics technologies. Leveraging the powerful computing capabilities of heterogeneous computing and efficient AI algorithms, we use high-dimensional data and models (feature vectors, embeddings) to process data, providing analysis, understanding, indexing, and search capabilities for unstructured data — helping industries actively embrace data intelligence and elevate human society's digitalization level."

Charles stated: "AI-powered unstructured data processing and analytics is the fulcrum for accelerating global AI and big data transformation, and we will continue to increase our investment in this field. Through Milvus, our open-source vector similarity search engine, we've already significantly reduced the cost for developers to build unstructured data analytics and processing applications. Next, we'll build cloud-based unstructured data services on public clouds, providing global developers with secure, reliable, easy-to-use, and low-cost cloud services."

Zilliz is an open-source software company focused on developing AI-powered unstructured data processing and analytics systems. Founded in 2017, the company's team is distributed across China and the US. Zilliz's vector similarity search engine Milvus was open-sourced on GitHub in October 2019. It currently has over 4,400 stars, more than 120 contributors, and has been adopted by over 400 organizations and institutions globally. It has wide applications in image processing, computer vision, natural language processing, speech recognition, recommendation systems, search engines, drug discovery, and gene analysis. Milvus was accepted as an incubation project by the LF AI & Data Foundation in April 2020, where it currently ranks first in contribution level.

5Y Capital (formerly Morningside Capital) currently manages approximately $3 billion across USD and RMB dual-currency funds. We believe: if the you whom others see as crazy, starts to be believed, the world becomes a better place.

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