VC-backed Mogujie to acquire rival Meilishuo

The share swap between Mogujie and Meilishuo will on a 2:1 basis, an investor in Mogujie confirmed to AVCJ. The new company will be headed by Mogujie's founder and CEO Qi Chen, although the two companies will operate under their own brands. Tencent Holdings, which previously invested in Meilishuo, will re-up in the new company upon completion of the merger.

Founded in 2011, Hangzhou-based Mogujie is described as a Chinese version of Pinterest. It targets female consumers, selling clothing and accessories via its web platform and mobile app.

Mogujie received an undisclosed seed round from Bertelsmann Asia Investments and Ameba Capital in 2011 and then raised two rounds from Qiming Venture Partners and IDG Capital Partners the following year. Last year, it received a $200 million round led by Hopu Investments and Trusbridge Partners, at a reported valuation of $1 billion. Banyan Capital, Qiming and IDG also participated.

In November, the company raised a further $200 million Series D round led by Ping An Ventures, a VC arm under Ping An Insurance, which also featured domestic consumer-focused GP Tiantu Capital as an investor. The round valued Mogujie at around $2 billion.

Beijing-based Meilishuo, founded in 2009, has been Mogujie's biggest rival in the social shopping space. It raised an undisclosed Series A round from BlueRun Ventures in 2010 and then two rounds from Sequoia Capital China and GGV Capital in 2011. One year later, the firm received a Series D round from Tencent and GGV. The start-up had been trying to raise fresh capital for months last year without success, according to The Wall Street Journal.

"Following the merger with Meilishuo, we can avoid a lot of ineffective competition, saving a lot of marketing costs," Mogujie's Chen said in an internal e-mail. "We can leverage our strength on different customer base, providing differentiated products and services to them. We should have a long-term mission but not a short-term competition."

The merger will create a dominant player in mobile commerce space that specializes in women's fashion and social networking. Meilishuo has about 100 million registered users while Mogujie has more than 130 million. The combined business reported RMB20 billion ($3 billion) in revenue last year.

Given smart phone sales growth has been slowing and smart phone penetration in most Chinese cities is relatively high, more tech companies are expected to consolidate in order to increase the number of users and revenue.

In October, rival Chinese online-to-offline (O2O) services platforms Dianping and Meituan - both of which have received substantial private equity and strategic funding - agreed to merge. This followed the unification of ride-hailing app operators Didi Dache and Kuaidi Dache.

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• Topics
• Greater China
• Consumer
• Venture
• Technology
• China
• TMT
• Venture
• Consumer
• Qiming Venture Partners
• Banyan Capital
• GGV Capital
• IDG Capital Partners
• Hopu Investment Management
• Trustbridge
• Sequoia Capital
• Tencent