Lashou ups ante for group-buying niche

Milestone Capital led the round, which also included Richemont's affiliates Reinet Fund SCA FIS, Remgro Limited and previous investors GSR Ventures, Norwest Venture Partners and Tenaya Capital. The website has seen two previous funding rounds that collectively shore up $166 million. In December, Lashou raised $50 million from Tenaya, Norwest, GSR and Rebate Network.

According to Lashou's founder and CEO Bo Wu, the capital will be used to expand its call centers, logistics offerings and its Lashou Experience Shops. "The group-purchasing market of China has huge potential," Wu said. "Because Lashou.com has a very healthy business model, we are attracting the attention of many well-known investment institutions both in China and abroad."

Lashou's push for capital and differentiation come as group-buying players try to out-compete for netizens' disposable dollars. An investment of this magnitude for Lashou may be enough to stave off further competition, at least for a little while.

According to the China e-Business Research Center, total Mainland internet sales reached RMB4.5 trillion ($684 billion) in 2010. This represents a 22% increase from 2009, coupled with an increase in shoppers from 2009 to 2010 (from 121 million to 158 million). How much of this can actually be funneled to group-buying sites is so far unknown, but Groupon sets the bar. Last year, Groupon turned down a $6 billion acquisition offer by Google, and is reportedly looking to IPO later this year, targeting as much as $25 billion.

In March, Groupon launched in China under the name GaoPeng.com. GaoPeng was founded by a consortium of high-profile backers, consisting of Groupon and private equity funds the Tencent Collaboration Fund and Yunfeng Capital. Both funds are newly established, and one is backed by digital giant Tencent and the other by Jack Ma, a co-founder of Alibaba.com.

GaoPeng's launch came after Groupon itself offered to buy a 49% stake in Lashou, valuing the company at $500 million in November 2010. Lashou turned down the offer, hoping of building a higher valuation for its. The current deal values the company at $1.1 billion.

"As the Series A lead investor of Lashou.com, we are excited by the company's continued market traction and success," said Richard Lim, Managing Director of GSR Ventures. "The management has managed to emerge as the clear leader in a crowded market by focusing on providing value to both consumers and merchants."

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• Topics
• Venture
• Greater China
• Technology
• Milestone Capital Partners
• GSR Ventures
• Norwest Venture Partners