Vision Knight bets big on property site

"We believe that people who born in 1985 or after will make almost all their consumption decision online. This group of people is willing to spend more in these three segments," says David Wei, co-founder of Vision Knight.

Fangdd is the first deal from the private equity firm's second China fund, which closed at the hard cap of $550 million in April. Lightspeed China Partners and existing investor CDH Venture also participated in the round.

The three-year-old real estate site serves as a launch pad for leading property developers such as China Vanke, China Poly Group and Greenland Holding. As the government has imposed tighter controls on the housing market as part of efforts to stem price growth, developers and agencies have founder it harder to sell their stock.

Fangdd helps them penetrate lower-tier cities in China, offering group buying discounts among other promotions. It receives a commission on each transaction. In the first six months of this year, the company has processed more than RMB50 billion ($8 billion) worth of real-estate transactions, compared to RMB30 billion in 2013 as a whole. Fangdd's target for 2014 is now RMB150 billion.

Wei says the business is already profitable and the founder is in no hurry to raise fresh capital. CDH invested RMB50 million ($8 million) in July of last year. Prior to that, Fangdd got RMB10 million from Decent Venture Capital.

Ahead of its investment, Vision Knight provided free consulting services to the company, helping it hire senior executives and refine its strategy to incorporate mobile internet. "We came as the late-comer to meet the management but we managed to convince them that we can help them operationally. The founder then changed his decision and let us become the largest investor in this round," Wei says.

Fangdd offers properties in 30 Chinese cities, covering more than 500 projects. The new capital will be used to expand its network and develop a new business line selling secondary market property.

Wei adds that part of the company's appeal was its pure e-commerce model. Fangdd is essentially a real estate marketplace, which means it can achieve scale by offering properties from multiple developers. In this sense, Wei compares the business to Alibaba, where he formerly worked as CEO of the B2B unit.

"It's very similar to Alibaba when it was difficult for Chinese manufacturers to export overseas. Everyone started using Alibaba and the platform was booming," Wei says. "The exporters needed to find new channels to sell their products."

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• Topics
• Expansion
• Consumer
• Technology
• Venture
• Greater China
• China
• TMT
• Consumer
• Vision Knight Capital
• Lightspeed Venture Partners
• Venture
• CDH Investments Management