Alibaba leads $335m round for China's Souche
Alibaba Group has led a $335 million Series E round for Chinese online second-hand car trading platform operator Souche. It is the company’s third funding round in the past 12 months.
Additional investors included Warburg Pincus, Primavera Capital, and CMB International. It establishes Alibaba as the company’s largest institutional shareholder. The capital will be used to build a new big data-enabled retail and finance platform for the local car industry as well as to consolidate existing offline retail channels.
In a statement, Souche described the plan as a “revolutionary” move in the fields of auto distribution and consumption. The company will support this effort by leveraging the data and risk control capacity of Alibaba’s financial unit Ant Financial, which is an existing partner.
"The value strategic investors such as Alibaba brings to the company is far beyond funding support,” said Junhong Yao, founder and CEO of Souch. “More importantly, Souche will benefit from the investors' cultural recognition, strategic collaboration, complementary resources as well as the shared vision for promoting the development of the industry."
Founded in 2012, Souche operates a software-as-a-service system that is said to connect more than 110,000 car dealerships in China, or at least 60% of the market. It claims to have booked transactions worth RMB60 billion during 2016 and RMB91.5 billion in the first nine months of 2017. Souche receives a commission on each transaction.
Product development work with Ant Financial to date has focused on auto licensing software known as Tangeche, which is said to offer a new model of car purchasing by connecting manufacturing, sales, logistics, insurance and after-sale services. Tangeche has been deployed at 1,700 dealers in about 200 cities and at 20 major auto manufacturers.
Souche received a $180 million Series D round led by Warburg Pincus in April. This followed less than five months after a $100 million Series C led by Ant Financial and car rental services provider Ucar. Previous investors in the company also include Sequoia Capital, Ferry Venture Capital, VMS Investment Group, ClearVue Partners, Zuoyu Capital, Haitong International, CreditEase and Morningside Venture Capital also participated.
Used car trading platforms in China have proven an attractive investment category across a number of competing operational models.
Deal flow this year includes the close of a $600 million Series B round for consumer-to-consumer player Guazi, a $100 million Series C investment in consumer-to-retailer player Mychebao and a $500 million round for business-to-business player Uxin. Earlier this week, a similar company called Tiantian Paiche closed a $180 million Series C round.
In 2015, online retailer JD.com and its investor Tencent Holdings committed $1.5 billion to Bitauto, a US-listed online car marketing services company.
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