China car-trading platform Renrenche gets $300m

It follows capital-raising and M&A activity by two of the company’s three main competitors. In March, Chehaoduo, the parent of Guazi, raised a Series C round of $818 million – the largest ever seen in the segment – which was also led by Tencent. The following month, Souche, an online car trading platform backed by Alibaba Group, entered the second-hand space with the acquisition of Cheyipai.

Renrenche will use the proceeds for team building, upgrading its core technologies, and business innovation purposes, said Jian Li, the company’s founder and CEO, in a statement. In addition to brokering sales of used cars and some new cars, the company provides after-sales services and automotive financing. It wants to continue this development and establish itself as a data-driven integrated services provider.

Beijing-based Renrenche was founded in 2014. It seeks to replace used-car dealers with an online platform through which buyers and sellers can negotiate transactions directly. Cars go through third-party tests before they are posted on the site and buyers can return vehicles within 14 days and get one-year warranties on parts.

According to AVCJ Research, Ceyuan Ventures, Shunwei Capital Partners, and Redpoint Ventures jointly invested $25 million in Renrenche through two tranches in 2014. Tencent led an $85 million Series C round the following year. In 2016, investors including Prometheus Capital, China Minsheng Investment, Tencent, and Shunwei provided $150 million funding and then Didi contributed $200 million on its own in 2017.

Used car trading start-ups have typically pursued different parts of the value chain. The B2B model has been the most popular, but larger players have sought to expand their coverage into C2B, B2C and C2C. According to iResearch Consulting, internet-facilitated trading accounted for 12.8% of China’s used car transactions in 2017. The figure is expected to reach 13.4% this year with 14.6 million vehicles traded.

Souche’s most recent funding round came last November, with Alibaba leading a Series E commitment of $335 million. The remaining member of the big four, Uxin, secured $500 million in early 2017 led by TPG Growth, Jeneration Capital, and China Vision Capital. The likes of Mychebao and Tiantian Paiche have also received sizeable rounds.

CEC Capital served as advisor to Renrenche on the latest transaction.

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• Topics
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