China social e-commerce player Red raises $300m
Alibaba Group has led a $300 million Series D round of funding for Red, a social e-commerce site that enables Chinese consumers to buy products from overseas.
The round gives the company – also known as Xiao Hong Shu, which means little red book – a post-money valuation of more than $3 billion, according to Tiantu Capital, one of the investors, citing an internal letter. Other participants included GSR Ventures, Tencent Holdings, GGV Capital, Genesis Capital, ZhenFund, and the K11 Art Foundation.
Red was founded in 2013 by Fang Yu and Wenchao Mao with a view to targeting post-1990s consumers. They built the site around a social networking concept, whereby users post photos and opinions of products they like, and these goods are then made available for purchase by the wider community. The content covers fashion, cosmetics, health and wellness, food, travel, and entertainment.
The company claims to be the world’s largest consumer word-of-mouth database and community e-commerce platform. As of May, it had more than 100 million users, of which nearly 30 million were monthly active users. These include some celebrities from the arts and sports worlds who use Red as a platform to offer snapshots of their daily lives
AVCJ Research’s records show that ZhenFund provided seed funding to Red in 2013 and then re-upped for a Series A round the following year, accompanied by GGV. In 2015, GGV, GSR and Tiantu all took part in the Series B, the size of which was not disclosed. Tencent then led a $100 million round, joined by several existing investors, in 2016.
The latest funding will go towards expanding the Red team, improving its technology platform, and attracting more users.
Other cross-border e-commerce platforms to receive VC funding include 55Haitao, while GGV is also an investor in Xiao Hong Chun (little red lip), which sells mass-market domestic and Korean beauty products to Chinese consumers. The company has a different target market to Red, but they are both driven by user-generated content. This kind of social e-commerce is drawing a lot of interest from VC investors.
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