Chinese auto parts supplier raises $25m in Series A
Mancando, an automotive parts supplier based in Guangdong province, has raised RMB170 million ($25 million) in Series A funding led by Eastern Bell Venture Capital, with participation from Legend Capital.
Founded in 2015, the company primarily serves over 95,000 auto repair factories in 13 Chinese cities and provinces including Beijing, Zhejiang, Shandong and Chongqing, through a network of 1,100 outlets. It has 50,000 square meters of manufacturing and storage capacity, producing 85% of the parts it sells in house. There are more than 20,000 stock keeping units (SKUs).
In addition to its physical stores, Mancando operates a software-as-a-service platform through which customers can monitor and review their orders.
The company claims to have achieved a 10% month-on-month growth rate in sales revenue as of year-end 2018, while compound annual growth has surpassed 300% over the past three years. The new capital will be used to improve quality controls, expand geographic coverage into lower-tier cities, and develop smart retail platforms to gain better insights into customer demand, said Jibin Song, Mancando's chairman.
Long Xue, a partner at Legend Capital, said the company has successfully reduced the number of layers in the supply chain - and thereby lowered costs - by establishing direct relationships between manufacturers and end-customers. “This pattern is also highly replicable and that’s why we are bullish on the company,” said Xue.
There were over 1,000 auto parts chain operators in China as of 2012, according to Sinoauto Federation. The China Association of Automobile Manufacturers expects the segment to be worth RMB4 trillion by 2023.
Other private equity and venture capital investment in the space has similar motivations - consolidating a large and fragmented supply chain - but the focus has been more on online operators. For example, in 2017, Warburg Pincus led a $100 million Series C round for Baturu Technology, an auto parts trading platform. Eastern Bell Venture Capital also took part as an existing investor.
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