VC-backed Chinese e-cigarette company targets US IPO

Source Code is the largest external shareholder with a 10.7% interest. According to the prospectus, it participated in the angel, Series A and extended Series A rounds worth a combined $42.7 million in 2018. Sequoia, which has 4.9%, came into the Series A extension alongside other unspecified investors.

Relx went on to raise Series B and C rounds of $22.1 million and $75 million, respectively, in 2019, plus a Series C extension of $107.3 million. These were followed last year by a three-tranche Series D comprising $202.5 million in new equity and the transfer and reclassification of some existing shares. The participants were not disclosed, but IDG Capital, Hike Capital and Cambium Grove Capital are known to be among Relx’s backers.

The company was founded in 2017 by Kate Wang, David Jiang and Yilong Wen, who previously worked together at Uber China and then Didi Chuxing, following its acquisition of Uber China. Wang, who has served as CEO and chairperson since inception, formerly led Uber China as well as Didi’s premium ride-hailing service. The founders have also worked for several multinationals in China.

Relx claims to be the country’s leading e-vapor company, with a 62.6% market share by retail sales value in the first nine months of 2020. It has launched five series of closed-system rechargeable e-vapor products with various value-added features. The company has its own physiochemistry and bioscience labs that research e-liquids and aerosols and assess the health risks associated with e-cigarettes.

As of September, the company worked with 110 distributors operating 5,000 Relx-branded stores and over 100,000 other outlets across 250 cities. During the first nine months of 2020, it shipped 5.6 million devices and 124.6 million replacement cartridges.

China Insights Consultancy estimates that the country’s e-vapor market will grow from $1.5 billion in 2019 to $11.3 billion by 2023. China is the largest potential market for e-vapor products globally, with 286.7 million adult users of traditional tobacco products in 2019. Closed-system e-cigarettes – which come ready to vape and require no liquid refills – will account for 97.1% of sales by 2023, up from 74.1% in 2019. Global e-vapor product sales are set to hit $82 billion in 2023, up from $35.2 billion in 2019.

Relx generated RMB1.55 billion ($228.2 million) in revenue for 2019, compared to RMB132.6 million in its product launch year. Over the same period, a net loss of RMB300,000 became a net profit of RMB47.7 million. For the first nine months of 2020, revenue and net profit were RMB2.2 billion and RMB108.6 million.

The size and pricing of the IPO have yet to be decided.

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• Topics
• Greater China
• IPO
• Consumer
• China
• Source Code Capital
• IDG capital
• Sequoia Capital
• Hike Capital
• Cambium Grove Capital