Superangel swoops in to support Vancl
Chinese smart phone maker Xiaomi is a smash hit, valued at $10 billion in its most recent round of funding. Lei Jun, the company’s founder, is riding high. In contrast, Chen Nian (pictured), who set up online clothing retailer Vancl six years ago, is reportedly in trouble, his company shedding staff and struggling to pay suppliers.
Lei and Chen are old friends, having founded multimedia retailer Joyo.com together in the 1990s and then sold the business to Amazon in 2000.
Lei provided seed funding for Vancl in 2007 and last week he bet on the company once again, committing $20 million to a $100 million round. Existing investors Temasek Holdings, Ceyuan Ventures, IDG Capital, Qiming Venture Partners, SAIF Partners, Hotung International and CITIC Private Equity also participated.
Chen intends to adopt the Xiaomi model in trying to turnaround Vancl, with clear market positioning, high quality products at reasonable prices, and killer online marketing strategies.
The two entrepreneurs have already created a buzz for Vancl's latest offering on microblogging site Sina Weibo. Lei wrote that the high-quality shirt, which boasts at least 300 threads per inch, is his favorite item of clothing.
"Vancl invested hugely in growing its brands and products over the last few years, and it has undoubtedly become a leading player in the online clothing category. We are still convinced that it has a high business value," says J.P. Gan, managing partner at Qiming, which led Vancl's Series C round in 2008 and has also invested in Xiaomi. "Now Lei is on the board he can bring his experience to help grow the business."
Vancl, which started out selling low-price menswear, was once a VC darling. According to AVCJ Research, it has received arund $449 million across five rounds of funding. Tiger Global Management, Trust Bridge Partners and Kerry Properties are also among the investors. An attempt at an IPO was aborted in 2012 due to market volatility.
Stiff competition appears to have shaken Vancl, with Alibaba Group's Taobao and TMall platforms, JD.com, Vipshop and LightInThebox aggressively buying market share. The company has struggled to position itself, at one point seeking to expand into a variety of categories, including consumer electronics.
Last year, Vancl shifted its focus back to clothing and cooperated with third-party brands, following the acquisition of rival Beijing Crucco Technology. It also restructured into three core businesses - its own brand V+, special discounted sales and third-party brands.
However, critics are skeptical whether this model is sustainable as it far from the original goal of establishing a proprietary online brand.
"Vancl will return to selling its own branded clothes by targeting young and fashionable customer groups," says Gan.
He envisions the company following a similar online development path to Japan's Uniqlo - and once it gets back on track and back on scale, an IPO will again be in the offing.
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