Alibaba-backed e-commerce startup Xiaohongshu raising $500m: Report

A clerk counts Chinese yuan and U.S. dollar banknotes at a branch of Bank of China in Taiyuan

Xiahongshu, a Chinese e-commerce and social media startup backed by internet giant Alibaba, is reportedly raising as much as $500 million from investors including SoftBank’s Vision Fund, Sequoia Capital China, and Hillhouse Capital.

According to a report by The Information, the latest funding for Xiaohongshu, which last raised $300 million in an Alibaba-led Series D round in June last year, is likely to value the startup at $6 billion.

Xiaohongshu, which literally means Little Red Book, helps users discover and buy luxury goods from overseas, share shopping tips, and exchange fashion ideas. It was founded in 2013 by Charlwin Mao and Miranda Qu.

The startup originally focused on connecting buyers with cosmetics sellers overseas. With China imposing more stringent import policies, it shifted focus to domestic merchandise and built a social media platform similar to Instagram, where celebrity influencers recommend products to their followers.

In addition to Alibaba, Xiaohongshu’s Series D round in June 2018 was backed by Tencent, GSR Ventures, GGV Capital, ZhenFund, Genesis Capital, Hong Kong-based businessman Adrian Cheng, and Tiantu Capital.

In 2016, Xiaohongshu had raised a $100-million series C round led by Tencent Holdings that was joined by Genesis Capital and Tiantu Capital. The company claimed to have more than 100 million users and 30 million monthly active users as of May 2018.