Tencent-backed startup Little Red Book to raise $200m at $2.5b valuation

Women's fashion. Photo by Unsplash

Chinese e-commerce startup Xiaohongshu, or “Little Red Book,” is in early talks to raise at least $200 million at a valuation or more than $2.5 billion to quicken its expansion in a heated e-commerce space, according to people familiar with the matter.

The women-focused shopping site co-founded in 2013 by Charlwin Mao is seeking to more than double its valuation since its last round of funding more than two years ago, the people said, requesting not to be named because the matter is private. Its plans are preliminary and the fundraising targets may change, they added.

Xiaohongshu — which calls itself RED and stresses its name bears no relation to the seminal book of Mao Zedong’s quotations — works by letting its mostly younger female users post pictures of their favorite products. Backed by Tencent Holdings Ltd., it competes not only against titans like Alibaba Group Holding Ltd. but also up-and-comers that rely on social media such as Pinduoduo, which is said to have raised more than $1 billion at a $15 billion valuation. Meilishuo, another women-focused fashion retailer, is said to be seeking a U.S. IPO at a valuation of about $4 billion.

Xiaohongshu declined to comment. But co-founder Miranda Qu told Bloomberg Television in April her company was looking into another round of fundraising this year, and said it was open to an initial public offering within two to three years.

The startup, which already counts Genesis Capital, ZhenFund and GGV Capital among its backers, originally focused on connecting buyers with cosmetics sellers overseas. Yet with China imposing more stringent import policies, it shifted to domestic merchandise and built a social media platform similar to Instagram, on which celebrity influencers help recommend products.

Qu said the company wasn’t affected by trade tensions between China and the U.S., as it focuses on cosmetics and fashion items not yet on a proposed tariffs list. And revenue contribution from overseas products had dropped since the company pivoted to its own home market. Xiaohongshu now plans to open its first physical store in Shanghai in June and will soon have more than 100 million users, she said. Monthly active users have grown 40 percent since the end of last year, she added.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.