China’s social media and e-commerce startup Xiaohongshu, or “Little Red Book,” is in early talks to raise funds at a valuation of about $6 billion, according to people familiar with the matter.
The online platform, backed by Tencent Holdings Ltd. and Alibaba Group Holding Ltd., aims to raise about $400 million to $500 million, said the people. The company is working with an adviser on the financing plan and has sounded out potential investors, said the people, who asked not to be identified as the discussions are private. Its valuation reached about $5 billion last year, one person said.
There hasn’t been a final decision on the fundraising size as deliberations are still at an early stage, the people said. A representative for Xiaohongshu didn’t respond to requests for comment.
Xiaohongshu resumed seeking new funds following an earlier attempt that was suspended after its offering was taken down from app stores last year. The app has since returned and is available for downloads, with more than 300 million users as of July, according to its website.
Xiaohongshu — which calls itself RED and stresses its name bears no relation to the seminal book of Mao Zedong’s quotations — was founded in 2013 as an online community that recommends overseas e-commerce sites for users in China. It later entered e-commerce and then evolved into a social media platform where users share their daily life moments through videos and pictures on topics including skincare, food and travel.
The startup closed a $300 million series D financing at a valuation more than $3 billion in 2018. The round was led by Alibaba and other investors including GSR Ventures and Tencent Investment.