China-based e-commerce platform operator Xiaohongshu is in talks to raise up to $500m in funding from investors including telecommunications conglomerate SoftBank’s Vision Fund, The Information reported on Friday.
Venture capital firm Sequoia Capital and hedge fund manager Hillhouse Capital are also involved in the discussions, according to people familiar with the matter. Xiaohongshu, which has denied the rumours, is thought to be targeting a valuation of $6bn.
Xiaohongshu initially ran an online platform that enabled Chinese consumers to review products they had ordered from overseas companies, before adding the ability to purchase such goods through the platform directly.
The company has since shifted its focus to selling primarily China-made products and has built a roster of influencers who promote goods on behalf of brands. It takes a cut both from sales and fees paid by brands to influencers, and also offers in-app advertising.
Alibaba led Xiaohongshu’s $300m series D round in June 2018, investing together with Tencent, GGV Capital, GSR Ventures, ZhenFund, Tiantu Capital, Genesis Capital and private investor Adrian Cheng at a $3bn valuation.
Tencent had already taken part in a $120m series C round for the company in 2016 alongside ZhenFund, GGV Capital and GSR Ventures. Xiaohongshu had secured $10m in a GGV-led series B round in 2015, after ZhenFund had backed a seven-figure series A the year before.
