Xiaohongshu, translated into “Red” or “Little Red Book”, a shopping tip app gaining large popularity among Chinese millennials, just closed its $300 million Series D funding round led by Internet giant Alibaba Holding.
Other backers of the investment include GSR Ventures, Tencent, GGV Capital, ZhenFund, Genesis Capital together with individual investors including K11’s Adrian Cheng. The company now stands a valuation at $3 billion after the investment, according to people familiar with the matter.
Founded as a social e-commerce platform in 2013 by Charwlin Mao, a Stanford-trained young Chinese who used to work for consulting firm Bain & Company, the five-year-old startup is reported to hit 100 million users by the end of this May. The largest chunk of users feature millennials born after 1990 and 1995.
The company, which started off as a small online community allowing users to share cross-border shopping tips, later became an online review and shopping platform instead. Now, users can not only record and share their lives by marking their favourite products and services through pictures, video and blogs, but also have them delivered straight to their doorsteps in just a few clicks. Similar to Amazon magic, the Xiaohongshu platform is well trained to accommodate user’s preferences through its algorithms backed by deep learning and Artificial Intelligence.
The user generated content based community sharing sees over billions of product reviews published about every aspect of life: from skincare, cosmetics, food to travelling, from video, reading to fitness… With a claimed monthly active users of 30 million last month, the company has skyrocketed to one of China’s biggest lifestyle sharing platforms.
The capital will be deployed to expand the e-commerce unicorn’s talent reach and enhance its R&D capability, in particular leveling up infrastructure architecture based on its algorithms. Heavily adopting the AI technology, the company looks to distribute content to users in a more accurate and smarter way, paving path for scaling up the business and welcome more user growth.
You need to get your hands dirty, as retail is always one click away. We don’t ask ourselves if we’re a social or a commerce company – we ask ‘What does the customer want?’
said Carwlin Mao, co-founder of Xiaohongshu, in an interview with American magazine Wired earlier.
The high-flying Shanghai-based company will celebrate its 6 anniversary this month. On its anniversary sale on 6 June last year, Xiaohongshu recorded a sales binge of 100 million yuan ($15,6 million) within just 2 hours after it commenced promotion sales.
“From the first day Xiaohongshu was founded, we have been striving to transform the way our generation live, empower and accompany them in the growth. This is where we hold true belief in and there has never been a day we changed thought on that” said Mao, in a letter he sent to the company staff after the raising deal was confirmed this week. The company is also considering an IPO within the next 2-3 years, according to Miranda Qu, another co-founder of Xiaohongshu.
The investment in Xiaohongshu also marks Alibaba’s aggressive global reach by funding e-commerce juggernauts around Asia. Just two months ago, Alibaba doubled down its funding in Lazada, its main e-commerce marketplace in South East Asia to $4 billion. Last month, the Chinese tech and e-commerce giant announced its full acquisition of Daraz , the leading Pakistani online shopping outlet.