Tencent and Alibaba-backed Startup Looking for $6 Billion Valuation

Xiaohongshu, also known as “Little Red Book” is looking for potential investors to raise funding of its target of $6 billion capital valuation. The China-based social media and e-commerce startup was able to create more funding from holding companies including Alibaba.com (Alibaba) and Tencent Holding Ltd. (Tencent) investment over the last two years.

Little Red Book’s Journey

Xiaohongshu, or RED which was supposedly derived its name from the Chinese leader, Mao Zedong’s book founded in 2013. The startup originally started as an online community that provided information to overseas e-commerce sites selling cosmetics and connected buyers in China. The company shifted to domestic merchandise and entered e-commerce after China restricted import policies. Later, the startup evolved into a social media platform similar to Instagram, where users share their daily life moments through videos and pictures related to fields including skincare, food, and travel.

The company’s Co-founder, Miranda Qu had recently revealed that the company would soon have many billions of users in the coming years. The leader of the ecological cooperation of Xiaohongshu Social media, Minako revealed in the 2020 New List Conference held on January 6, in Beijing that the overall active users of the company’s social media increased by 4.4 times and male active users increased by 14.5 times in 2018. As per the company’s statement, the number of single-day exposures of the Xiaohongshu social media has exceeded 4.5 billion as of December 2019.

Recent Funding from Investors

The 9 years old Shanghai-based company had received around $300 million for its series D funding from several financial investors including Alibaba, GSR Ventures Ltd., and Tencent Investment in 2018. With this funding, the company’s valuation for 2018 was worth more than $3 billion. As reported by Bloomberg, an insider of Xiaohongshu claimed that the startup’s valuation had reached $5 billion last year.

Little Red started re-launching its app after shutting down it for a long time last year. Since its return, the company witnessed that more than 300 million users have downloaded the apps till July 2019 and started seeking new funding for the re-capitalization. According to the South China Morning Post, the e-commerce service company aims to raise funding about $400 to $500 million to lead the company’s valuation of $6 billion. However, the fundraising size of the Xiaohongshu has not been yet finally decided.

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