Chinese e-commerce startup Xiaohongshu, or “Little Red Book,” is in early talks to raise at least USD200 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.
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.
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.
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