China’s ‘Little Red Book’ Seeks $200M Investment

As it seeks to speed up its eCommerce expansion, China’s Xiaohongshu or “Little Red Book” is seeking new funding. According to people familiar with the matter, Xiaohongshu wants to raise at least $200 million at a valuation of over $2.5 billion, Business of Fashion reported.

While Xiaohongshu’s plans are still in the early stages, the company is seeking a valuation that is more than double what it sought in its last funding round two years ago. Xiaohongshu began as a way to match buyers with overseas cosmetic vendors, but the company has since evolved to offer domestic products. It also created an Instagram-like social media platform through which celebrities can recommend products.

Xiaohongshu, which is backed by Tencent Holdings Ltd., competes with large eCommerce retailers such as Alibaba Group Holding Ltd. and small startups such as Pinduoduo. Another fashion retailer focused on women, Meilishuo, is reportedly eyeing an U.S. initial public offering (IPO) and is seeking a valuation of approximately $4 billion. Xiaohongshu Co-Founder Miranda Qu told Bloomberg Television earlier in April that the company was open to the idea of an IPO in the range of two to three years.

The news comes after Meilishuo, which means “Beauty Talk” in Chinese, was hoping to raise $300 million from investors in 2015. Meilishuo’s online marketplace focuses on a young female audience and claimed to have more than 100 million women as registered users in 2015, primarily between the ages of 18–35.

The company was founded in 2009 by Xu Yirong. In November 2013, the company took its talents online and began growing its eCommerce. This included a trading platform that featured thousands of sellers in the fashion market — including shoes, handbags and accessories. In 2015, the company reportedly aimed to hit 15 billion yuan, which would have been approximately three times the amount of the company’s transaction volume in 2014.