26 April 2019
Chinese house-sharing platform has raised US$120 million in a funding round led by Jack Ma’s Yunfeng Capital. Photo: Reuters
Chinese house-sharing platform has raised US$120 million in a funding round led by Jack Ma’s Yunfeng Capital. Photo: Reuters

China Airbnb rival Xiaozhu gets Jack Ma backing

Chinese house-sharing platform has raised US$120 million from investors led by Jack Ma’s Yunfeng Capital, Reuters reports.

The latest fundraising has catapulted Xiaozhu to the status of a “unicorn startup”, the company said in a statement on Wednesday, using a term that refers to firms with a valuation of more than US$1 billion.

The funding round boosts Xiaozhu’s financial muscle to compete with local rival and US giant Airbnb, which was valued at US$30 billion in a funding round last year.

Kelvin Chen Chi, Xiaozhu’s co-founder and chief executive, said: “After five years of exploration, Xiaozhu pioneered house-sharing business model in China and created a new bilateral market from the ground up by building an entire service system that consists of cleaning and photography services.”

Commenting on competition with foreign home-sharing companies developing China business, Chen told the South China Morning Post: “We have no reason to worry about the development of a US company in China. It will be a positive force, pushing the development of the industry forward, but it will never be the market leader in China.”

In April Airbnb denied a Chinese media report that it was in talks with Xiaozhu to work together in markets such as Japan and South Korea.

But Chen told Reuters that his firm was open to working with other companies either in China or overseas.

“We don’t rule out the possibility of working with any overseas platforms, including Airbnb… We are open to cooperation in the China market, so it depends on how the other side views us,” he said.

The latest funding round is led by Yunfeng Capital which was founded in early 2010 and named after Alibaba founder and chairman Jack Ma Yun and Target Media founder Yu Feng. Existing investors including Joy Capital, Morningside Ventures, and Capital Today also participated. TH Capital is the exclusive financial advisor.

Founded in 2012, Xiaozhu is now the country’s second largest short-term rental firm platform with listings in over 400 locations globally. It raised US$65 million last November.

In China, the company has branches in 13 cities and properties in more than 130 cities. It aims to have more than 300,000 listings by the end of 2017.

The latest funding round came after its rival Tujia announced last month that its online platform had closed US$300 million in funding, backed by China’s leading online travel agency Ctrip.

“Xiaozhu will invest more resources to introduce technologies, further enhancing the security of house-sharing and building a sustainable platform ecosystem for the whole industry,” Chen said.

This article appeared in the Hong Kong Economic Journal on Nov. 2

Translation by Ben Ng with additional reporting

[Chinese version 中文版]

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