The investment and insurance consulting company has completed its Series B round of funding led by the Chinese tech behemoth.
Financial solutions provider Xiaobang Guihua (小帮规划) received CNY 200 million (USD 28.40) in fresh funding from investors including Tencent (0700:HK, TCEHY:OTCPK, TCTZF:OTCPK), which led this financing round, Sequoia Capital China, RGA (Reinsurance Group of America, RGA:NYSE) and BlueRun Investment (蓝驰创投) on August 17.
This is the third known funding event carried out by the Beijing-based tech firm. It raised an undisclosed amount of angel investment from BlueRun in June 2017. One year later, Xiaobang obtained several millions of dollars in its Series A round of funding led by Sequoia Capital China and RGA in November 2018.
The company provides comprehensive financial services in the fields of wealth management and insurance, targeting Chinese “new middle class” users. It runs an investment fund with current Assets Under Management (AUM) of CNY 300 million (USD 42.60 million). Besides, Xiaobang organizes one-on-one wealth management and insurance consultations. According to the firm’s official website, over 100,000 consulting sessions have taken place as of July 2019.
The platform mostly attracts clients through online investment lessons for non-professionals. Since it was founded in May 2017, over 200,000 users have purchased at least one such course.
As for insurance, the firm’s other core business, Xiaobang disrupts the traditional industry model by cutting off agents that often not just annoying but may even blackmail their clients. There is a huge room for growth in this sector: research organization Swiss Re Institute projects the local insurance market to quadruple by 2032, reaching USD 2.36 trillion.
Although they have been rapidly growing lately, China’s financial markets are still underdeveloped, compared to the world’s leading economies. For one, the 'Buffett indicator' (stock market capitalization to gross domestic product) of the country has been hovering between 40 and 70 since the 2008 global financial crisis outbreak. The low equity market participation rate problem could be fixed by the spread of financial education.