The additional USD 500 mn mostly comes from existing investors who increased their stakes in the firm.
The e-commerce app Xiaohongshu recently finished a new round of financing and raised USD 500 million. The round was led by Temasek Holdings and Tencent Holdings along with Alibaba Group, Genesis Capital, and Tiantu Capital. The last round of financing was led by Alibaba Group in 2018 and raised USD 300 million.
According to a spokesperson at Xiaohongshu, "The current round of financing mainly stems from existing shareholders who increased their stakes in the company. We thank our shareholders for their long-standing trust and continued support."
It was reported that Xiaohongshu planned to go public in United States and had already filed for IPO. However, the action was halted due to unknown reasons. Recently speculations indicated that the company is looking for an IPO in the Hong Kong market.
Xiaohongshu generates its revenue mainly from advertisement and e-commerce. In 2020, advertisement accounted for approximately 80% of Xiaohongshu's revenue and e-commerce accounted for 15%-20%. PE investors have commented that the company's income stream is not diversified enough. They also worry about China's regulatory crackdown that poses a potential threat to Xiaohongshu and its contents. Xiaohongshu was already ordered by Chinese regulators to rectify its "excessive collection of personal information" earlier this month.