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Tencent and Sequoia Weave the way in Textiles
Tencent and Sequoia Weave the way in Textiles
White Cotton Threads Spools. Image Credit: 🇸🇮 Janko Ferlič/Unsplash
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Chinese B2B fabric-selling company Smart Fabric (智布互联) has closed USD 100 million Series C round of funding, led by Tencent and Sequoia, followed by CBC Capital.

The company’s existing investors Vision+ Capital, Matrix Partners, IDG Capital and 10 Fund followed in the transaction. It plans to use the new cash to expand markets, recruit talents and improve technology infrastructure. Partner of 10 Fund Li Dong claimed that the company is aiming to establish a PaaS (Platform-as-a-service) to replicate the model into more manufacturing industries.

Founded in 2014, the company has closed three rounds of funding so far. The SaaS-enabled marketplace player is focusing on more than the transaction itself, but more importantly, on how to manage resources effectively for its upstream suppliers. Based on its proprietary ERP (enterprise resource planning) SaaS, the company connects upstream yarn factories, dyeing mills, fabric manufacturers, with downstream garment factories and OEMs. The company services 70% of top 200 OEM clothing manufacturers, such as H&M, Calvin Klein and Tommy Hilfiger.

System integration capability matters here. Smart Fabric provides more than information matching but also enables factories to decide the production volume of yarns, fabrics, and textiles, and even cooperate with each other to fulfill one order. The company leverages IoT technology and order-planning system to drive the decision-making procedures.

Large garment manufactures spend around tens of billions of yuan in raw material procurement. Smart Fabric slices a small part out of the amount but the company eyes higher penetration in the future. On the other hand, the enterprise still needs to explore, design, implement the order planning and coordination for complex fabrics production, to improve product mix.

90% of sales comes from fabric-selling so far. The company CEO and founder Fu Junchao (傅俊超) claimed that while the company keeps a high growth sales record, it maintains relative-high gross margins compared with the average industry level. The company has achieved tens of millions of net profits last year. It decreases 5% to 10% of procurement costs for garment markers on average and contracts order delivery time by 30% (around 2-3 weeks).

For factories in cooperation with the company, their weaving and knitting machinery operates more than 300 days annually from 200 days before. Occupancy of dying machines has improved to 95% from 60%.

Headquartered in Shenzhen, the company has more than 10 branches around the world, in LA, London, Seoul and Singapore. More than half of total 400 employees work for hardware and software designing, most of which are veterans in the industry (Fountain Set) and also technology firms (i.e. IBM, Huawei, and Kingdee). It is, thus, not a sales-driven company, with less than 10 members in the sales team.  

The adult garment market in China has a value of RMB 1.45 trillion in 2017, which was a 5.2% increase from the year before, according to HKDTC Research. China is also the home to largest textile production industry in the world. The textile industry in China, however, has long been labor-intensive.

Textile trading, a procurement operation for garment production, is essentially driven by the ability of delivery. Small- and medium-sized textile factories have difficulty in adopting technology and effective operation methods, which in result causes high manufacturing costs, unstable delivery. The rapid changes in the end-customers calls for customization and slow-down apparel sales urge the industry to transform - asking for a faster reaction and order delivery speed.

Enterprise Information

EqualOcean is a leading industry tech media and an investment research company.
CATEGORIES: AI, Research
Last Funding Type
Series C
Number of Employees
200
Number of Funding Rounds
6
Total Funding Amount
26.79M

Enterprise Information

EqualOcean
EqualOcean is a leading industry tech media and an investment research company.
CATEGORIES: AI, Research
Last Funding Type
Series C
Number of Employees
200
Number of Funding Rounds
6
Total Funding Amount
26.79M

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EqualOcean is a leading industrial tech media and investment research company that focuses on technological and industrial innovation in China.

We aim to assist Chinese entrepreneurial enterprises to break into the global market and provide overseas investors, VCs, and enterprises with a deeper understanding of China's business environment and to seize opportunities in China.

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