Home-sharing platform Xiaozhu gets Jack Ma backing
XIAOZHU, China’s answer to house-sharing, has raised US$120 million in Series E funding, backed by Jack Ma’s Yunfeng Capital and existing investors such as Morningside Venture Capital and Capital Today.
The short-term rental platform has now achieved ‘unicorn’ status as it hits an estimated stock value of more than $1 billion. The latest funding has increased the total amount raised to $271 million, making it fair competition for China’s alternative house-sharing platform Tujia.com and global market leader Airbnb.
While other Asian countries, such as Singapore is trying to clamp down on short-term letting platforms, China is welcoming investment to promote easy solutions to finding accommodation. The funding is set to establish Beijing-based Xiaozhu as the front-runner for China’s growing demand for short-term accommodation.
The steady growth in China’s economy has led to an increase in the country’s middle-class population. Through this growth, many Chinese millennials are acquiring a small amount of disposable income, and seek to travel in alternative ways to traditional package holidays and hotel stays.
The company has branches in 13 cities across the country and properties in more than 130 domestic cities, with its sights set on having more than 300,000 listings by the end of 2017.
The Chinese firm is often compared to Airbnb, however, Xiaozhu is not concerned with being equated to similar companies. “What matters for us is how to provide our customers with better services than hotels,” Kelvin Chen Chi, chief executive of Xiaozhu, told 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.”
The fifth-round funding from Ma’s YF Capital Group has allowed Xiaozhu access to the smart technologies of Alibaba – which is also owned by Ma.
China does not yet have rigid regulations on home-sharing, and for now, at least, it has granted Xiaozhu, Tujia.com, and Airbnb space for development in the wider picture of the sharing economy.
Perhaps in the future the market leaders in home-sharing will collaborate. “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,” Chen Chi told Reuters.