‘Actually, we’re okay for now’: LeEco raises US$600m in abrupt U-turn from cash shortage
The Chinese internet company unveils new chief executive for Asia-Pacific, along with strategy pivot to ‘focus on rapid cash flow growth’
Chinese internet conglomerate LeEco, often referred to as the “Netflix of China”, has raised US$600 million in funds just two weeks after chief executive Jia Yueting said that the company was facing an impending cash crunch.
The company also said in an internal memo to employees on Tuesday that it would hold off on further expansion in Asia-Pacific, and has appointed a new chief executive to head its APAC operations as LeEco shifts its priorities to focus on its existing markets and improving cash flow.
On Tuesday, LeEco said that it had raised US$600 million in funds from investors including Jia’s classmates from the Cheung Kong Graduate School of Business in Beijing and Chinese corporations such as Chengxin Green Integration and China Heilan Group. The funding comes just a week after Jia had said that LeEco had weak fundraising abilities and was working on strengthening its capital structure.
The new funds will go primarily to the company’s car business, the LeEco See Plan, as well as LeEco Global Holdings, the company said. Jia had previously said that the company’s cash flow problems was largely due to expensive ventures such as the car division, which has already received over 10 billion yuan from company funds in early development.
In Tuesday’s internal memo to LeEco employees, the company also said that it would “temporarily hold horizontal expansion in the Asia-Pacific market”, as LeEco shifts priorities to “focus on rapid cash flow growth” and increasing the quantity and quality of its user base globally.