Tencent and Alibaba-backed ‘Little Red Book’ seeks US$6 billion valuation

China’s social media and e-commerce start-up Xiaohongshu, or “Little Red Book”, is in early talks to raise funds at a valuation of about US$6 billion, according to people familiar with the matter.

The online platform, backed by Tencent Holdings and Alibaba Group Holding, aims to raise about US$400 million to US$500 million, the people said. Alibaba is the parent company of the South China Morning Post.

Xiaohongshu is working with an adviser on the financing plan and has sounded out potential investors, said the people, who asked not to be identified as the discussions are private. The start-up’s valuation reached about US$5 billion last year, one person said.

There has not been a final decision on the fundraising size as deliberations are still at an early stage, the people said. A representative for Xiaohongshu did not respond to requests for comment.

Xiaohongshu resumed seeking new funds following an earlier attempt that was suspended after its offering was taken down from app stores last year. Its app has since returned and is available for downloads, with more than 300 million users as of July, according to its website.