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. Xiaohongshu – which calls itself RED and stresses its name bears no relation to the seminal book of Mao Zedong’s quotations – was founded in 2013 as an online community that recommends overseas e-commerce sites for users in China. It later entered e-commerce and then evolved into a social media platform, where users share their daily life moments through videos and pictures on topics including skincare, food and travel. The Shanghai-based company closed a US$300 million series D financing at a valuation more than US$3 billion in 2018. The round was led by Alibaba and other investors, including GSR Ventures and Tencent Investment. Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.