Alibaba eCommerce Rival Pinduoduo Secures $1B In Funding

Chinese upstart eCommerce site Pinduoduo (PDD) is raising more than $1 billion to help compete with Chinese giants like Alibaba and JD.com, according to reports.

The company, which went public six months ago and raised $1.6 billion, said it’s planning on selling 37 million of its shares to raise the new billion, or even $1.25 billion if some underwriters exercise full share buying options.

Several existing backers are going to sell portions of their stock as well, including Sequoia China, Lightspeed China and Banyan.

PDD was founded in September of 2015 by an ex-Google employee named Colin Huang. The company puts a twist on the traditional eCommerce playbook by offering a social aspect – shoppers who team up with friends or family can get discounts by making group orders.

The company says that as of Q3 of 2018, it had 385.5 million active buyers with an annual GMV of $250.2 billion. The social component is especially popular with women.

The company isn’t profitable yet, and probably won’t be for a while. Since PDD went public, it has been hit with net losses of $981.4 million in Q2 and $159.9 million in Q4. But there has been growth, too. Q4 revenue jumped 697 percent year-on-year to $491 million, although the operating losses increased as well.

Huang said he sees his company as a cross between Costco and Disney, and that it represents “value for money and entertainment combined.” He told shareholders it could take as long as a decade before the company reaches its full potential.

“It is not easy to take the leap of faith believing in such an unconventional company, which strives to meet both economic and social needs of users, and to make a positive impact to the society,” he wrote. “The pursuit and focus of our long-term vision and intrinsic value may not always translate into near-term profits. Instead, we hope to show you the true colors of our company, no matter how bumpy or rough the numbers may seem to be. We ask you to ride the journey with us for the long term. We believe it will be wonderful.”