China's Xiaomi takes seat at tech's top table as fundraising values it at $45b
By Charles Clover - Beijing
China's top-selling smartphone maker Xiaomi has raised $1.1bn in a venture capital funding round valuing it at $45bn, in a big vote of confidence in the fast-growing company.
The valuation makes Xiaomi the world's most highly valued technology start-up, with the four-year-old business surpassing Uber's $40bn valuation after the ride-hailing app closed a $1.2bn fundraising round earlier this month. It also values the company at more than three times that of Hong Kong-listed Lenovo, which is running neck-and-neck with Xiaomi for leadership in the Chinese smartphone market.
Lei Jun, chief executive, said on his blog on Weibo, China's equivalent of Twitter, that the valuation was a "watershed" marking the beginning of a new stage in development. The valuation of the company, which has previously said it will not launch an initial public offering before 2018, is more than four times the $10bn value it was given after its last funding round in August 2013.
The new round has been in negotiation since November. Investors include All-Stars Investment, DST, GIC, Hopu Fund and Yunfeng Capital among others, according to a Facebook announcement by Lin Bin, Xiaomi's president.
Xiaomi has said it would use part of the investment to improve the entertainment options available to users of its phones. Last month it announced investment deals with online video providers Youku Tudou and Iqiyi, the two largest video-hosting sites in China, to make their content part of a Xiaomi-branded "ecosystem". The size of the investment in Youku Tudou was not published, while Iqiyi said Xiaomi had invested $300m, although the size of the stake was not disclosed.
Xiaomi has used a viral marketing campaign to sell its high-spec, low-cost smartphones and vault over more established manufacturers to become the market leader in China. By the end of September, the company had 15 per cent of the market, according to IDC, the technology research company.
This year Xiaomi will easily meet its goal of selling 60m phones, and has announced an ambition to sell 100m next year as it plans to export to up to 10 countries, including India, Malaysia and the Philippines.
Xiaomi was briefly the world's third-largest smartphone seller according to third quarter rankings by Strategy Analytics. However, Lenovo's acquisition of Motorola enabled it to regain that slot.
(c) The Financial Times Limited 2014
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