Yes, you read it right. A fast e-commerce company in the tech industry may have heard as far back as two years ago that it is aiming to raise $1 billion at a $100 billion valuation.
Sheen’s fundraising plan was first reported by Bloomberg, and we’ve reached out to the company and its investors for comment. However, given its rise, it’s no surprise that investors are turning to Zara and Amazon to get their share of this new challenge, despite its skyrocketing valuation. The company told us last June that its valuation was at the “billion dollar level” as of its latest funding round in 2020.
Sheen is in talks with General Atlantic about this new round of funding, according to Bloomberg. The company’s existing investors include Tiger Global, IDG and Sequoia.
Last June, we suggested that Amazon focus on Sheen, and the numbers for 2021 speak for themselves. Last year, Sheen was the most downloaded shopping app in the US after Amazon, according to analytics firm Apptopia. But while Sheen was still a big hit, growing 68% year-over-year, Amazon posted a 2.4% drop. Globally, Amazon is the fourth most downloaded shopping app behind Singapore’s Shopee, India’s Sheen and Meesho.
Since its 14th birthday (and thus not quite a “startup”), Sheen has built a data-driven, vendor-backed formula for success. Designers closely follow social media influencers and runway shows to come up with new pieces that aren’t too different from other fast fashion brands. What sets Xin apart is its responsive supply chain, an extensive network of loyal and nimble boat builders around Guangzhou, the major metropolitan area in southern China where most of its operations are located. The company is testing a wide range of low-cost clothing in small batches, and if the data shows something is selling well, it quickly places additional orders with those suppliers to sell even more. This demand-driven approach allows Sheen to keep inventory costs low.
The tire also manages to cut costs by taking advantage of customs regulations. In 2016, the US raised the minimum price limit that allows individuals to purchase tax-free imported goods from $200 to $800. The law was meant to help small American businesses reduce import taxes, but ultimately benefited global businesses and the consumer. E-commerce platforms like Sheen because most of their supplies can enter the US duty-free and get through the border faster.
Tire is not without problems. The company is in the process of setting up a holding company in Singapore, with founder Sky Xu reportedly seeking Singaporean citizenship to avoid China’s growing control of offshore listings, according to Reuters.
Xu is certainly not the only Chinese CEO to switch nationalities to pursue a foreign IPO. Late last year, Beijing proposed a series of regulations on Chinese companies listed overseas, including one that would require a company whose main board of directors consisted primarily of Chinese citizens or executives residing in China and whose main business is located in China. China, must go through the application process with the China Securities Administration. Ironically, we have heard that some venture capital firms in China have begun offering citizenship applications as part of their post-investment services.
Finally, Sheen has been criticized for its lack of supply chain transparency and potential environmental damage. Good On You, a site that tracks brands’ sustainability practices, gives Sheen a “very poor” environmental rating.