DCM and Sequoia Capital invested $20 million in Vipshop, a private sales company operating in China, the firms announced this morning.Vipshop works on the familiar Gilt/Vente-Privee model, but for more mainstream brands. China doesn’t have a huge market for high-end designer fashion yet. Instead, Vipshop offers brands like Nike and Adidas to China’s massive new middle class. Ultimately, Vipshop hopes to use its own brand to begin introducing Chinese consumers to higher end labels.
More broadly, VCs like DCM and Sequoia are extremely bullish on Chinese ecommerce. The growth of the Chinese middle class has happened extremely quickly, and brick-and-mortar outlets haven’t been able to keep up. Outside the centres of the countries biggest cities, there generally aren’t physical stores that can offer the products Chinese want.
The $20 million round is actually a series A, but Vipshop is already fairly large, with around 700 employees. The money will go toward scaling up the companies infrastructure and making a big push in marketing and user acquisition.