Shein is in talks to raise up to $3bn in a move that would lead to the Chinese fast-fashion group accepting a vastly reduced valuation of $64bn, down more than a third from its peak following a downturn that has led investors to re-evaluate frothy tech start-up valuations.
The internet retailer is seeking to close a new fundraising round from existing investors including Abu Dhabi sovereign wealth fund Mubadala, venture capital group Sequoia China and private equity group General Atlantic, according to people with knowledge of the negotiations.
The three investors were also involved in Shein’s last fundraising round in April, which valued the group at just above $100bn. That made it the world’s third most-valuable private company at the time, behind TikTok parent ByteDance and Elon Musk’s SpaceX. Only two years ago, the company was valued at $15bn.
Since Shein secured its $100bn valuation there has been a sharp decline in venture capital funding and a largely closed market for initial public offerings, all resulting in a funding crunch for many private technology companies over the past year.
In response, leading start-ups have been aggressively cutting costs, creating a wave of job reductions across the tech sector, but a growing number of companies are running out of cash and so have been forced into so-called “down rounds” — accepting funding at a far lower valuation than a company had previously secured.
Those familiar with the Shein talks said all investors that participated in the April fundraising that valued the company at $100bn would reprice their investment at the new valuation. This would mean those involved in the previous fundraising would gain greater equity in the company, as Shein seeks to raise between $1.5bn-$3bn in the new round that is expected to close in the coming months.
Shein still expects to launch an IPO as early as this year in the US, its biggest market, according to a person familiar with the plans. It made $30bn in revenue last year, including $6bn in cash, which this person said would be used to diversify into payments.
It said: “As a private company, Shein does not comment on market speculation.” After this article was published, Shein said it “denied the accuracy of some of the information”, but would not specify further.
The fast-fashion group, founded in 2008 by Chinese former marketing professional Chris Xu, has also received investment in the past from groups including Tiger Global Management and IDG Capital.
Started in the eastern Chinese city of Nanjing, Shein has been one of the fastest-growing companies to emerge from China as a regulatory crackdown by Beijing stunted growth in its once flourishing internet ecosystem.
Shein, which now has headquarters in Singapore, has recorded explosive growth in the west, where its cheap and stylish clothing has been a big hit with young shoppers posting “hauls” on TikTok of their orders.
In a signal of changing sentiment towards its valuation, however, the Financial Times reported in October that trades on the private market — where prices are not disclosed publicly — valued the company at between $70bn-$85bn.
Mubadala and Sequoia China did not immediately respond to requests for comment. General Atlantic declined to comment.
Additional reporting by Eleanor Olcott in Hong Kong