With Alibaba’s shares in a slump and ride-hailing app Didi losing half of its market value since its IPO, Japanese investment giant SoftBank is looking for ways to offset some of its China-linked losses. If its latest investment is anything to go by, it hasn’t given up on Chinese companies.
In late August children’s wear brand PatPat announced that it had received $160 million in investment from SoftBank’s Vision Fund 2. The capital is coming in a Series D2 round for the children’s wear maker and e-commerce firm, which raised $510 million from a group of Chinese investors just a month earlier.
Founded in 2014 by Wang Can, Gao Can and Hu Meng in Guangzhou, the company drew inspiration from Gao’s struggle to find clothing he liked for his newborn child. Together with Wang, a former colleague in Oracle’s engineering team, he started PatPat as a direct-to-consumer shopping app that offers children’s wear and accessories.
The three entrepreneurs decided to focus on creating a brand that appealed to middle-and-lower-income families in the US and Europe, rather than in China itself. With their engineering backgrounds they put together an algorithm that analysed market data to predict trends and styles.
“While the three founders of PatPat are men with science and engineering backgrounds who had no knowledge about fashion and apparel, they solved the biggest problem facing the apparel industry with their proprietary algorithm so that they could accurately predict customer needs,” gushed Xu Xin of Capital Today, which participated in the Series C fundraising.
PatPat’s success comes hot on the heels of SheIn, another hugely successful cross-border e-commerce fashion firm. The company, which WiC was early to profile among English language media (see issue 542), has attracted younger female shoppers from the US and Europe with its hyper-fast production process, bargain-basement pricing and easy to use purchasing app.
PatPat follows some of the same rulebook. Prices are kept to at least 30% below most of the comparable goods sold on Amazon: a baby onesie costs less than $2 on PatPat’s app, for example, while a set of feeding utensils retails for just $1.20. And the marketing team makes sure to feature images of Caucasian children, deliberately downplaying the brand’s Chinese origin.
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