58 Home, or 58 Daojia Inc., the on-demand service subsidiary of China’s Craglist, 58.com, has announced US$300 million in series A funding from Alibaba Group, global investment firm KKR and Chinese insurance magnet Ping An Group at a valuation of more than US$1 billion. Upon the completion of this funding, 58.com will maintain majority ownership of 58 Home.
58 Home will continue to enhance the platform with further investments in marketing, research and development, and other operating initiatives, according to an official statement from the company.
Founded in September 2014, 58 Home is a multi-category local services platform that provides information on and access to offline services such as cleaning, moving, babysitting, beauty care, and many other categories in approximately 30 cities in China. With its location-based order processing system, 58 Home’s platform directly connects customers to the nearest independent service providers.
With the diverse business lines in O2O, 58 home has a stiff line up of startup competitors, such as, housekeeping platforms eJiajie, Ayibang, manicure service Helijia, car washing platform Chediandian. In an attempt to better tap these O2O verticals, the parent company has made a total of $1.5 billion USD investments in related startups to create synergy. The firm expressed that it will continue to invest in new startups and business ventures in China’s rapidly expanding home services market.
It is interesting to note that this funding is yet another case of market match-ups between Alibaba-backed and Tencent-backed platform giants, following the merger of Didi-Kuaidi and Meituan-Dianping. Tencent has purchased a 19.9% stake in 58.com for $736 million USD in mid-2014. The internet giant then increased its stake in 58.com to 25%.
Despite having Tencent as a previous backer, 58 Home’s reason for partnering with Alibaba probably lies in the current business landscapes of the two internet giants. Tencent already has stakes in similar O2O services like Dianping and Ele.me. Moreover, the ecosystem formed around WeChat is a premium platform for O2O startups to promote their services, providing Tencent access to rich resources in this aspect.
Alibaba, on the other hand, which is poised to make inroads into the red-hot O2O sector, still has a lot of catching-up to do in this field. Its local lifestyle platform Koubei is relatively new and is in urgent need of new verticals. 58 Home, as one of the few comprehensive on-demand services platforms, seems to be a good choice.
Mr. Michael Jinbo Yao, Chairman and CEO of 58.com, commented that “the 300 million and growing population of digitally literate middle class consumers in China has created a huge but still nearly untapped market for online-to-offline home services. There is a strong need for experienced, trustworthy and effective home service professionals in China, and 58 Home is in a unique position to lead this local services revolution.”
Image credit: 58.com