Local news broke yesterday that 58.com, the China’s Craiglist closed its US$ 55 million Series D round of financing in H2 of last year led by Warburg Pincus with participation from Yao Jinbo, founder and CEO of 58.com. People familiar with the matter said that Warburg Pincus invested US$ 42 million into the company while Yao invested US$ 13 million into it. This sounds familiar, in the Beijing-based company’s US$ 60 million third round of financing in December 2010 led by Warburg Pincus, Yao also participated by investing US$ 5 million into his own company.
In response to the rumor, Yao said on Sina Weibo, the popular Chinese micro-blogging service that “Successfully raising money from existing investors as well as from its founder speaks to investors’ confidence in the startup, and disappoints those who’re looking to our failure. We’re confident in exploring and innovating the life service-related Internet on our own.” He also noted that the funding numbers weren’t right as to the latest round.
Also in last week, a self-claimed anonymous former 58 staff claimed that “58.com was about to fall apart with a yearly loss of US$ 70 million”. Yao rebuffed the saying claiming his company was on track to make profit.
Not come singly but in pairs, Ganji was rumored to downsize and even shut down, Yang Haoyong, founder of Ganji disclaimed the claim.
So what’s happening to these two Chinese Craiglist?
As of now, vast majority of Ganji and 58’s proceeds is commission from property agencies. Such revenue model requires a large pool of offline sales team to grow or at least maintain the business, however, the business model itself isn’t very much sustainable since the operational cost is so much higher than the revenue. Basically, they are all bleeding VC money to compete with each other. So who’ll make it to the last to some extent depends on whose investors are more ‘generous’, a prominent entrepreneur turned VC commented on these two last year by telling me so.
Ganji was said to boast more than 500 staff with 100 in sales team as of 2010 while 58 had more than 1000 in that year. Meanwhile, went live in 1999, Craiglist with its 30-some staff was estimated to generate more than US$ 115 million in revenue in 2011.