The Strategist

Former Chinese unicorn startup may be sold for $1,300

10/22/2020 - 03:32

The Chinese service of selling used cars Renrenche, which was valued at $1.4 billion two years ago, may now be sold for only $1290. The startup, whose investors include Goldman Sachs, Tencent and Didi, suffered from the pandemic and failed to cope with the competition.

Dave Steadman
Dave Steadman
Renrenche was founded in 2014. The platform made it possible to sell cars with mileage and took a fee less than that of offline dealers. The hopeful startup received $300 million in investment from Goldman Sachs, while Chinese IT giant Tencent, transport company Didi Chuxing, venture firms Shunwei Capital and Redpoint China were also investors, according to Bloomberg.

The agency reports that the startup was unable to compete with major players in the Chinese used car market, such as Uxin Ltd. and The company's operations were also hindered by the novel coronavirus pandemic, according to Bloomberg. One of the startup's creditors, Argyle Street Management Ltd., has filed a lawsuit in the Cayman Islands court, where Renrenche is registered, demanding the liquidation of the company that has failed to pay its debts of about $15 million, the agency writes with reference to the document.

The idea of selling the assets of Renrenche Inc. was supported by Tencent and Didi at last week's shareholder meeting, Bloomberg said. However, some investors spoke out against the transaction. Shareholders continue to explore options for retaining Renrenche's business.

Renrenche representatives refused to comment on the situation, and noted that the letter requesting comments indicated inaccurate information but did not say what was not true: plans for the deal with Inc., support for the idea from Tencent and Didi or information about the loan from Inc. Inc. is a platform for placing advertisements, which is called the Chinese equivalent of the American service Craigslist. Tencent is also listed among the company's investors, according to Bloomberg.