Another New Retail Unicorn Emerges: FreeS Fund Angel-Round Project Huasheng Haoche Closes $210M Series B | FreeS Funding News

Investor Note

Feng Li, Founding Partner, FreeS Fund

Email: feng@freesvc.com

First, congratulations to Huasheng Haoche on completing another major funding round.

From zero to unicorn, Huasheng Haoche started by providing auto finance services and evolved into a closed-loop retail model with over 400 self-operated stores and supply chain control. This transformation owed much to the founders' determination and perseverance, as well as their exceptional capabilities in management, learning, and seizing new opportunities.

More than three years ago, when we first discussed this entrepreneurial direction, we talked about the historical origins and distribution patterns of China's 4S dealerships, their single-brand characteristics, how China became the world's largest new car consumer market after 2008, and how new car consumption in lower-tier cities kept growing and eventually surpassed that of first- and second-tier cities. We also discussed the huge demand and growth potential in these lower-tier cities — and the lack of quality sales systems and brand experiences behind it.

Huasheng Haoche capitalized on this market shift and incremental growth, seized a massive market opportunity, and built a complete closed-loop chain. Of course, there were countless difficulties along the way. From its founding through this round, Huasheng Haoche didn't raise particularly much funding. It relied entirely on the founders' business acumen and judgment to map out its path and move forward. They also went through tough negotiations and partnerships with OEMs, building inventory and warehousing systems, and much more. Congratulations again to Huasheng Haoche on reaching this new milestone.

Huasheng Haoche, a leading domestic new retail auto platform, announced the completion of a $210 million Series B funding round led by Crescent Point, with Goldman Sachs participating. Existing shareholders JD Finance and FreeS Fund also continued their support in this round. Following this financing, Huasheng Haoche joins the ranks of well-capitalized new retail unicorns, while also signaling that the first tier of auto new retail companies — with Huasheng Haoche as their representative — has been largely locked in.

According to Huasheng Haoche founder Ma Xiaojun, this round of funding will focus on three priorities: first, further expanding its offline self-operated store network to solidify its direct-channel moat; second, optimizing operational efficiency to improve transaction and service efficiency; third, exploring and incubating new businesses to complete a derivative layout across the full industrial chain, enhancing the one-stop service experience for users.

Founded in June 2015, Huasheng Haoche previously received angel investment from FreeS Fund and strategic Series A investment from JD Finance. From the outset, it entered the market with new car direct leasing, built its own direct-operated channels, targeted channel下沉 (channel penetration into lower-tier markets), and reconstructed its auto retail network moat. Its aim was to create an auto new retail ecosystem integrating new cars, used cars, and after-sales services, optimizing auto transaction flow in third-, fourth-, and fifth-tier cities while improving efficiency and ensuring customer experience.

Public data shows that as of October 2018, Huasheng Haoche currently operates 400 chain self-operated stores offline, covering more than 350 cities, making it the largest direct-operated auto retail chain brand in China. Additionally, it has established deep online partnerships with Tmall Auto and JD Finance, enabling users to place orders online and pick up vehicles offline — reconstructing the auto new retail scenario.

Huasheng Haoche co-founder Chen Pengyun noted that based on its well-developed channel下沉 infrastructure, solid user base, and the comprehensive user service system built on its financial leasing business, the company has attracted strategic partnerships with multiple financial institutions including Industrial and Commercial Bank of China Limited, Bank of China, PICC, China Continent Insurance, China Minsheng Banking Corp., WeBank, Everbright Financial Leasing, Minsheng Financial Leasing, and Wangjinshe. These partnerships continue to push both parties' business development to new heights.

Specifically, Huasheng Haoche has collaborated with multiple banks to establish rent installment businesses, pioneering a new financial format for direct auto leasing and enabling resource sharing and complementary strengths in projects, capital, and customers. Furthermore, Huasheng Haoche has partnered with multiple insurance companies to create auto finance insurance products. Through performance bonds, it conducts business cooperation with capital providers, facilitating diversified tripartite cooperation and achieving long-term stable collaboration in the auto finance sector.

In the first half of 2018, Huasheng Haoche's business volume grew fourfold compared to the same period last year. By the end of 2018, its self-operated stores are expected to exceed 500. Additionally, Huasheng Haoche has begun piloting new business segments including self-operated after-sales services, comprehensively extending and optimizing the service experience throughout users' vehicle lifecycle, thereby integrating the full auto industrial chain and realizing one-stop service from new car transactions to the aftermarket.