Source Code Capital portfolio company Zhangshang Fucai announced the completion of a RMB 30 million Series A+ funding round, with existing investor Source Code Capital continuing to increase its stake.

源码资本·May 21, 2019·0·2

Zhangshang Fucai is a B2B online platform for construction finishing materials, gradually replacing the traditional offline distribution model represented by "building materials markets."

Zhangshang Fucai, a B2B platform for construction finishing materials, has raised RMB 30 million in its Series A+ round, led by YuanDu Venture Capital with follow-on investment from existing shareholder Source Code Capital.

Zhangshang Fucai is a B2B online platform for construction finishing materials. Upstream, it connects with brand suppliers to leverage channel advantages for better pricing, while consolidating highly fragmented quality factories and unlocking their excess capacity through empowerment. Downstream, it provides quality foremen and renovation companies with cost-effective, guaranteed one-stop online procurement services. In between, it uses internet and AI technologies to empower product selection, procurement, logistics, warehousing, and sales — building an intelligent, efficient, standardized service system for the finishing materials supply chain. Through this model, Zhangshang Fucai is gradually replacing the traditional offline distribution model represented by "building materials markets."

Xue Chengkun, Founder & CEO of Zhangshang Fucai

On the customer side: Zhangshang Fucai currently covers nearly 40% of quality foremen in the Beijing area, accounting for 20% of Beijing's home renovation finishing materials market.

Since its launch in September 2017, Zhangshang Fucai has focused on serving upper-tier "quality foremen" in the industry and building strong stickiness with them. We understand that in the overall foreman-procured finishing materials market, users fall into three main tiers:

Quality foremen — they have good reputations, many active job sites, and their orders come primarily from word-of-mouth (referrals from past clients and organic traffic). To ensure delivery quality, they have high demands for brand, quality, and authenticity guarantees when purchasing materials. At the same time, given their busy schedules, they value efficient, reliable ordering, delivery, and after-sales service. This group is Zhangshang Fucai's current core customer base.
Mid-tier foremen — some orders come from word-of-mouth, some from external channels. Their needs vary by order source, partially matching quality foreman demands and partially resembling those of lower-tier foremen.
Lower-tier foremen — orders mainly come from external channels (affiliations, online leads), mostly low-budget renovation projects. These projects have thin margins, forcing compromises on material quality, so they have lower requirements for brand, quality, and service.

On the supplier side: Zhangshang Fucai has been deeply cultivating upstream manufacturers, identifying promising quality players, and using technology and channel advantages to empower them — helping address weak brand recognition, customer acquisition difficulties, and inability to operate with precision, all of which ultimately lead to excess capacity.

Reportedly, "Beibi," an emerging player in the putty market, successfully opened retail sales channels through its partnership with Zhangshang Fucai, standing out among established putty manufacturers. Its substitution rate for similar legacy players rose from negligible to over 50%, with overall capacity utilization improving by roughly 30%. Going forward, the company will continue deepening its upstream presence, unlocking upstream resources through partnerships, OEM, and ODM arrangements to jointly advance the transformation and upgrading of the entire finishing materials industry.

On the operational side: Zhangshang Fucai emphasizes technology's role in empowering the finishing materials industry, continuously investing resources to provide digital innovation and transformation for procurement, logistics, and sales — aiming to build a highly intelligent, efficient, standardized operational service system that reduces costs and improves delivery quality and efficiency for both upstream and downstream partners. For example: in sales, machine learning is used to identify potential customer groups, improving sales efficiency by 3x compared to traditional industry practices; in delivery, intelligent dispatch algorithms reduce logistics costs by 25%; in procurement, comprehensive databases and demand forecasting guide purchasing and improve inventory turnover.

On the company's future development priorities, Zhangshang Fucai founder and CEO Xue Chengkun revealed: "Beyond foremen, we will partner with more small and medium-sized home renovation companies and have already developed new supply chain solutions for this segment; beyond residential renovation, we will leverage our accumulated supply chain advantages to serve small and medium-sized commercial renovation projects. With two consecutive funding rounds, Zhangshang Fucai has amassed relatively ample ammunition, secured a favorable position in the finishing materials e-commerce sector, and is now preparing to replicate its model."

On this investment, Wang Xuefeng, Managing Partner of YuanDu Venture Capital, stated: "The supply chain for construction finishing materials remains in a traditional state — many product categories, fragmented upstream manufacturers, and low overall industry efficiency. We have full confidence in Zhangshang Fucai's vision and execution, and believe they will bring a completely new look to this industry."

Source Code Capital invested in Zhangshang Fucai's angel round and Series A, and continues to increase its stake in this round. As a board member, Zhao Wanrong of Source Code Capital said: "After bringing efficiency improvements to finishing materials distribution, Zhangshang Fucai is gradually developing infrastructure-level value for the industry. We are optimistic that CEO Xue's team, after successfully piloting in select regions, will complete nationwide expansion through its efficiency advantages."