Hui Fenqi Raises Another 230 Million Yuan as Rental Installment Market Enters Era of Giants

China's housing prices remain stubbornly high. Behind this reality, 200 to 300 million people are expected to enter the rental market over the next five years, pushing the rental market's value past 2 trillion RMB, with target users concentrated in first-tier cities and their surrounding areas.

This massive rental market is catalyzing the rise of a new industry — rent installment, a tightly integrated fusion of internet, real estate, and financial services. As a new branch of consumer finance, rent installment isn't just scenario-specific consumer lending; renters represent high-quality, growth-oriented customers capable of generating substantial long-tail effects.

Starting in 2014, sharp-eyed entrepreneurs began entering the rent installment space. Major players like 58.com and JD Finance followed suit, and as the market heated up, so did competition and capital inflows.

Multiple companies announced funding rounds last year. Barely into 2017, industry leader Hui Fenqi announced a new 230 million RMB funding round led by A-share listed company Lianluo Interactive. With capital engines now roaring, the era of rent installment giants is approaching.

A Startup Story Born from "Rental Headaches"

Li Lei was among the earliest entrepreneurs to enter China's rent installment market. Before founding Hui Fenqi, he worked as a product manager at Tencent and Baidu. His entrepreneurial motivation stemmed from a painful apartment-hunting and moving experience.

▲ Hui Fenqi founder Li Lei

In September 2014, Li Lei, then a "Beijing drifter" (beipiao), prepared to move and discovered the rental market was thoroughly disrupted by shady agencies. Common scams included agencies collecting rent from tenants without passing it to landlords, then disappearing — leaving tenants evicted by the actual property owners.

Li Lei wondered: could an internet platform solve these problems? Over the following three months of market research, he connected extensively with agency staff and landlords.

"I posed as a renter chatting with agents, working my way up the chain. While talking to landlords, I noticed many apartment complex residents had dogs, so I'd strike up conversations under the guise of petting their dogs — a way to deeply understand landlord psychology."

Li Lei maintains this habit of in-depth conversations with agents and landlords to this day, because he believes renting is an industry that must stay "grounded." Without deep frontline understanding, product excellence is impossible.

Li Lei initially envisioned an internet-based property search platform similar to Ai Wu Ji Wu. But market research and analysis revealed rent installment as a far more urgently needed blue ocean.

Under prevailing market rules, rentals required at least one month's deposit plus three months' rent upfront. As the rental industry grew, annual rent increases made this payment structure an increasingly heavy burden. Rent installment, as the name suggests, allows tenants to pay monthly rather than fork over three to twelve months of rent at once — a modern financial service that simply didn't exist before.

After a period of experimentation, Hui Fenqi officially launched at the end of March 2015.

Through Hui Fenqi, users dramatically reduce rental pressure and improve their quality of life. They pay only "one deposit, one month" upfront; Hui Fenqi directly covers the remaining rent to the landlord. Each subsequent month, users pay rent back to Hui Fenqi along with a service fee. Tenants lighten their rental burden, while Hui Fenqi earns solid returns.

This fresh business model quickly attracted capital attention.

Immediately after Hui Fenqi's launch, Source Code Capital — which had long tracked "Internet Plus" startups — moved first, joining INK Group to provide 35 million RMB in Series A funding.

The rapid arrival of investment allowed Li Lei to expand his team and capture market share quickly. Hui Fenqi handled just a dozen or so transactions in April that year; by July, it was facilitating thousands monthly, establishing its market position.

Rent Installment Completes Its First "Industry Shakeout"

Li Lei wasn't the only prospector in this blue ocean.

From March 2015, rent installment companies proliferated, with peak numbers exceeding 40. But the massive market explosion never materialized. The uneventful market drained many entrepreneurs' enthusiasm.

In Li Lei's view, the lukewarm market stemmed mainly from rent installment's immaturity, plus its entanglement of landlord, tenant, and broker interests — numerous pain points that weren't easily resolved.

Rent installment companies needed not only to refine risk control models through operations, building models suited to rental installment's particularities, but also to accumulate substantial user bases to sustain their business models.

Hui Fenqi's risk control logic differs from traditional finance. Traditional finance focuses on a "person's" repayment capacity and willingness; Hui Fenqi's logic centers on the tenant's ability to sublease after terminating their lease, reducing landlords' vacancy risk and sparing them the hassle of finding new renters.

Compared to other internet finance lending products, Hui Fenqi's risk characteristics allow clear identification of fund purposes before disbursement, with access to tenants' actual residential addresses — higher security. Hui Fenqi also connects to credit reporting systems, using big data screening to eliminate subpar applicants during review.

With risk models gradually clarifying, where to find target users?

Through extensive contact with renters and landlords, Li Lei discovered that post-90s generations, compared to post-80s, more readily accepted and spread rent installment as something fresh. "Their attitude was, 'Dude, use this now.'" Hui Fenqi thus locked in users as young people within three years of graduation.

Target set, how to acquire new users? Li Lei pursued two parallel paths.

First, find the source of transactions — partner with agencies for rapid customer acquisition. Given rentals' long-tail nature, giants like Lianjia and 5i5j.com would have lengthy negotiation cycles, so Hui Fenqi decided to start with mid- and long-tail agencies. How to leverage them? Li Lei established aggressive subsidy policies: agents received payments for each successfully referred case.

The other path went direct to consumers. Hui Fenqi's team entered communities, subway stations, buses, office buildings, breakfast shops — constantly refining granular acquisition models. "For example, if an area has many young women, we'd give out Baymax plushies; if a complex has many sports facilities, we'd give drinks; if residents skew older, we'd give phone cards." Hui Fenqi has now developed a relatively mature, grounded set of customer acquisition methods.

Yet rent installment's total user coverage remained limited. Difficult user cultivation and high market costs tested every player in the space. Not everyone possessed Li Lei's perseverance and patience for long-term frontline grinding.

By the second half of 2016, some companies quietly exited the rent installment market — Yuezubao, Zhulebei, Leshoufu, and others. With this first "industry shakeout" complete, capital began concentrating among the "surviving best."

Capital Accelerates the Formation of Rent Installment Giants

Li Lei and Hui Fenqi embarked early on their investor search, meeting many interested parties, but with limited overall success. Though 2016 was widely called a "capital winter," money in the market hadn't decreased — what became harder to find was capital that truly understood business models and could provide value-added services for future growth.

As competitors announced large funding rounds, how could Hui Fenqi unlock capital circle support? Li Lei thought of his early investor — Source Code Capital.

In venture capital circles, Source Code Capital boasts an enviable LP roster, especially its core internet network of dozens of listed company CEOs. Leveraging this industry network, Source Code Capital built an entrepreneurial service ecosystem — "Ma Hui," a classmates-association-style alliance for startup exchange and mutual assistance.

▲ "Ma Hui" group photo

After joining Ma Hui, entrepreneurs enjoy regular interactions, "classmate exchanges" with LPs and portfolio companies — low-density, high-efficiency communication generating mutual value and shared leverage. They also gain access to resource allocation, mobilization, and integration within the Ma Hui ecosystem.

Source Code Capital consistently favored the grounded Li Lei and Hui Fenqi, providing not just funding but also bringing in Ma Hui member INK Group for the first round. INK Group then leveraged its own mortgage lending business to provide substantial industry resources for early-stage Hui Fenqi, with both sides achieving strong win-win collaboration.

When Li Lei and Hui Fenqi sought to reach the next level, Source Code Capital brought in another Ma Hui member — Lianluo Interactive chairman He Zhitao.

Following personal introduction and groundwork by Source Code Capital founding partner Yi Cao, Li Lei and He Zhitao hit it off immediately. Hui Fenqi and Lianluo Interactive finalized all investment matters in just two months.

For Li Lei, the 230 million RMB investment helps Hui Fenqi continue patiently cultivating the market while rapidly scaling to become a true industry giant. For Lianluo Interactive, which had long sought to expand into real estate, it found a uniquely valuable entry point. Both parties can now build an entirely new vertical ecosystem around the upstream and downstream of rental housing.

Rent installment remains a vast "virgin territory" awaiting full cultivation, with enormous room for imagination. As pioneers like Hui Fenqi solidify their foundations, and more industrial capital like Lianluo Interactive enters, the market expands — and a new batch of "unicorn" companies is charging straight toward us.