Zhangshang Fucai Closes Tens of Millions in Pre-A Round, Existing Investor Source Code Capital Continues to Increase Stake

源码资本·March 30, 2018·0·0

Great value, quality service, guaranteed authenticity.

Following its record-breaking RMB 20 million angel round in 2017, Zhangshang Fucai, a B2B platform focused on building materials, has recently secured tens of millions of RMB in Pre-A funding from Source Code Capital and Buhuo Ventures. The fact that Source Code Capital and Buhuo Ventures doubled down on Zhangshang Fucai just six months later sends a strong signal of their confidence in the building materials B2B sector and their high regard for the company.

Founded in 2014, Source Code Capital currently manages $750 million and RMB 3 billion, focusing on innovative sectors including "Internet +," "AI +," and "Global +." Its portfolio of industrial internet investments includes Yijiupi, Yimi Dida, Baibu, Zhangshangkuaixiao, and Ruigu.

Yuemei Lv, Investment Vice President at Source Code Capital, commented: "We see value in the efficiency gains Zhangshang Fucai delivers — both in customer acquisition and in supply chain management and fulfillment. We're also optimistic about the consumption upgrade among construction foremen, and the platform's ability to consistently deliver reliable, standardized genuine products with responsive service."

Li Zhujie, Partner at Buhuo Ventures, noted: "The multi-layer trading structure in auxiliary materials stems from information asymmetry and the difficulty of managing warehousing and logistics. The industry as a whole offers substantial market space and gross margins. Zhangshang Fucai's standout performance in recent months gives us greater confidence in its future. We hope the team accelerates its progress to bring better service to the home renovation market."

Since launching in Beijing in mid-September 2017, Zhangshang Fucai has focused on one-stop delivery of renovation auxiliary materials. After nearly six months of rapid growth, it has now served over 2,000 foreman customers, completed nearly 10,000 transactions, and recently broke through 150 orders per day.

According to CEO Chengkun Xue, the building auxiliary materials market is worth RMB 300 billion annually. Transactions currently take place across urban building materials markets in a traditional distribution model: materials pass from manufacturers to first-tier wholesalers, then second-tier wholesalers, then retail vendors in building materials markets, before finally reaching foremen.

Zhangshang Fucai operates on a B2B self-operated model. The platform sources directly from manufacturers or first-tier suppliers, purchasing over 2,000 commonly used building auxiliary materials into its warehouses. After users place orders through Zhangshang Fucai's WeChat official account, app, website, or 400 hotline, the company's professional customer service team follows up to confirm product details, pricing, and specifications. Zhangshang Fucai then ships from its own warehouse, handles logistics, and delivers materials to the designated construction site, with payment on delivery.

Xue identifies three distinct advantages of Zhangshang Fucai's model over traditional building materials markets:

1. Better value: Order volume effects and the operational efficiency gains from an "Internet + auxiliary materials" approach help reduce fulfillment costs over time, with savings passed on to users.

2. Superior service: By replacing wholesalers and retail vendors, the platform provides more stable, standardized, and convenient order-taking, delivery, and handling services — outperforming traditional building materials markets in both timeliness and quality.

3. Genuine product guarantee: Direct factory connections mean all products come with original manufacturer quality test reports. With fewer intermediaries, quality control becomes more manageable.

Xue stated: "The Zhangshang Fucai team has strong DNA in both internet and serial entrepreneurship. While solidifying our procurement, sales, and logistics, we keep asking ourselves: How can we genuinely improve operational efficiency and differentiate ourselves from industry competitors?

Improving operational efficiency means we must outperform our competitors — building materials markets and other auxiliary materials e-commerce platforms — with lower costs and higher efficiency. Only by achieving low costs and high efficiency can we pass more savings to our customers, allowing foremen to purchase more cost-effective auxiliary materials.

To this end, Zhangshang Fucai has established a dedicated intelligent operations department to explore big data and AI-based methods for improving operational efficiency and industry competitiveness," Xue offered two examples:

An AI-powered order consolidation system has, over the past two months, significantly reduced Zhangshang Fucai's delivery costs to 62% of the industry average, while actually improving delivery speed and service quality for customers.
A big data-driven SKU selection optimization strategy allows Zhangshang Fucai to satisfy over 85% of daily order demand with less than 5% of the SKU variety found in building materials markets, achieving inventory turnover efficiency more than four times the industry average.

A Tsinghua University Computer Science graduate, Xue jokingly calls himself "China's highest-educated brick mover." He notes that few in this industry have approached efficiency gains from a technology-enablement perspective; competition has largely remained stuck on price wars or relationship-based client maintenance, which does little to actually improve industry efficiency. He firmly believes the "Internet + auxiliary materials" direction still holds substantial untapped potential.

More Recent Funding News

Zhangshangkuaixiao Raises RMB 205 Million Series B, Existing Investor Source Code Capital Continues to Double Down