Tencent, Sequoia Lead $100M Round In Smart Fabric To Disrupt Traditional Textile Sector


Tencent and Sequoia Capital China have jointly led a US$100 million series C round of financing in Smart Fabric, a start-up providing internet-enabled solutions for the textile industry in China.

CBC Capital, a China-based private equity firm specialized in TMT investments, participated in the new round. The company’s existing shareholders, Matrix Partners China, Chinese angle investment firm 10Fund, Alibaba co-founder Wu Yongming-led Vision+ Capital, and Boston-born investment company IDG Capital all poured money into the deal, said 10Fund in a statement released on its WeChat official account on Thursday.

"The [global] textile market, despite being valued at trillion dollars, [bears problems] like extreme dispersion of productivity, inefficient usage of resources, and a low degree of information technology popularity. Smart Fabric is helping clients effectively solve these industry pain points by introducing unified product standards and innovative production models," said Jeffrey Li Zhaohui, managing partner of Tencent Investment.

"Tencent will continue to make investments in the industrial internet spree and promote the intelligent upgrade of the manufacturing industry," said Li.

The remarks came as China remains as one of the most attractive destinations for clothing manufacturing due to comparably low labor costs, reduced commercial barriers and better information flow.

The country’s exports of textiles and apparel in 2018 has increased by 3.5% compared to 2017 to reach US$276.73 billion, according to China’s General Administration of Customs. The 2018 textile exports, in particular, reached an all-time high in 2018, surpassing the previous record of US$112.13 billion made in 2014. The growth was 3.3 percentage points greater than the 4.8% growth in 2017.

Smart Fabric, founded in 2014, specializes in providing internet-enabled solutions to simplify the complicated and redundant traditional manufacturing and trading procedures for the textile industry. The company has developed a software as a service (SaaS) platform, which leverages internet of things (IoT) and enterprise resource planning (ERP) solutions to connect suppliers with customers along the upstream and downstream industry chain.

The start-up, headquartered in Shenzhen, has more than 400 employees working across over 10 branch offices worldwide, covering countries like South Korea, Singapore, India, Sri Lanka, Britain and the United States. Most of its clients are overseas brands and clothing factories, such as Amazon, Swedish fast-fashion brand H&M, hypermarkets operator Walmart, and American luxury fashion house Calvin Klein.

Proceeds will be used for technological research and development, market expansion and talent recruitment. The company said that it will focus on "promoting the digitalization of the textile industry" to realize its vision of "making production simpler."

The series C round is the third investment closed by Smart Fabric. The start-up raised a series B round led by Matrix Partners China and Vision+ Capital in 2018. In 2017, the company completed a series A round led by 10Fund, IDG Captial, and K2VC, a venture capital arm of Chinese tech-focused boutique investment bank China Renaissance. Financial details of the previous two rounds remained undisclosed.

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