Billion Dollar Unicorn: Aiwujiwu Rides High On Chinese Real Estate Sector

The residential real estate market is a high growth industry in China. According to an Ibisworld report, the industry grew 9% annually over the last five years to be worth $949 billion in 2015. The industry is also not immune to the advancement of Internet in the country. There is an increasing presence of an online-to-offline model where online portals such as SouFun and Leju not only help facilitate buying and selling of houses but also offer additional services geared towards the home owner. Then there are several smaller ones that are creating a ripple by creating pricing wars and following a niche market focus. One such player is Billion Dollar Unicorn Aiwujiwu.

Aiwujiwu’s Offerings

Shanghai-based Aiwujiwu was founded in 2014 to offer an online platform to people looking to buy and rent properties in Tier 1 cities in China. The company was founded by three former executives from Tudou.com, the Chinese online video platform. It operates the iwjw.com website that has built a professional network for property owners and potential buyers and tenants.

Tenants can search residential rentals and take virtual tours for most of the listings on iwjw.com. It also connects buyers with individual sellers for second-hand and new home sales on the market. Aiwujiwu maintains a quality check by ensuring that it conducts a background check on all projects listed on the website. The site allows for location-based searches and acts as a virtual agent by allowing consumers to book visits using their smartphone. The company operates in ten markets including the four big ones of Beijing, Shanghai, Shenzhen, and Guangzhou and has allowed people living in Mainland China to purchase or rent properties in these cities and as of November 2015 claimed to have sold nearly 6,000 apartments through its portal.

Aiwujiwu’s Financials

Aiwujiwu earns revenues by charging a 1% commission on home sales facilitated by its web site. It does not charge any fee toward rental services. Traditionally, agencies helping tenants charge a month’s rent as commission for their services. Aiwujiwu entered the market by focusing on the home lease business and initially cutting the commission from a month’s rent to half. It also poached brokers from brokerages by promising to at least double their base salary. Today, it offers no-fee rentals and has become one of the favorite of customers searching for rental properties.

Detailed financials for the company are now known. It is venture funded so far with $305 million in funding from investors including Banyan Capital, GGV Capital, Hillhouse Capital Group, Morningside Group, Shunwei Capital, and Temasek Holdings. Its last round of funding was held in November last year when it raised $150 million in a round led by Temasek Holdings at a valuation of $1.1 billion.

China’s online real estate market is a busy space. The market is dominated by NYSE listed companies like SouFun and Leju, which together accounted for nearly 85% of the online real estate sector market share in 2014. Both these companies are present in many more cities in China, have backing from names like the Carlyle Group and IDG Capital Partners, and also offer additional value-added services on their websites. For instance, SouFun’s website also acts as an e-commerce portal for vendors selling furniture, electronics, and other offerings. Similarly Leju offers its consumers the ability to purchase home furnishings through their website. Then there are others like 58.com, which is traditionally a classifieds website and which bought out another real estate site Anjuke.com earlier this year. According to market reports, Aiwujiwu’s biggest competitive edge lies in its cleaner website and the video tours for its properties. But given the rising competition, the company will have to do much more to stay relevant in the market.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

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