GSR Ventures uses its RedNote stake to anchor a new $350M China fund

SR Ventures Management Co. is raising about $350m for a new China-focused venture fund. The pitch centers on its existing stake in Xiaohongshu, internationally known as RedNote. Investors may gain exposure to RedNote shares through the firm’s existing fund. The structure could also provide an exit route for backers of the current fund, which is more than a decade old and holds the RedNote position. RedNote is marked at roughly $50bn in the firm’s books, up from an implied $31bn valuation in a secondary transaction in early 2025. The $50bn valuation aligns with a late-2025 secondary share sale reported by Pandaily. RedNote is described as a Pinterest-Instagram hybrid, became widely used in the West during a TikTok ban, and reportedly became profitable in 2023.

"SR Ventures Management Co., one of the earliest backers of the Chinese social commerce app Xiaohongshu, is raising about $350m for a new China-focused venture fund and is using its existing stake in the app, known internationally as RedNote, as the central pitch, according to a Bloomberg report on Tuesday citing people familiar with the matter."

"Investors who back the new vehicle have been told they may gain exposure to RedNote shares through GSR's existing fund, the people told Bloomberg. The structure would also create a possible exit route for backers of the current GSR fund, which is more than a decade old and which currently holds the firm's RedNote position. The fund-raising plans are described as preliminary and may change. A GSR spokesperson declined to comment."

"RedNote is now marked in GSR's books at roughly $50bn, a figure that anchors the entire pitch. That is a 61% increase on the $31bn implied valuation logged in a secondary transaction inside the same GSR vehicle in the first half of 2025, when shares of the fund changed hands and the position was disclosed in portfolio documents distributed in September. The $50bn mark is consistent with a separate late-2025 Xiaohongshu secondary share sale, reported by Chinese outlet Pandaily, which valued the company at the same level."

"RedNote, co-founded in 2013 by Charlwin Mao Wenchao and Miranda Qu Fang, sits in an unusual category for Chinese consumer tech. Often described as a Pinterest-Instagram hybrid, it became a household reference point in the West last year when US users migrated from TikTok during the latter's short-lived ban, briefly making it the most-downloaded free app on the US App Store. The company is reported to have turned profitable in 2023 with annual net profit of about $500m on revenue of $3.7bn, and its earlier backers include Tencent, Alibaba, Hillhouse, Boyu and HongShan, the firm formerly known as Sequoia China."

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