Vancl, troubled IPO, To be or not to be?

Vancl, China’s leading apparel and fashion B2C, was founded in 2007

It enjoyed its glorious days till first half of 2011

Afterwards its losses have been staggering and negative rumors were whispered in the air

Perhaps attributed to 3 evils:

1) Rapid expansion losing control 2) Pushing drastic low price strategy 3) Overly heavy spending on marketing campaign

Luckily it has still been able to attract incessant support from VCs

Vancl seemed to prepare IPO in Apri 2011, but somehow delayed the scheme; Current U.S. market is sluggish, really not a timing

VCs perhaps would like to have a push for IPO, if Vancl’s fund chain is needy, then IPO might be the last resort of survival

47 68

486 527

158

472

1937

665

0

500

1000

1500

2000

2500

June, 2009 June, 2010 June, 2011 2011 Q3

Vancl's loss(accumulative, RMB in million) Vancl's sales(RMB in million)

Whopping loss

Again more loss

Source: Gemag.com.cn, Jan, 2012

Fund Raising History of Vancl

Order Time Amount Investors

Round A Oct, 2007 USD 2 million Chuangyuan Capital; IDG

Round B Jan, 2008 USD 10 million Softbank

Round C Aug, 2008 Over USD10 million Qiming Ventures;Chuangyuan; Capital;

IDG; Softbank

Round D May, 2010 USD 40-50 million Tiger Fund

Round E Dec, 2010 USD 100 million Chuangyuan Capital; IDG; Tiger Fund

Round F Dec, 2011 USD 230 million Undisclosed

General view of Vancl’s deal performance

Benchmark June,2009 June, 2010 June, 2011 2011Q3

Vancl’s average price per deal (in RMB)

196 182 108 88

Vancl’s total number of deals 804,000 2,599,000 17,976,000 7,551,000

Guess on Vancl’s average loss per deal

Average price per deal(+)

Average product cost(-)

Average marketing

cost(-)

Average logistic cost(-)

Other average

operating cost, i.e. (-)

Average loss per deal

RMB108 RMB71.5 RMB26 RMB14.5 RMB23 -RMB27