Congratulations to CC Zhang, CEO, and his entire team at Qunar! GGV-portfolio-company Qunar had a very successful IPO and public market debut Friday on the NASDAQ. The company initially filed a pricing range of $9.50 – $11.50, raised it to $12-14 while on the roadshow, priced the IPO at $15 and closed Friday at $28.40, up 89% on the first day of trading. This strong showing indicates that public market investors are very excited about the prospects for Qunar, China’s leading online travel player. Similarly GGV’s outlook is driven by some key elements:
China’s Continued Rise on the Global Stage. While many other US venture firms who had previously established China-based operations were leaving the Chinese market in the few years post the global financial crisis, GGV doubled down on China. We believed then and still believe strongly that China’s economy will continue to thrive and grow, providing a fertile setting for our portfolio companies. We invested in Qunar in ’09 and the company has performed exceptionally well ever since. Although we don’t expect a straight line up, China’s domestic and international travel market should continue to grow for many years.
Mobile growth and China/ US convergence. GGV’s global team has been built to help our portfolio companies take advantage of the increasing inter-dependency of the Chinese and US economies. Our view is that mobile, which is so strong in both markets, will only continue to further tie China and the US together for entrepreneurs. Qunar is no exception. Mobile as a percent of traffic and usage is growing very rapidly with more than 100M app downloads to date, and although Qunar is focused on China’s domestic travel market, as Chinese people continue to travel abroad more frequently, expect Qunar to help serve this customer base. Mobile is also quickly changing how users in China and the US are planning travel, becoming more real-time and location-based. This mobile growth, coupled with an online travel market that’s still fast growing (33% CAGR expected for China in the next 3 years), is a combination GGV believes will provide exceptional opportunities ahead (and we’ve also invested in Hotel Tonight in the US and Tujia in China as a result).
“Qunar Model” – Strategic Partnership with Baidu. Qunar has done a terrific job building a strong brand in China. A majority of its traffic comes organically, as people know to visit Qunar for travel related queries. That said, the partnership with Baidu is powerful, making Qunar the default gateway to travel in China, and most of the public investors with whom I spoke about Qunar mentioned it as a very attractive element of the story. GGV Partner Jixun Foo, who led our investment and sits on Qunar’s board, was instrumental in bringing Baidu into Qunar as an investor and partner. Jixun was able to help spark and negotiate this deal, borrowing on the strong relationships he’s built from his days as a trusted venture investor and board member at Baidu. The “Qunar Model” is first of its kind in China, and now quickly are being borrowed by others in China. UCWeb (yet another GGV portfolio), which recently received investment from Alibaba, another GGV portfolio company, is another example.
Management’s desire to “go long.” CC Zhang, Qunar’s CEO, has been a terrific partner from day one of our investment. He knows his market cold and he has a strong vision for where he wants to take Qunar. Like GGV, he sees travel as a huge market opportunity in China. He believes he’s early in the game and expects many more years of exciting progress. We’re strapped in for the journey with CC!
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