# Aiwujiwu (2014 – 2019)

- URL: https://girisimcikafasi.com/en/startup-graveyard/aiwujiwu/
- Sector: Real estate and construction
- Country: China
- Total funding: $350 million
- Unicorn: yes, peak valuation $1 billion
- Cause of closure: Business model failed

## What did it do?

Aiwujiwu was a Shanghai-based online and branch property broker. It charged no commission on rentals and 1 per cent on second-hand sales. It promised to do away with traditional estate agents. It began in Shanghai and in 2015 spread to Beijing, Shenzhen, Guangzhou and other big cities.

## Why did it shut down?

After dropping rental commission in Shanghai in September 2014, the company reached third place in the city by May 2015. By November 2015 it had raised USD 350 million in five rounds. Reports of unpaid wages, layoffs, commission cuts and branch closures began in early 2016. Between late 2016 and early 2017 staff fell from 5,000 to 6,000 to about 400. Its share of Beijing second-hand sales dropped from 1.91 per cent to 0.48 per cent. Normal operations stopped at the end of January 2019; a former senior executive said the cause was not running out of cash but major investors losing interest.

## The story

Aiwujiwu was born in Shanghai in March 2014, a start-up founded by former Tudou executives. Its promise was bold: get rid of the estate agent. In September 2014 it stopped charging tenants in Shanghai and took just 1 per cent on sales.

The market responded at once. By May 2015 it ranked third in Shanghai behind Centaline and Lianjia. That month a USD 120 million round led by GGV Capital and Morningside lifted its value to USD 1 billion. In November 2015 another USD 150 million came from Temasek and Hillhouse, taking the total to USD 350 million. Eighteen months after founding, it was seen as the fastest unicorn in its field.

But buying and selling homes is not a frequent business. Subsidies won market share, not repeat customers. From early 2016 the news on pay, commissions and branches turned bad. Staff fell from 5,000 to 6,000 to about 400.

At the end of January 2019 the company quietly stopped. The website and app went offline and the office on Anyuan Road emptied. Only a small team remained to handle the wind-down. The agents stayed where they were.

## Lessons

- Subsidies do not create loyalty in big, infrequent purchases. Someone who buys a home returns years later, while the discount costs you today.
- Claiming to disrupt an industry while taking on its costs is dangerous. Hiring agents on high pay tied a huge workforce to the same brokerage economics.
- A company can die before its cash runs out once investors lose interest. Aim for the day you no longer need a round, not for the next one.

## Sources

- [GGV, Morningside back China real estate site Aiwujiwu](https://www.avcj.com/avcj/news/60598/ggv-morningside-back-china-real-estate-site-aiwujiwu)
- [Temasek, Hillhouse lead $150m round for China's Aiwujiwu](https://www.avcj.com/avcj/news/50328/temasek-hillhouse-lead-usd150m-round-for-china-s-aiwujiwu)
- [Aiwujiwu stops operations and enters liquidation](https://www.nbd.com.cn/articles/2019-02-20/1301628.html)
- [The rise and fall of Aiwujiwu](https://m.jiemian.com/article/2881787.html)
- [Aiwujiwu quietly stops external business](https://finance.sina.cn/2019-02-21/detail-ihqfskcp7191102.d.html)