Chinese app 5miles marks its anniversary with $30m funding

Chinese-developed app eyes expansion to more cities in the US

A Chinese-developed challenger to Craigslist and Wallapop has secured $30 million in new funding as it celebrates its first year in business this month.

5miles is a Dallas- and Beijing-based mobile-app startup that has more than 5 million users, averaging 30,000 downloads a day.

Its goal is to become a major factor in local classified advertising, an area dominated by Craigslist.

"5miles is a community and not just a marketplace," Liang Lu, founder and president, said in an interview on Tuesday. "We will use this funding to expand to other US cities."

5miles currently serves Austin, Dallas, Houston and San Antonio in Texas and also Miami, Florida, and Oakland, California.

Lu is a native of Luoyang in Henan province. After attending college in China, he moved to the United States, where he gained a graduate degree in 2005 from Southern Methodist University in Dallas.

He then worked in a series of technology- and e-commerce-focused positions with BlogDrive.com, LightInTheBox and Alibaba Group Holding Ltd.

"At Alibaba, I was exposed to mobile and e-commerce applications," Lu said.

In 2014, he noticed that mobile penetration was growing rapidly in the US and Europe.

"I studied Craigslist and decided to do a similar business," he said.

Craigslist features free online merchandise listings but charges a fee for job listings, apartment-rental offerings and automobile ads in certain cities. Many observers believe Craigslist played a big part in making the classified advertising sections of US newspapers obsolete.

Lu said 5miles is different from Craigslist in that it is mobile-based and offers a more service-oriented product.

"We enable you to take advantage of your smartphone and communicate with pictures, words, GPS and social media and instant messaging instead of relying on e-mail," he said.

"We verify users with a valid e-mail, phone number and Facebook account," Lu said. Clients will also be able to access reviews on a user.

Buyers are not allowed to sell pets, weapons or pharmaceuticals on 5miles, said Lu.

It does not charge buyers or sellers a fee and earns revenue from online advertising.

Investors in 5miles include venture capital funds like Blue Lake, IDG, Morningside and SIG-China (part of the Susquehanna Investment Group).

In addition, individuals with ties to Alibaba and eBay Inc have invested in the company.

"Right now we use the latest funding to focus on US expansion," said Lu.

"If that goes well, we will then look at Europe and maybe Brazil. We are letting Alibaba work on a China application."

5miles has 15 marketing and administration employees in Dallas, and its Beijing office has 30 employees working on engineering and product development.

The latest financing brings total investment in 5miles to more than $50 million. In its first year, 5miles gained 4 million users and generated $1 billion in gross merchandise volume.