GSR Ventures is utilizing its stake in RedNote to establish a new $350 million fund focused on China.

      SR Ventures Management Co., one of the initial investors in the Chinese social commerce application Xiaohongshu, is seeking to raise around $350 million for a new venture fund focused on China, leveraging its current stake in the app, known internationally as RedNote, as the primary selling point, according to a Bloomberg report published on Tuesday, citing sources familiar with the situation.

      Investors considering the new fund have been informed that they might gain access to RedNote shares through GSR’s existing fund, the sources told Bloomberg. This structure could also provide a potential exit strategy for investors in the current GSR fund, which has been active for over a decade and holds the firm’s position in RedNote. The fundraising plans are described as preliminary and may evolve. A spokesperson for GSR declined to provide comments.

      GSR currently values RedNote at approximately $50 billion, a figure that serves as a cornerstone for the entire proposal. This valuation represents a 61% increase from the $31 billion implied valuation noted during a secondary transaction within the same GSR fund in the first half of 2025, when fund shares were exchanged, and the position was revealed in portfolio documents distributed in September.

      The $50 billion valuation aligns with a separate secondary share sale of Xiaohongshu in late 2025, reported by the Chinese outlet Pandaily, which also valued the company at this level.

      RedNote, co-founded in 2013 by Charlwin Mao Wenchao and Miranda Qu Fang, occupies a unique niche in the Chinese consumer tech landscape. Often characterized as a blend of Pinterest and Instagram, it gained significant attention in the West last year when US users shifted from TikTok during its temporary ban, briefly making it the most downloaded free app on the US App Store.

      The company reportedly became profitable in 2023, achieving an annual net profit of around $500 million on revenues of $3.7 billion, with prior investors including Tencent, Alibaba, Hillhouse, Boyu, and HongShan, previously known as Sequoia China. Investors are still anticipating an IPO that has yet to come to fruition.

      GSR is not the only firm attempting to convert changing sentiments into secured capital. IDG Capital is aiming for approximately $2 billion for a new China growth fund, expecting a first close before the year concludes. Hillhouse, Primavera, BAI Capital, and Boyu have all been noticeably active in fundraising discussions over the past year, according to several industry reports.

      Collectively, they signify the first concentrated effort by US-dollar funds focused on China in about five years, following the tech crackdown in Beijing and the slowdown during COVID that reduced the foreign investment previously flowing into the country’s startup ecosystem.

      The investor makeup for these new funds differs from that of the previous cycle. Numerous US pensions and endowments have withdrawn completely from China, citing geopolitical risks. To some extent, sovereign wealth funds and family offices from the Middle East, parts of Europe, and Southeast Asia are helping to fill the gap.

      Messaging from the Chinese government has marginally improved the situation: a recent commitment from the market regulator to support private companies is widely regarded as boosting sentiment.

      For GSR, the crucial question is whether the appeal of RedNote will be effective. The fund is essentially asking new limited partners to invest in a forward-looking China portfolio with the implicit promise of access to a coveted position whose IPO has been awaited for several years.

      Whether GSR can provide an exit route through secondary structures or a future listing will ultimately determine the outcome of this funding round. Reports indicate that marketing efforts are still in the early stages.