Asia Tech Wire (Apr 29) -- China's Instagram-like social media platform Xiaohongshu has denied that it is working on a pre-IPO financing round at a valuation of $20 billion.

Earlier news surfaced that Xiaohongshu was in the midst of a new round of funding at a $20 billion valuation.

An investor close to the round revealed that it is actually a pre-IPO funding round for Xiaohongshu, which will provide some pricing reference for the platform's potential IPO.

In response, Xiaohongshu said Monday, "The news is not true."

News broke in March that Xiaohongshu had achieved a historic breakthrough in 2023 by turning profitable for the first time. The popular social media platform reported a net profit of $500 million last year, as well as revenue of $3.7 billion, people familiar with the matter said.

Xiaohongshu's official website shows that the company has received investments from big-name corporate institutions such as Alibaba, Tencent, GGV Capital and Sequoia Capital.

Founded in 2013, Xiaohongshu has reached 260 million monthly active users (MAUs) by the end of 2022.