Lehe Food, an online wholesale and supply chain platform for agricultural produce, has raised ¥400 million ($56 million) in its Series C funding round.
The round was co-led by Hong Kong-based asset manager CDH Investments – a new backer – and existing investor Longzhu (‘Dragon Ball’) Capital, which is the VC arm of on-demand app Meituan Dianping.
Another existing investor, Guangzhou Hezhi Investment Management, joined the Series C raise.
According to a report from Chinese site Sohu News, Lehe Food said it will use the funding to secure new partnerships, hire and nurture talent, and boost innovation in areas such as cold chain logistics.
The Guangzhou-based startup seeks to build a digital, vertically integrated supply chain for food and other agricultural products.
Its core focus is on selling fresh farm produce to retailers, restaurants, and other wholesale customers through its online platform.
In addition, it handles everything from farm management and fresh food processing through to cold chain logistics, retail distribution, and tech consulting services for other participants in the supply chain.
Lehe Food was launched in 2006 with the stated aim of becoming China’s answer to Sysco – the US company that supplies restaurants, caterers in hospitals and schools, and other foodservice businesses with food and equipment. It later expanded into other areas of the agrifood supply chain, such as agribusiness and e-commerce.
The company says its vision is now to establish a “complete food supply chain system” that can provide healthy and safe food “with conscience” for China’s population of over 1.4 billion people.
Lehe Food operates 300 distribution centers across eastern and central China, and counts a number of major government bodies, educational institutions, and corporates among its clients. These include local names such as e-commerce giant JD, China Southern Airlines, Jinan University, and the People’s Bank of China, as well as foreign retailers such as Carrefour and Walmart.
Last year, the startup raised a total of $29 million across two rounds. This included its $14 million Series B+ funding led by Meituan’s Longzhu Capital, which also saw participation from internet giant Tencent (itself a Meituan backer), Hezhi, and the Agricultural Fund of Guangdong Province.
Both investments made it into the top 10 deals in AgFunder’s Midstream Technologies category in China last year, according to the AgFunder China AgriFood Startup Investing Report 2019.
Midstream Technologies – covering startups which connect food and agricultural producers to consumer-facing businesses – was the fourth largest category last year overall in dollar funding terms, pulling in $336 million in total investment across 39 deals.
The two biggest investments in the category went to Yijiupi, an online wholesaler of alcohol and food products, which raised $100 million in Series D funding from Warburg Pincus and another $80 million from Tencent. Xinliangji, which sells seafood and aquatic equipment to the restaurant industry, beat Lehe Food into fourth spot with its $42 million Series B.
The 262% year-on-year growth in Midstream Technologies funding comes as restaurants, large retailers, and small grocery stores across China increasingly look for faster and more transparent procurement options.
Lehe’s earlier investors include Atopia Capital, Dalian Juntai, and New Value Capital.
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