Farm-to-factory cold chain platform Xianshenghuo hauls in $93m for Series A round

Xianshenghuo, which provides cold chain solutions for the transporting fresh produce, has raised ¥600 million ($92.9 million) in Series A funding, according to an announcement it posted on its WeChat channel.

Funds affiliated with Beijing investment bank CICC and Hong Kong financial services provider Far East Horizon took part in the round alongside VC firm Longfor Capital.

Xianshenghuo was launched in 2016 as a spin-out of New Hope Group, one of China’s largest agrifood conglomerates. It has built a tech-enabled logistics, warehousing, and distribution network that delivers fresh produce from farmers to enterprise customers including food processors, retailers, and catering companies.

The Chengdu-based platform operates what it calls a ‘closed-loop management system’ covering the entire supply chain from farm to business, which allows clients to order and pay for produce online. Automatic scheduling, demand forecasting, and similar tools enable the platform to be as efficient as possible; cold chain logistics in China has “always been extremely sensitive to [high costs] due to insufficient cargo volume density and difficulty in process control,” the startup said in its WeChat post.

As of the end of 2020, the startup had a fleet of 45,000 cold chain-enabled delivery vehicles — including both its own trucks and third-party transport — and 50,000 drivers, with over 120,000 square meters of cold storage space serving around 500 million shoppers in large and medium-sized cities throughout China.

At the upstream end of the agrifood supply chain, Xianshenghuo aims to improve the lot of its farmer suppliers – not just by giving them access to a wider market of prospective buyers, but also through the provision of services like system and vehicle support, tax optimization, and financial management.

The startup’s Series A close comes during a major growth spurt in China’s e-grocery sector.

Beijing-based online grocer MissFresh raised over $800 million in funding last year, more than any other agrifoodtech startup in the world. This included a $495 million round in July led by Xianshenghuo investor CICC with participation from Tencent, Goldman Sachs, and others.

Dingdong Maicai, another Chinese e-commerce platform for fresh food, banked $300 million in a General Atlantic-led round last May. Dingdong reported a 14% boost in user activity in January 2020 as Covid-19 took hold in the country.

Group-buying networks that allow consumers to team up and buy farm produce and other goods at bulk discounts have also secured significant funding in China of late.

One of the largest, Nice Tuan, reportedly raised $196 million at the tail-end of 2020 in a round co-led by Alibaba and Hong Kong’s Jeneration Capital which also saw participation from CICC. Another group-buying app, Tongcheng Life, raised $200 million in Series C funding back in June co-led by livestreaming platform Joyy,

“Against the backdrop of [Chinese consumers’] food consumption upgrade, the cold chain industry is in a phase of increasing competition and growth,” said Xi Gang, chairman at Xianshenghuo and president at New Hope Group.

“The battle for leadership [in this industry] will be fought on technology, talent, and capital,” he said in a WeChat post. “This funding introduces resources from multiple strategic partners, which is the result of Xianshenghuo’s continuous investment in technology, success in attracting outstanding talent, and proven ability to integrate supply chains.”

CICC’S Lu Yin said that consumer demand for high-quality fresh products, better service levels, and timeliness has “promoted the rapid growth of the cold chain logistics” segment.

“With the development of China’s economy and the improvement of people’s living standards, the catering service and fresh food market is growing rapidly and the space is extremely broad,” he said in the WeChat post.

“We believe that companies with excellent service, technical, and management capabilities like Xianshenghuo [can] grow into a benchmark enterprise in the industry.”