Chinese e-grocery startup Missfresh has raised ¥2 billion ($306 million) in a funding round co-led by several government-affiliated investment entities, according to local press reports.
Qingdao Gouxin and Qingdao Municipality Guidance Fund, both affiliated with the government of the northeastern port city of Qingdao, invested in the online grocer alongside Sunshine Venture Capital — which is linked to the government of the city’s Chengyang District — and other undisclosed investors.
At least part of the funding will be spent on the construction of a new “intelligent supply chain center” in Chengyang District – something that the investment was presumably conditional upon.
“Missfresh is a unique business with large volume, a new model, and strong production capacity. It will make an important contribution [to Qingdao’s economy in terms of] foreign investment, trade, import and export, consumption, local finance and industrial stimulus, and it will boost Chengyang and Qingdao,” Zhang Zhigang, chairman at Sunshine Venture Capital, said at a press conference.
“At the same time, Missfresh can also rely on [Qingdao’s] advantageous location, foundations in logistics and supply chain, and supportive policies to drive the development of its business.”
Rather than operating out of large-scale distribution centers, Missfresh handles customers’ orders from a sprawling network of what it calls “micro-warehouses.” The company has around 1,500 of these these facilities situated in or near residential areas across China’s largest cities.
This approach allows it to locate fulfillment closer to customers, thereby keeping produce as fresh as possible, cutting cold-chain costs, and honoring its same-day and next-day delivery pledges.
In July, Missfresh raised $495 million in a Series F round led by a unit of Chinese investment bank CICC. Existing investors Goldman Sachs, Tencent, and Tiger Global also participated in that round, alongside new backers including banking giant ICBC and UAE investment manager Abu Dhabi Capital Group.
According to AgFunder‘s China Agrifood Startup Investing Report 2019, companies in the eGrocery category secured more funding than counterparts in any other category in the country last year, with a 60% share of overall agrifood investment dollars. Altogether, online grocers netted $2.1 billion – a 24% increase on 2018.
Missfresh was the top-funded agrifood startup in China in 2019 having secured $700 million from Chinese government-linked funds. It was also the second highest funded startup outside of the US (Colombian on-demand delivery app Rappi took first place thanks to a $1 billion SoftBank-led injection in April.)
Other Chinese e-grocers that scored big on the funding front last year include Missfresh’s fellow Tencent investee Yipin Fresh — a tech-enabled ‘new retail’ supermarket — which raised $298 million in a round led by the tech giant, while fresh produce portal Benlai banked $200 million.