Chinese e-grocer MissFresh has raised $495 million in a funding round led by a unit of investment bank CICC. Also participating in the round were existing MissFresh investors Goldman Sachs, Tencent, and Tiger Global, alongside new backers including banking giant ICBC, investment manager Abu Dhabi Capital Group, and funds affiliated with the municipal governments of the cities of Suzhou and Changshu.
Instead of relying on a handful of cavernous mega-warehouses à la Amazon, the startup has built a network of around 1,500 small-scale distribution centers located close to residential areas across China, allowing it to cut both delivery times and cold chain costs.
The investment was first reported by local media outlet Latepost. MissFresh chief financial officer Wang Jun said in a WeChat post that the new funds will be deployed to enhance the company’s “smart chain” technology — including its intelligent warehouse replenishment system — and broader supply chain capabilities.
He added that the Beijing-based company had become profitable during the height of China’s Covid-19 pandemic, when millions of consumers turned to online grocery shopping and home delivery while under lockdown.
According to market research firm Trustdata, China’s online fresh grocery segment saw its number of monthly active users grow by 131% in February this year – the highest year-on-year growth it has experienced in the past two years.
A survey of new MissFresh users who signed up to the platform between March and May this year found that 86% of them will continue to use the company’s services after the pandemic has passed.
Even before Covid-19 hit, Chinese e-grocers were pulling in big bucks from investors.
According to AgFunder’s China Agrifood Startup Investing Report 2019, the eGrocery category scored more venture funding than any other in the country last year. Online grocers netted a whopping $2.1 billion in investment, representing a 24% increase on 2018’s figure and constituting 60% of total agrifoodtech funding in the country.
This trend reflects growing demand for convenience, quality, and variety among China’s increasingly wealthy middle classes when it comes to food. On the investor side, the high purchase frequency of the eGrocery model allows startups in the space to build treasure troves of valuable customer data.
MissFresh was China’s highest-funded startup in the agrifoodtech ecosystem last year, according to AgFunder data. It secured $700 million in debt financing from the Changshu government.
Other Chinese eGrocery startups banking big checks in 2019 included fellow Tencent investee Yipin Fresh, a ‘new retail’ supermarket that received $298 million in a round led by the Shenzhen-based tech giant; fresh produce portal Benlai, which raised $200 million; and community-focused, tech-enabled convenience store chain Furong Xingsheng, which followed up a $46 million investment in May from (you’ve guessed it) Tencent with a $200 million injection from US private equity giant KKR in September.
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