Don’t miss out these headlines for the week: Alibaba invests USD 1.25B in food delivery service platform Ele.me; C2B fruit selling platform raises USD 50 million in a Series B financing; Meituan Dianping likely to have raised USD 2.8 billion.
Alibaba invests USD 1.25B in food delivery service platform Ele.me
Alibaba has signed an investment agreement with leading food delivery platform Ele.me, investing USD 1.25 billion. With this round of financing, Ele.me is estimated to be valued at USD 4.5 billion, and will be operated independently, reports Caixin.com, China’s leading financial media website.
It is reported that Alibaba has taken up to 27.7% of Ele.me, while CEO of Ele.me, Zhang Xuhao is left with less than 10%, following previous investments from Didi chuxing and the current round. This means Alibaba will become the biggest shareholder in Ele.me.
Ele.me turns to Alibaba, after losing support from China’s Yelp, Dianping, following the recent Meituan-Dianping merger. Ele.me recieved USD 80 million from Dianping in a series D financing last May.
The platform has competed fiercely since 2014 with Meituan Waimai, the takeout delivery service introduced by China’s Groupon, Meituan in late 2013.
According to the previous investment agreement of Dianping and Ele.me, Dianping had to leave its post on the Board of directors of Ele.me in order to merge with Meituan.
Partnering with six year old Ele.me in food delivery, Alibaba is able to beef up its late launched Koubei.com, a similar food delivery service, to compete with Meituan Waimai and Baidu-backed Baidu Waimai.
Besides Alibaba, Tencent and JD.com are also among the investors of Ele.me, having invested in an E Series financing in January 2015 and an F Series in August.
According to data released in December by Ele.me, its daily transaction volume amounts to RMB 100 million（USD 157M), with more than 3.3 million daily orders.
C2B fruit selling platform raises USD 50 million in a Series B financing
Yqphh.com, or Pinhaohuo or “fighting for good stuff”, a fruit selling platform which combines fruit selling with social network platforms including Wechat, raised USD 50 million in a B-series financing from Banyan Capital and IDG on Tuesday, boosting its valuation to USD 480 million, Iyiou.com reports on Wednesday, a Chinese O2O business website.
In a previous interview Marketing Director of Yqphh.com told the new media that Banyan Capital and IDG invested USD eight million in a Series-A financing.
The platform, founded in April 2015, is one of a number of pioneers who have attempted to combine social networking with purchasing. Consumers are to share products with their families and friends, and then make a group-buying order at a lower price.
A group-buying order at the platform takes at least three to five people, which means users will at least recommend two to four new users to the platform.
Users are constantly creating value for the company, putting pressure on the company to guarantee the quality and freshness of fruits, and also the speed of delivery. Once those needs are met, a good reputation flies around, bringing with it bigger user groups.
CEO of the company, Huang Zheng, previously worked at Google America before following Kai-fu Lee to found Google’s China Research Institute.
Before starting yqphh.com, Huang was involved in the gaming business, which later gave him the inspiration to begin yqphh.com. Sharing products with other people with a simple retweet gives you a reward. This is like a game for customers.
According to data provided by Yqphh.com, the company has attracted around 10 million Wechat users spread throughout China. Its app was released in July 2015.
Marketing Director Wu says that they have been learning from leading retailer Costco in strictly controlling inventory stocks and guaranteeing half of fruit is gathered from places of origin. Recently, the platform has tried to sell salmon and steaks among other meat and seafood products.
Online decoration platform is valuated at USD 157M after new financing round
Online decoration platform Meijiabang has completed a new round of fundraising and claims its valuation exceeds RMB one billion (USD 157 million), Tencent Tech reports on Tuesday.
The round of funding is led by Lang Ma Feng VC. Founded in 2007, Lang Ma Feng VC focuses on the medical, educational, IT, and mobile internet industry. The company’s A series of funding was lead by Internet giant Tencent.
Founded in last September, Meijiabang provides online services for home decoration. Its major product is “innovation for 777 yuan per meter square”. Meijiabang’s app has now become the leading app of its kind in China with over five million users. It has already settled in 16 cities in China, and it will enter more than 60 cities next year.
Dai Hongliang, the founder of Meijiabang, is a decorations guru. The X Tuanzhuangxiu app which he set up eight years ago, is now one of the most authoritative third party decoration platforms. With the user base of X Tuanzhuangxiu and support from Tencent, Meijiabang has acquired quality users at low cost.
Meituan Dianping likely to have raised USD 2.8 billion with more cash soon to come
Tencent Tech leaked a document Tuesday morning alleging that China Internet Plus Holdings Ltd (CIP), the giant new merged entity of a classifieds/on-demand services platform, Meituan and Dianping, has raised USD 2.8 billion for a valuation of USD 15 billion.
Around noon, Meituan told Chinese tech website TechWeb that they can’t confirm details but that they may release updates on the matter later.
Based on fundraising documents Tencent Tech have attained, Meituan Dianping plans to raise USD three billion via issuing Class B preferred shares, which will occupy 16.67% of the total shares of the new company after this round of funding. The valuation will then be expected to increase to USD 18 billion.
The document indicates the new combined entity will take up over 80% of China’s online-to-offline service market. The new entity is estimated to have had a GMV of around RMB 184.8 billion (USD 28.8 billion) in 2015.
Chinese tech giant Tencent, Russian venture capital fund Digital Sky Technology (DST), American venture capital fund Sequoia Capital, Chinese state-backed investment bank China International Capital Corp (CICC) and China-focused international venture capital fund Capital Today, all participated in this round of funding.
The document shows that Tencent, as previously rumoured, will invest USD one billion in the new entity. The industry giant invested in Dianping in 2014 in exchange for 20% of the O2O platform’s shares.
Sequoia Capital participated in Meituan’s first three rounds of funding and Dianping’s first four rounds of funding. According to Tencent Tech, Sequoia Capital will invest another USD 150 million in the new company. The venture capital fund is now believed to be one of the biggest shareholders of the new entity.
With support from existing shareholders, the new company plans to go public in two to three years following this round of funding. Based on the valuation adjustment mechanism of this round of funding, investors participating in this round of funding will be guaranteed at least 20% profit if the company goes public or will be prioritized for a 120% return in case of a clearing or M&A.
Alibaba is believed to be selling, the 7% of Meituan shares it holds now, at a price lower than the new company’s current valuation. The shares Alibaba holds however aren’t protected by the same preferred terms as the shares issued this round.
Alibaba participated in Meituan’s B and C-series funding in 2011 and 2014 but then invested RMB six billion (USD 937 million) in Koubei, an O2O platform it acquired four years ago, in June. It’s rumoured that Meituan CEO Wang Xing and Alibaba had a huge falling out over control of Meituan.
Meituan and Dianping merged in October this year. The new company recently announced its new structure with Wang Xing, ex-CEO of Meituan, as CEO and Zhang Tao, ex-CEO of Dianping, as Chair of the Board. at the recent World Internet Conference in Wuzhen Wang announced that the company had successfully raised funds and would make a public announcement soon.
(Photos from Baidu Images)