Baidu’s food delivery subsidiary Baidu Waimai will complete its Series-B financing in Q1 2016 with an estimated total amount of USD 300 to 500 million, Chinese financial news outlet Caixin reported on Tuesday.
A proposal for Baidu Waimai’s B-series funding is circulating among multiple media sources. According to the leak, Baidu initiated this round of funding in November with no exact valuation disclosed yet. The food delivery branch is currently estimated at USD 800 million after its USD 250 million A-series funding in July 2015.
Baidu estimated that the food delivery platform would have achieved a total revenue of over RMB eight billion (USD 1.25 billion) in 2015. It’s aiming for a total revenue of RMB 25 billion (USD 3.9 billion) in 2016 with one million daily orders on average.
By October 2015, Baidu Waimai has covered 109 cities with 16 million users and 11 million monthly active mobile users. On the business end, it works with over 187,000 merchants while about 6% of its key accounts contribute 18% of the total revenue.
According to the document, 40% of the new investment will be spent on platform construction, 20% on product development, 20% on category expansion, and 20% on marketing. The platform is planning to expand its categories to include fresh groceries, alcohol, daily necessities, and baby essentials.
Baidu Waimai also claimed in the fundraising document that their target consumers will be 75 million urban white collar workers, who contribute to 67% of China’s current online food delivery market as of November 2015, according to Chinese market research agency Analysys International.
Prior to Baidu Waimai’s fundraising leaks, its primary competitors Ele.me and Meituan-Dianping are both reported to be close to wrapping up a new round of financing. Ele.me is reported to have signed a framework agreement with China’s biggest e-commerce magnate Alibaba for an investment of USD 1.25 billion, boosting its valuation to USD 4.5 billion.
The new Meituan-Dianping company is estimated to have raised USD 2.8 billion, including an investment of USD one billion from Chinese social network giant Tencent. After the completion of this round of funding, the new group’s valuation may soar to USD 18 billion, according to Tencent News.
According to market research agency Analysys International, as of November 2015, Ele.me leads the market with a 33.6% share of the online food delivery market, with Meituan coming in closely at 33.5%. Baidu Waimai ranks third, taking up 18.8% of the market.
The Chinese online food delivery sector has generated RMB 6.43 billion (USD one billion) in revenue in November 2015 alone, Analysys International said.
(Featured image from Canyin88.com)