China’s top online food takeout site Ele.me announced Friday that it has raised $630 million USD of fresh funding led by CITIC Capital and supermarket chain Hualian at a market cap of more than $3 billion USD, pushing the company’s total investment size to a whopping $1.1 billion USD.
The hefty round was followed by current investors Tencent, JD, Sequoia Capital and new backers of China Media Capital and Gopher Asset.
The company did not specify the investment share of every investor, but disclosed that Hualian contributed $90 million USD and will leverage its offline resources to enable faster food delivery services across the country.
Founded as a student entrepreneurial project in 2009, Ele.me has experienced substantial growth in line with China’s booming O2O industry in recent years. Along with the funding news, the company has announced some impressive metrics. As of July 2015, the startup’s more than 10,000 employees provide service to more than 40 million users and 300,000 restaurants distributed across north of 260 cities nationwide. The daily turnover hits RMB60 million (US$9.4 million) with 98% comes from mobile users.
Zhang Xuhao, the company’s founder and CEO, said that funding is earmarked for constructing more sophisticated trading and delivery platform, as well as to improve user experience. He indicates the firm is going raise further rounds since constructing an efficient delivery platform needs solid capital support.
China’s booming online food delivery sector has been crammed with multiple players from internet giants Baidu, Tencent and Alibaba, to medium-sized competitors Dianping, Meituan, and all the way to vertical startups Line0, Waimaichaoren, Daojia, Meican, Dianwoba. The growing market has attracted strings of capitalists who are eager to pour money in.
However, the fierce competition has made the sector a high money-burning sector where players compete for an increasingly large market share. Of course, investments can help companies to attract users by giving out more coupons or discounts, but when all the players have some funding in their pocket to burn, companies have to differentiate their services with better user experience.
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Image Credit: Ele.me