Benlai, a Chinese fresh produce e-commerce platform, has secured $200 million in Series D1 funding, the company’s founder Yu Huafeng announced in an internal letter made public on Monday.
Why it matters: Interest in Benlai from venture capital funds indicates that China’s fresh produce sector may be warming up again. Benlai was an early entrant and is among a handful of survivors in the industry.
- Fresh produce e-commerce is a difficult sector due to the high attrition rate of perishable goods and the significant logistics requirements, which weigh heavily on margins.
- The sector boomed a few years ago, culminating in multiple firms bowing out. These included Amazon-backed Yummy77 and Xianpinhui.
- Chinese tech firms have improved their supply chains management and customers are better acquainted with grocery delivery services. Fresh produce e-commerce has regained the attention of tech giants including Tencent, JD, and Alibaba, to Meituan this year.
Details: Mingde Holdings, a shareholder in delivery giant SF Express, led the round, joined by state-backed Beishang Capital as well as returning investors CDH Investments and Gaorong Capital.
- Benlai expects the new tie-up with SF Express to bring more support in logistics and the supply chain, a crucial factor for fresh produce platforms.
- The firm will use the proceeds to further boost the development of the group’s online-to-offline (O2O) and business-to-consumer (B2C) businesses.
- The company’s B2C site Benlai.com has posted revenue of RMB 100 million ($14 million) for 2019 to date, while the produce-to-business (P2B) wholesaler unit Benlai Guofang has also earned a profit during the same period. It is aiming for profitability for the overall group in the 2019 fiscal year.
- In the letter, Benlai’s founder cited Morgan Stanley’s comments on the need for tech companies like WeWork to turn a profit. “WeWork’s failure to go public is a critical turning point for markets that signals the end of “the days of endless capital for unprofitable businesses,” he said in the statement.
Context: Benlai secured its last funding round, a $117 million Series C, in 2016 led by China Urban Realty Association and ChinaEquity Group.