Chinese grocery platform Dingdong Maicai has raised $700 million in a series D round of financing co-led by investment firms DST Global and Coatue Management as the startup continues its expansion in the crowded fresh food delivery market.
The company also received investment from previous backers including Tiger Global, General Atlantic, Sequoia Capital and Ocean Link, according to a Tuesday statement by boutique investment bank Cygnus Equity, which participated in the fundraising as both an investor and financial advisor.
The statement added that the online grocer will use the fresh funds for regional expansion and supply chain investment.
Founded in 2017 in Shanghai, Dingdong Maicai (叮咚买菜) delivers fresh produce such as fruits, vegetables and meat to users’ doorstep within 24 hours. It counts Sequoia China and Qiming Ventures as its early backers.
Last May, Reuters reported that Dingdong Maicai raised $300 million in a funding round that valued the firm at $2 billion, benefiting from a rise in demand from residents in lockdown during the pandemic.
In February, Bloomberg reported that Dingdong Maicai is considering an initial public offering in the US this year and could again raise at least $300 million.
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Right now, the online grocer processes around 900,000 orders daily and earns a monthly revenue of more than 1.5 billion yuan, according to 21st Century Business Herald. The startup operates approximately 1,000 warehouses across 27 cities including Shanghai, Beijing, Shenzhen and Guangzhou. It directly competes with other grocery platforms operated by Alibaba and JD.com, as well as Meituan Maicai, Tencent’s MissFresh, Didi’s Chengxin Youxuan and Pinduoduo’s Duoduo Maicai.
China’s online fresh foods sector could reach 1.27 trillion yuan ($197 billion) by 2025, according to Chinese market research institute Qianzhan. Companies in the industry often attract users through exclusive contracts with suppliers, as well as heavy subsidies.
“Right now, these e-commerce giants are adopting a cash-burning model,” China food industry analyst Zhu Danpeng told 21st Century Business Herald. “But soon enough, as the scale effect, brand effect and so-called ‘fan effect’ emerge, we’ll see which players are able to turn their losses into profits.”