Chinese deals firm Meituan-Dianping raises $3.3b in largest VC round in internet startups

Visual of Meituan website. January 2016.

The Chinese deals firm Meituan-Dianping, which resulted from the merger of Meituan and Dianping Ltd in October 2015 to form China Internet Plus Holdings Ltd, has secured a $3.3-billion investment, the largest venture investment in any Internet startup to date.

According to a Tech in Asia report, a representative from the firms confirmed with the Asian startup news portal and community hub confirmed rumours of the $3.3-billion transaction. This venture investment is significant, being the largest non-IPO funding round to date raised by a corporation in the technology space.

In an interaction with Tech in Asia, the representative stated: “We confirm that the new Meituan-Dianping funding round exceeds US$3.3 billion; more information will be provided to the media at a later date.”

This follows the firm raising one of the largest investments of 2015 – a $700-million Series D investment from a syndicate that included Sequoia Capital, Northern Light Venture Capital, and Alibaba Group, among others. Notably, this historical deal is happening amidst its slowest period of economic growth in 25 years, contrary to conventional market sentiment.

Despite the merger of Meituan-Dianping in 2015, how the funds will be disbursed amongst the two, which still operate as different brands, is unclear. No details on how the capital will be invested are available as well.  The company was formed in October 2015 when Meituan, backed by Alibaba, and Dianping, backed by Tencent Holdings Ltd, merged. This comes amidst reports of Alibaba seeking to exit the venture.

With venture capital growing in China since 2009, this transaction could also be considered a milestone for the venture capital (VC) sector in China. In fact, the MIT Technology Review noted that VC is currently a growth market in China. It noted that based on World Economic Forum data, Chinese venture capital consistently accounted for about 9 per cent of global VC volume for the 2006-2013 period.

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2014 saw it increase by 18 per cent, with a total capitalisation of about $15.6 billion across 1334 venture deals in 2014, according to data from PricewaterhouseCoopers. In fact, 2014 saw China surpass Europe to become the second-largest destination for VC deals after the US. This record-breaking transaction is part of a general trend of Chinese startups attracting more venture capital investments.

China presents not just a large market, but one with mini-ecosystems located in places like Hong Kong, Shenzhen and Shanghai that cater to different industry verticals, as well as a growing middle class. China itself is in the midst of economic deregulation and restructuring, moving up the value chain and shifting from being a manufacturing base to a global engineering centre.

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