Tencent-backed grocery delivery service Missfresh has pocketed $495 million in a new funding round led by CICC Capital, as China’s fresh produce e-commerce market enjoys a rising growth momentum during the coronavirus pandemic.
The new round, which marks one of the largest investments in China’s fresh produce delivery field, was backed by Tencent, Goldman Sachs Asset Management, private institutional investment house Abu Dhabi Capital Group (ADCG), and Tiger Global Management, said China Renaissance, the exclusive financial adviser of the deal, in a WeChat post on Thursday.
Hong Kong-based ICBC International, a wholly-owned subsidiary of Chinese state-owned commercial bank ICBC, and a government-led industry fund in eastern China’s Suzhou City, as well as other institutional investors also participated in the funding round.
Beijing-based Missfresh did not disclose its post-money valuation. But the company was valued at about $3 billion before the transaction, stated an earlier Bloomberg report, citing sources.
The new financing will help Missfresh raise stakes in China’s highly-competitive fresh produce e-commerce market, which is estimated to present a 62.9 per cent growth rate this year as consumers refrain from dining out during the pandemic.
According to consulting firm iiMedia Research, which recorded an industry growth rate of 29.2 per cent in 2019, the scale of China’s fresh produce e-commerce market is set to reach 263.8 billion yuan ($37.7 billion) in 2020, compared to 162 billion yuan ($23.1 billion) one year earlier.
“[China’s] Fresh produce delivery has moved on from the first development period of claiming markets by preemptive investments, to the second phase with equal stress on the high consumer penetration rate and quality business operations,” said Wang Jun, CFO of Missfresh in the post.
“The proceeds will be used to finance the construction of Missfresh’s intelligent chain-store technologies and the development of supply chain capabilities,” said Wang.
Founded in November 2014 and operated by Beijing Missfresh Ecommerce Co, Missfresh offers fresh produce like fruits and vegetables, dairy products, snacks, drinks and beverage, and seafood through a mobile app, as well as WeChat’s online e-commerce platforms. The company provides fresh produce through thousands of mini-warehouses across 16 cities in China. It promises deliveries as fast as within 30 minutes, according to the post.
Prior to the new transaction, Missfresh has raised nearly $900 million through eight funding rounds. In September 2018, the company secured $450 million in a Series D round led by Goldman Sachs Investment Partners (GSIP), Tencent, US-based investment management firm Davis Selected Advisers, and Jeneration Capital, which focuses on growth-stage investments in Greater China.
It closed a combined $330 million across two tranches in its Series C round in 2017. Investors included Tiger Global Management, China’s Genesis Capital, and Lenovo Capital, which is part of Hong Kong-listed technology firm Lenovo Group.