Coffee startup Luckin is continuing its fundraising spree as it sets its sights on becoming an alternative to Starbucks in China.
The year-and-a-half-old company announced on Thursday that it closed a successions B-plus elevate totaling $150 million. The fresh proceeds valued Luckin at $2.9 billion post-cash, up from $2.2 billion just four months ago.
While many ask Luckin’s cash-fueled expansion, Blackrock, which owns a 6.58 percent stake in Starbucks, showed its confidence in the Chinese startup by pumping $125 million into Luckin’s brand-new circular through its independent equity fund.
With that, the brand-new York-based investment tight has its gambled
on two contrasting models for China’s coffee consumption. While Starbucks zeroes in on the brick-and-mortar experience, Luckin is a network of last-mile coffee delivery centers, plus places for people to pick up orders and sit down, targeting busy white-collar workers.
In a move that would amp up its fight with Luckin, Starbucks teamed up with Alibaba’s food delivery unit Ele.me last August to put hot and cold drinks in people’s hands.
Luckin did not disclose how it will disburse the fresh capital infusion, but the pace at which it’s raising suggests the startup is in dire need of cash. The brand-new circular arrived less than a year after it secured a $200 million successions an in July and another $200 million from a successions B in December.
Indeed, Luckin founder Qian Zhiya, a former executive at auto rental tight vehicle Inc., confessed the company burned through $150 million within just six months from launching. a gigantic chunk of cash had gone to shelling out deep discounts for consumers, while the coffee challenger’s offline expansion was just as cash-intensive.
As of late, Luckin has opened 2,000 outlets, consisting of tiny prep kitchens, pickup stations and cafes in 22 Chinese cities, up from 1,700 locations reached in December. That gives Luckin less than eight months to fulfill its ambition of becoming the “biggest coffee chain in China by the number of outlets run and cups sold.” The goal is to top 4,500 outlets by the end of 2019.
When it comes to actual people using the service, Starbucks still enjoys a gigantic guide. The Luckin app that allows one to order and pay had 650,000 distinctive downloads in March, data from research tight iResearch shows. Starbucks’ app is more than four times its size, with 2.81 million distinctive downloads from the same period.
Other investors that joined in on Luckin’s latest circular include existing backers such as Singapore’s sovereign wealth fund GIC, Chinese government-controlled China global Capital Corporation, Dazheng Capital and Joy Capital, whose founding partner Liu Erhai sits on Luckin’s board.