Chinese online grocery and recipe delivery firm MissFresh has just secured fresh capital of around $495 million after closing a round of financing led by China International Capital Corp (CICC). The latest investment is a further indication of the continued investor interest in online e-commerce startups and the growth of the industry in China amid the coronavirus pandemic.
The CICC-led funding round had attracted several major investors that were willing to bet on the continued growth of China's online commerce industry. Foreign investors that participated in the funding round included Goldman Sachs' asset management unit Tiger Global Management and Abu Dhabi Capital. Major local investors included the Commercial Bank of China. MissFresh hired China Renaissance to be its exclusive financial advisor for the deal.
According to sources familiar with the deal, the Tencent-backed online grocery delivery platform operator was already valued at about $3 billion even before the latest injection of capital. Since it was founded back in 2014, Miss Fresh has been able to raise a total of $900 million through eight separate funding rounds.
MissFresh was able to rapidly grow its business during the first few quarters of the year, following the emergence of the coronavirus. As people remained indoors to avoid contracting and spreading the disease, demand for online grocery deliveries had boomed.
MissFresh is currently competing with similar services offered by much larger platforms, including those operated by Alibaba Group and JD.com. However, the latest funding round should give the startup the capital it needs to go after the rapidly growing online fresh foods sector. According to estimates, China's online food delivery sector is expected to balloon to over $178 billion by 2025.
The company, which also delivers online meal kits apart from fresh produce, boasts about 25 million monthly active users. In a statement it released last year, MissFresh claimed that it had more than 1,500 mini-warehouses spread across the country, which it uses to make fast one-hour deliveries.
Unlike other startups, MissFresh has already proven itself to be profitable, reporting a positive cash flow in 2018. During that year, the company reported transactions worth over 10 billion yuan or roughly $1.5 billion.
Launching the funding round had come with its own risks, given the uncertainty revolving the global venture capital environment. Most companies are facing massive hurdles in raising capital outside of going public. The erratic travel restrictions and lockdowns have made it difficult for investors to participate in such activities, resulting in a massive drop in venture capital funding deals this year.
