China food-ordering platform Ele.me raises $350m

The company has now raised a total of $466 million from investors since inception, most recently an $80 million round from Dianping - a provider of restaurant listings, reviews and group-buying offers - in May 2014. The early rounds were provided by GSR Ventures and Matrix Partners, with Sequoia joining them in the $25 million Series C in 2013.

Founder Xuhao Zhang told a news conference that Ele.me - the name roughly translates as "Hungry yet?" - took more than 110 million orders from over 20 million registered users in 2014. Three quarters of these orders came via mobile devices. The company covers in excess of 200,000 restaurants across 250 cities and claims to have a 60% market share.

Ele.me was set up by three college students in 2009 as a service targeting the low-end catering market, although the business is now increasingly looking at higher-end customers and investing in service upgrades.

"They were still in school doing their masters degrees when we backed them," Allen Zhu, a managing director at GSR Ventures, told AVCJ last year. "The network was small - around Shanghai Jiaotong University - but we like the platform model and it has grown very fast."

Ele.me's model is broadly similar to that of GrubHub, a US-based food-ordering platform that went public in 2013. Customers can order meals from a wide variety of local restaurants through the website or mobile app and these are delivered by third-party couriers. Ele.me's pricing structure is similar to that of Alibaba Group's C2C platform Taobao - an annual service charge plus search ranking fee.

Food-ordering platforms enjoy a prominent position in China's online-to-offline (O2O) universe. According to internet consultancy iResearch, food will represent one of the largest vertical segments of the O2O market by 2015, with 300 million customers and a value in excess of RMB270 billion ($44 billion).

A host of different companies has received VC funding, although business models differ. While some follow the asset-light Ele.me approach, others retain their own delivery teams, which can be an obstacle to achieving scale. A further group of players charge the customer rather than the restaurant.

JD is also an investor in Daojia, having led a $50 million Series D round for the company in September 2014 alongside Macquarie Capital. Daojia makes deliveries using its own couriers and targets the urban middle-class population. Earlier this year, Tencent led a $30 million Series B round for Line0, with participation from existing investors Sequoia and Gobi Partners.

Other food-ordering services to receive VC backing include Etaoshi, Meican and Jinshisong.

The presence of Tencent and JD in Ele.me's latest round suggests that food-ordering may become the latest front in the ongoing battle between China's leading internet companies as they look to broaden their user bases and service capabilities. Tecent is an investor in both JD and Dianping.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Venture
• Expansion
• Consumer
• Technology
• Greater China
• China
• Venture
• Growth capital
• TMT
• Consumer
• Citic Private Equity
• JD.com
• Tencent
• Sequoia Capital