Chinese coffee shop chain raises $200m, achieves unicorn status
Luckin Coffee, a Chinese coffee shop chain established last year, has raised $200 million in Series A funding from GIC Private, Centurium Capital, Legend Capital, and Joy Capital. Centurium, a GP established by ex-Warburg Pincus China head David Li, is said to be the lead investor.
The round values Luckin at $1 billion, according to a statement. Zhiya Qian, the company’s CEO, added that the proceeds would be used for product research, technology innovation, and business development.
As of May, Luckin claimed to have 525 stores in 13 cities, having launched less than nine months ago. The company wants to challenge Starbucks – the dominant player in China with more than 3,300 stores and, according to Euromonitor International, an 80% national market share – and charges 30% less than its global rival for a latte.
The Luckin model is also a technology-enabled one. Customers are encouraged to download the company’s app to place orders in stores and pay through the Tencent Holdings-owned WeChat Pay system or a native mobile wallet. Luckin also emphasizes delivery, with many of its outlets dedicated to fulfilling orders placed from outside.
Specialist coffee shop chains generated sales of RMB22 billion ($3.4 billion) in China last year, and Euromonitor expects that figure to reach RMB28 billion by 2020. Other recent PE and VC investment activity in the space includes a $25 million Series B-plus round for Coffee Box, which started out as a delivery service for Starbucks. The round was led by Qiming Venture Partners.
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