Tencent re-ups in China B2B trading platform Yijiupi
Tencent Holdings has invested $80 million in Yijiupi, a China-based online B2B trading platform that is looking to continue its expansion from liquor into other consumer goods categories.
Tencent is an existing investor in the business, having participated in a $200 million Series D round last year alongside Meituan-Dianping, Source Code Capital and China Everbright. More recently, Warburg Pincus came into the round with a $100 million commitment.
Yijiupi said that it would use the Series D funding to broaden its geographical coverage and introduce more consumer goods categories. It appears to be realizing that vision.
The company now covers 140 municipalities and 500 towns in 26 Chinese provinces. It expects gross merchandise volume (GMV) to reach RMB20 billion ($2.83 billion) this year. On the product side, Yijiupi has divided its platform into two channels: alcohol and beverages and grocery and snacks. It claims that non-alcohol products account for 90% of transactions and 70% of overall spending.
Yijiupi started out in 2014 as a liquor trading platform for bar and restaurant owners and broke into more fast-moving consumer goods (FMCG) categories last year. It aggregates orders from multiple buyers and secures discounts from suppliers by purchasing in bulk. The company makes money through pricing arbitrage. If customers use normal channels, passing orders through layers of distributors, each of which takes a cut, their costs would be higher.
Chaocheng Wang, Yijiupi's founder, said that the core competency of the company is its digitized supply chain and business synergies. Supply chain finance is another revenue source, with Yijiupi extending RMB4 billion in loans to customers so they can make orders in the first half of the year. It expects the total to surpass RMB10 billion for 2019 in full.
Yijiupi raised its first round from Bertelsmann Asia Investments (BAI) in 2014. A Series B of RMB200 million came a year later from Greenwoods Investment, Lighthouse Capital and Source Code, in addition to BAI. In 2016, the received a further RMB241 million from Source Code, Genesis Capital, Meituan-Dianping and Eastern Bell Venture Capital. Several of these investors re-upped later that year in a $100 million Series C that also featured HG Capital.
Lighthouse Capital is the exclusive financial advisor for the latest funding round.
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