Joy Capital leads $88m round for China's Shihuituan
Joy Capital has announced its participation - as the lead investor - in an $88.3m funding round for Chinese community group buying platform Shihuituan, which is also known as Nice Tuan.
ZhenFund disclosed the deal last month, giving details of the size and contributing parties. However, it did not identify the lead investor. In addition to Joy and ZhenFund, Alibaba Group, Qiming Venture Partners, China Growth Capital and Ince Capital Partners - established by ex-Qiming executive J.P. Gan - put in capital. Joy also led Shihuituan’s RMB100 million ($14 million) angel round in 2018.
The new funding follows the company's merger with industry peer Niwoning.com last August. Niwoning was backed by GGV Capital and Hong Kong-listed CMBC Capital.
Established in 2018, Shihuituan offers fresh produce through a mini-program on Tencent Holdings' WeChat platform. Each community has a leader who aggregates demand for products. Customers pick up items from specified places such as convenience stores. Shihuituan predicted that its monthly sales volume would reach RMB500 million as a result of the Niwoning merger.
Erhai Liu, Joy's founder, said in a statement that Shihuituan is a new species of start-up enabled by the emergence of internet infrastructure such as social networking and mobile payment systems. New infrastructure is a key investment theme for Joy, he told AVCJ in an interview published earlier this year.
Ying Chen, founder of Shihuituan, noted that the community group buying model will evolve into a different concept best described as "community new retail." It will be underpinned by brick-and-mortar stores as well as mini-programs. This corresponds to the view of Huafeng Yu, founder of fresh produce retailer Benlai Group, who told AVCJ that community group buying cannot be sustained without offline stores.
Community group buying deals have dropped significantly since the second half of 2019. Many smaller players have either gone bankrupt or been acquired by larger operators. Larger recent transactions include a $100 million commitment to Tongcheng Life, a group buying business incubated by Hong Kong-listed online travel agency Tongcheng-Elong.
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