IDG leads $50m round for Chinese hot pot ingredients supplier

While HaiDiLao is China’s leading hotpot restaurant chain, Guoquan aims to become the dominant force in the “hotpot at home” market. Founded in 2017, it initially provided hot pot ingredients to small and medium-sized restaurants. It then moved into the consumer market and started selling directly to households.

The company now operates an online platform and has an offline network of 1,700 stores. It hopes to expand to 4,000 this year, according to a statement. Guoquan provides more than 400 kinds of self-developed hot pot ingredients, mainly frozen products. Finished and half-finished dishes are available as well.

Mingchao Yang, the company's founder, said that consumer-end sales data are used to guide hundreds of upstream factories, significantly improving product quality and supply chain efficiency. The new funding will go towards improvements in this area, as well as brand building online and offline.

Guoquan has been profitable for the last two years. Revenue grew fivefold in 2019. Despite the disruption caused by the coronavirus epidemic, more than 1,000 branches are still operating, as well as the online service. The company posted 400% year-on-year growth in the first two months of 2020, with average daily sales of around RMB20 million.

David Wei, the founding partner of  VKC, said that Guoquan focuses on small community stores of about 50-70 square meters under a franchise model. It means the company can expand rapidly, and also allows the franchised stores to quickly move into profit.

Although hot pot is a niche market, many Chinese start-ups focus on fresh produce suppliers. Among them, Benlai has operated a similar hybrid business model with community convenience stores. It has raised $200 million in the first tranche of a Series D round last year.  

Guoquan has completed three rounds of funding in the past six months. Buhuo Ventures invested RMB45 million ($6.4 million) Series A last August. This was followed by an extended Series A of RMB50 million in October from Shenzhen-listed Sanquan Food.

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• Topics
• Greater China
• Early-stage
• Consumer
• Technology
• China
• IDG capital
• Vision Knight Capital
• e-commerce