Chinese food-ordering platform Ele.me raises $630m

CITIC Private Equity and domestic retail group Beijing Hualian led the round, according to a Ele.me announcement. CMC Capital, Gopher Asset Management, Sequoia Capital and strategic players Tencent Holdings and JD.com also took part. In an earlier regulatory filing, Shanghai-listed Hualian confirmed it would contribute $90 million. 

Ele.me has now more than $1 billion since inception. This includes a $350 million Series E round of funding in January from CITIC PE, Sequoia, Tencent, JD.com and restaurant reviews and group-buying platform Dianping.

Xuhao Zhang, the company's CEO, said the new funding would go towards expanding the food-ordering platform and improving delivery services. "We need more capital to support our growth - particularly for the delivery platform as a foundation of our home delivery service," reported Tencent QQ News.

Citing a study by consultancy iResearch Group, Hualian said that China's online-to-offline (O2O) restaurant market was worth RMB97.5 billion ($15.2 billion) in 2014, accounting for 3.5% of the overall domestic food market. Customers order meals through the Ele.me website or mobile app, and the food is delivered by third-party couriers. Restaurants pay an annual service charge plus a search ranking fee.

Ele.me receives two million orders per day and its monthly transaction volume exceeds RMB1.5 billion. It works with more than 300,000 restaurants across 252 cities, serving in excess of 40 million consumers. The company has around 4,000 full-time couriers located in first and second-tier cities and a network of over 200,000 part-time couriers through arrangements with third-party providers.

Hualian had 144 grocery stores in 48 cities plus one luxury department store and 47 shopping malls as of June 2015. The company said that Ele.me's business could complement its own by providing delivery services to customers.

Ele.me was set up by three college students in 2009 as a service targeting the low-end catering market, although it has subsequently broadened its focus to include higher-end customers. Early rounds of funding were provided by GSR Ventures and Matrix Partners, with Sequoia joining them for the Series C in 2013. Last year Dianping invested $80 million.

Announcing the Series E round, Ele.me founder Xuhao Zhang said the company took more than 110 million orders from over 20 million registered users in 2014 and had a 60% market share. While Ele.me follows the asset-light approach, other platforms 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.

Various companies have received VC and strategic funding, with JD.com also backing Daojia, while Tencent and Sequoia have both invested in Line0. In June, Alibaba Group and its affiliate Ant Financial moved to counter Tencent and JD.com's alliance with Ele.me by announcing plans for a $1 billion joint venture that will tap China's O2O services market, initially focusing on the food and beverage segment.

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• Topics
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