Deal focus: Lalamove seeks edge in last-mile delivery

Fierce competition can make last-mile logistics a risky business in Asia – as a string of fizzled intra-city trucking start-ups in India will testify. Tackling this segment in the similar market conditions of Greater China must therefore be undertaken with a certain delicacy.

Shunwei Capital took this approach when it led a $100 million Series C round for Hong Kong-based delivery start-up Lalamove – also known as Huolala in mainland China. The capital will be used to develop a business-to-business service for corporate clients as the company firms up an existing footprint that extends into Southeast Asia, where it is now profitable.    

“We have studied the logistics industry for quite some time, looking at various business models and companies in this area,” says Tuck Lye Koh, CEO at Shunwei. “Lalamove has already captured significant market share in southern China, so there’s already a meaningful base on which they can build and consolidate a position to expand into other parts of the country.”

Lalamove’s operations cover more than 40 Chinese cities, including Shenzhen, Guangzhou, Shanghai, and Chongqing. Its platform, meanwhile, boasts about two million drivers and over 1.5 million users. Services in Thailand are supported by a partnership with mobile telecom company Line.

This scope has not insulated the company from the last-mile competition factor, however. In fact, the latest round – which was also backed by existing investors Xianghe Capital and MindWorks Ventures – coincided with an M&A-fueled growth spurt by key rival GoGoVan. Investors nevertheless believe in Lalamove’s leadership, especially founder and CEO Shing Chow, whose career spans stints as a professional poker player and a consultant for Bain & Company. “We believe it is one of the strongest management teams we have backed so far,” says Koh.

Previous support for Lalamove includes a $30 million Series B round led by Xianghe in January that attracted participation by Mindworks, Blackhole Capital and Crystal Stream. The company has raised more than $1.6 billion in venture funding since 2013.

Part of this confidence stems from a philosophy that the business model is not logistics per se – but rather a mobile-enabled communications play that simply aims to upgrade a stagnant traditional industrial process. While much of the conventional intuition around last-mile delivery connects the industry’s growth potential to upticks in online retail activity, Lalamove investors such as AppWorks see more fundamental problem-solving at work.

“With or without e-commerce, there are a lot of individual van drivers in China, Hong Kong, and Southeast Asia just sitting on a corner or at a physical marketplace in a small town and waiting every day for an order,” says Joseph Chan, a partner at AppWorks. “It’s very inefficient for both the drivers and the people who want the delivery service. Lalamove matches that supply and demand seamlessly.” 

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• Topics
• Greater China
• Expansion
• Support services
• China
• Logistics
• Growth capital
• Transportation
• Shunwei Capital Partners