Deal focus: Lalamove brings the Uber effect to logistics

The common perception of Hong Kong start-ups is that they are limited in scope, profile, and fundraising capacity by the size of their home market. All the smart money goes to mainland China. Gradually, though, these dynamics are changing with a handful of local businesses pursuing cross-border strategies that grab investor attention. Lalamove is one of them.

An aggressive growth strategy has seen the company establish a footprint that covers more than 130 mainland cities as well as top-tier centers in six Southeast Asian countries. Lalamove’s vision is to become Uber for the logistics sector – offering an app through which individuals or enterprises that want to move goods from A to B can do so through van drivers who have free time in their schedules. It is a classic case of technology disrupting a traditional business model.

“We were motivated to invest by Lalamove’s founder Chow Shing-Yuk, who said that the logistics sector had long been overlooked by other technology entrepreneurs. As such, there was little competition in the space. Given the very immature technological operating processes drivers had to go through to get orders back then, we believed Shing was in a good position to bring about disruption,” says David Chang, a partner at MindWorks Ventures.

MindWorks is the second-largest shareholder in Lalamove after Shing. It has participated in all six of the company’s private funding rounds since 2015, including the recent $300 million Series D round, which also featured the likes of Hillhouse Capital, Sequoia Capital China, Shunwei Capital, Xianghe Capital, and Eastern Bell Venture Capital. Lalamove has raised $1.6 billion since inception and is now said to be valued at more than $1 billion, making it one of Hong Kong’s few unicorns.

The company claims to have about three million drivers and over 28 million users on its platform. It generates most of its revenue by charging drivers a monthly membership fee. There are several tiers of membership, with those paying the most eligible for a larger share of the orders. Investors see this monetization model as preferable to taking a cut of the payment for each trip because it encourages drivers to remain loyal to the company based on the amount of business that can be generated.

Lalamove’s immediate objectives include expanding coverage of Southeast Asia to all 11 countries in the region and growing a presence in India, where the logistics market is said to be worth more than $160 billion. Aside from consolidating existing geographies and entering new ones, the company sees potential on the vehicle dealership side, buying vans in bulk from manufacturers and then selling them on to drivers registered on the platform, sometimes under installment repayment plans.

“Lalamove launched this new business vertical in 2018 and it is expected to become a big part of the overall business,” Chang says.   

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• Topics
• Greater China
• Support services
• Technology
• Expansion
• Hong Kong (China)
• Logistics
• TMT
• Hillhouse Capital Management
• Sequoia Capital
• Shunwei Capital Partners
• Transportation