Beijing’s Missfresh Ecommerce Co., a Chinese grocery delivery startup, is expected to receive more than $500 million in expansion financing as COVID-19 has fueled demand for fresh food at home, sources told Bloomberg News.
This second round of funding promises to raise a total of about $500 million for the Tencent Holdings Ltd.-backed company. Its other high-profile investors include Goldman Sachs Group Inc. and Tiger Global Management.
A third tranche, perhaps its final one, is expected to close soon, Bloomberg reported. So far, the startup has been valued at $3 billion.
The report did not name the investors. A Missfresh spokesperson declined to confirm or deny the report.
Previously, Missfresh has raised $900 million thanks to investors like Jeneration Capital and Genesis Capital.
The company appears to need the cash as China residents are staying at home and the demand for online groceries is heating up – as is the competition for what is expected to be a $178 billion sector in five years, the news service reported.
Founded in 2014, Missfresh has more than 1,500 warehouses that serve nearly 25 million customers. The company promises to deliver groceries within an hour.
As of 2018, Missfresh had $1.5 billion in transactions, which made it profitable, the company said at the time. Last summer, PYMNTS reported that the company was seeking additional funding as China’s economy and market appeared to be trending downward. The threat of a trade war was the driving force behind funding inconsistencies for Missfresh and other local startups, the report said.
The demand for online groceries has become a factor in the U.S. as well.
Navigating the COVID-19 Pandemic: The Post-Pandemic Reset, a PYMNTS survey published on Wednesday (May 20), revealed that the number of shoppers who have switched to online grocery shopping at the end of April was nearly 15 percent, up from about 4 percent in early March.
The other factor contributing to the surge in online grocery sales is that consumers are ordering less from restaurants. PYMNTS has reported that before the pandemic began, over 80 percent of consumers reported eating in restaurants regularly; by the end of April, that number dropped by more than 90 percent.