(Yicai Global) June 14 -- A coffee chain startup that didn't exist until the start of this year has just become China's latest unicorn after landing massive Series A funding that will help fuel its hot pursuit of market leader Starbucks.
Luckin Coffee has completed fundraising of USD200 million to USD300 million, valuing the Beijing-based company at more than USD1 billion, online news outlet 36Kr reported. The investors' names were not disclosed.
The six-month-old startup's financing is close to the amount that most new companies can expect only in later stage fundraisings. Little Red Book, the overseas shopping tip and lifestyle platform, secured over USD300 million in its Alibaba-led Series D round early this month.
Already China's second-largest player by store numbers, Luckin Coffee relies heavily on a New Retail model, enriching brick-and-mortar stores with online campaigns and free delivery. Since kicking off trial operations in January, the company has opened 525 stores in 13 cities including Beijing, Shanghai and Shenzhen. With a large latte priced at CNY24 (USD3.70), its coffee is about 20 percent cheaper than at Starbucks.
China's coffee market is worth about CNY100 billion (USD16 billion), and has huge growth potential, according to news portal Foodaily. The market grows at a dizzying pace of 40 percent a year. The country's largest player, Starbucks, aims to double its mainland store count to 6,000 by 2022, Bloomberg reported last month.
Despite an initial investment of CNY1 billion, Luckin Coffee's founder Qian Zhiya said in May that the firm was still running at a loss, and was prepared to do so for a long time because "the market was gonna take time to grow," state-backed Xinhua News Agency reported. Qian is a former chief operating office of ride-sharing firm Ucar.
Luckin Coffee also has homegrown rivals on the horizon. Coffee Box, a similar delivery-based brand raised CNY158 million in its fifth round of financing, led by Chinese venture capitalists Qiming Venture Partners and Gaorong Capital.
Editor: Emmi Laine