(Yicai Global) July 12 -- Luckin Coffee has become China's first coffee chain unicorn after a USD200 million fundraising that helps arm the seven-month-old company in its home-turf battle with global titan Starbucks.
Chinese investors Centurium Capital, Joy Capital, and Legend Capital, as well as sovereign wealth fund Singapore Government Investment Corporation led the startup's A-round fundraising, state-backed The Paper reported yesterday. Centurium Capital is a new backer. The others had previously invested through a fund run by ride-hailing service provider Ucar.
Beijing-based Luckin Coffee is now worth USD1 billion and the market disruptor is going after dominant rival Starbucks. Luckin is expanding rapidly in China, where the coffee market is already worth about CNY100 billion (USD16 billion). In only five months, it has opened more than 500 shops in 13 cities including Beijing, Shanghai and Shenzhen. But US-based Starbucks is not about to roll over. In the coming five years, it plans to almost double its presence in the country to 6,000 outlets.
Already the second-largest player in terms of stores, Luckin Coffee plans to spend its new funds on research and development of products, technological innovation and business development. The firm is not yet focused on turning a profit.
"We've not set any timeline for making a profit," founder and Chief Executive Qian Zhiya said. Luckin Coffee is "prepared for long-term losses."
The company operates a New Retail model, enriching brick-and-mortar stores with online campaigns and free delivery. Its 'buy two, get one free' and 'buy five, get five free' campaigns may be expanded, Qian added. With a large latte priced at CNY24 (USD3.70), its coffee is about 20 percent cheaper than that of Starbucks'.
Luckin's rapid advance is thanks to a nationwide coffee-drinking boom and an experienced management team, according to local food industry analyst Zhu Danpeng.
Before this round, Luckin Coffee had taken out loans and secured angel investor funds from Ucar Chairman Lu Zhengyao, Qian's former employer.
Editor: Emmi Laine