Chinese coffee chain Luckin has become a member of the so-called unicorn club following a fund-raising exercise that saw the startup fetch lofty valuation.
The Beijing-based firm successfully completed a Series A funding round worth US$200 million at a valuation of over US$1 billion, according to reports.
The investment round was led by Singapore sovereign wealth fund GIC and other entities that included Centurium Capital, Joy Capital, and Legend Capital.
Founded last year, Beijing-based Luckin Coffee positions itself as a “new retail” startup and purveyor of coffee, taking on Starbucks’ dominance in China market.
“After this round of financing, we will focus on product development, technique innovation and business expansion,” Luckin’s founder and CEO Qian Yazhi said in an announcement.
“We are confident that the best match between product quality, cost performance and buying experience can be achieved through mobile Internet and big data” said Qian, who had once served as chief operating officer of Chinese car rental giant CAR Inc and its ride-hailing affiliate UCAR.
With its on-demand service and generous subsidies, the homegrown coffee brand recorded five million cups of coffee in sales in just four months after launch, according to the firm.
The coffee chain had 525 stores in 13 cities across China as of May, serving over 1.3 million customers.
Adapting to China’s mobile-focused consumers, Luckin allows customers to choose to either pick the beverages in nearby stores or have the drinks delivered within 30 minutes after placing orders online, Sohu news noted.
Luckin outsources deliveries to China’s leading logistics service provider SF Express. It offers a free drink if the order does not arrive within 30 minutes.
With a large latte priced at 24 yuan (about USD3.70), Luckin offered competitive pricing on its products, about 20 percent cheaper than at Starbucks.
It also won the heart of Chinese with generous specials such as QR code-based coupons and discounts like “buy five, get five free” offerings.
In an interview in May, Qian revealed that the firm was still running at a loss, and that it is comfortable to stay unprofitable for a long time, because “the market takes time to grow,” state-backed Xinhua news agency reported.
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