Chinese food delivery and group buying company Meituan-Dianping gobbles $3.3B funding round
In September 2015, Zomato raised $60 million in funding led by Temasek and Vy Capital. Most recently (yesterday) Swiggy raised a $35 million Series C round. In stark contrast, Chinese food delivery and group buying company Meituan-Dianping announced on Tuesday that it has raised more than $3.3 billion in one of China’s (and indeed the world's) largest funding rounds for an internet company. A spokeswoman confirmed the news to Reuters but declined to disclose details on Meituan-Dianping's valuation.
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Meituan.com was a group-buying website specializing in localized consumer services and was founded by Xing Wang in 2010. The company had raised a total of $50 million from Alibaba. According to China E-commerce Research Center, Meituan’s transaction volumes had reached $860 million in the first six months of 2013.
Dianping was founded by Tao Zhang and co-founded by Jason Li, Bo Zhang, Shuhong Ye, and Edward Long. The platform was launched in April 2003 in Shanghai, as a website providing independent consumer reviews on local services. In January 2006, Dianping received an investment from Sequoia Capital in its first round of financing.
Meituan-Dianping was formed in October 2015 when Meituan, backed by Alibaba Group Holding Ltd, and Dianping, which is backed by Tencent Holdings Ltd, merged. This combined entity created one of China’s biggest players in the restaurant bookings, movie ticketing and other online-to-offline service providers. Many see the combined company as a mix of Yelp, GroupOn and food delivery. In November, The Wall Street Journal reported that Alibaba was seeking to sell its stake in the firm.
The Chinese startup scene has been known for its explosive growth in ecommerce and related fields. In November 2015, during their 'Single's day' sales, Alibaba Group Holding reported to Reuters that the total value of goods transacted during its Singles' Day shopping festival was $14.32 billion, a 60% surge from 2014. Some other large funding rounds in the last year include Uber raising $1.6 billion convertible debt from clients of Goldman Sachs Group while Alibaba Pictures Group Ltd, the film and entertainment unit of China’s largest e-commerce company, too raised $1.6 billion in funding. In December 2015, Bloomberg reported that Uber was in the process of raising a $2.2 billion funding round at a valuation of $62.5 Billion.
Other than Meituan and Dianping, another high profile merger in China in the recent past was when taxi apps Didi Dache and Kuaidi Dache merged and were valued at $6 billion in February 2015. Closer home in India, food-tech startups have been growing and raising a lot of funding, but many have shut down too.
Many compare the Chinese market to be similar to the Indian market in many aspects, and India is expected to be the 'Next China'. But India lags behind in many aspects currently. For example, the smartphone penetration was estimated to reach 73% among Chinese consumers by year 2015, according to a report by Nielsen. From 200 million internet users in 2013 India is expected to reach over 500 million internet users by 2017. So with increasing mobile and internet penetration in India, Indian startups too have the opportunity to grow exponentially. Like the two big mergers in China, Indian startups that have synergies may be able to merge or form symbiotic relationships to provide more value to end users.
(With inputs from Emmanuel Amberber)