Tencent-backed Grocery Start-up Missfresh Closes on $495M Fundraising

Tencent Holdings-backed Missfresh has completed a new round of financing worth $495 million, LatePost reported, the biggest fundraising that a Chinese grocery start-up has ever received.

Led by China International Capital Corporation Limited (CICC), this round of financing had multiple investors like Goldman Sachs Group Inc. and Tiger Global Management.

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Missfresh CFO Wang Jun said the fundraising will be mainly used to develop the company’s “smart chain technology and supply chain capabilities” rather than marketing.

Under smart chain, Missfresh will split the three major businesses of commodities, logistics and marketing into 300 sections, then standardize and digitalize each one. For example, Missfresh currently uses an intelligent algorithm for replenishment, which makes 3 million calculations per day and accurately replenishes products in front warehouses nationwide.

As for the supply chain, Missfresh will further enrich its products and lower prices to provide consumers “convenient, high-quality and one-stop shopping.”

Wang said Missfresh is forming partnerships with more and more suppliers.

“We’re developing new partnerships with top suppliers every week,” Wang said. “Suppliers give us exclusive prices in the industry.”

Founded in 2014, Beijing-based Missfresh has more than 1,500 warehouses that serve nearly 25 million customers.

Wang said the company has achieved nationwide profitable growth after deducting operating costs such as purchases, coupons, losses, logistics, distribution, warehouse rent and labor.

Missfresh has up to 3,500 products on the platform that it claims to deliver within two hours. The company said the average turnover of its fresh products is 1.5 days, and the sell-through rate before 5 p.m. each day is 5%.

“This kind of management quality is leading in the industry,” Wang said. “Although we still make investments, it will not affect the fact that we have already made profitable growth nationwide.”

Missfresh previously raised more than $3 billion in May.

Grocery delivering start-ups have grown rapidly as the coronavirus pandemic fueled demand for grocery delivery. It’s also seen as one of the most promising industries in the future.

According to Trustdata, the number of monthly active users of grocery apps jumped 131% in February compared to last year, the highest year-on-year growth in two years.

A survey from Times Capital, one of Missfresh’s long-time supporters, shows that 86% of new users who joined during the pandemic will continue to use Missfresh after COVID-19.

“This number is very encouraging,” said Zhang Ziquan, managing partner of Times Capital. “We believe Missfresh has the biggest potential in self-operated food e-commerce.”