Dubbed “Starbucks’ first serious challenger in China”, Luckin Coffee raised $200 million in their first funding round, announced earlier this week, reportedly valuing it at $1 billion: unicorn status.
“Our initial [funding] investment will likely exceed one billion yuan (US$156 million),” the South China Morning Post reported Jenny Qian Zhiya, CEO of Luckin Coffee, saying in a press briefing in Beijing last month. “We have plenty of cash.” According to SCMP, at the time Qian declined to say how much.
Luckin Coffee’s first round was led by GIC, a Singapore-based sovereign wealth fund. Other participants included Centurium Capital, Joy Capital, and Legend Capital.
To raise this much capital in a Series A round isn’t exactly the usual. Crunchbase tackled the question of “What is Luckin Coffee, and why did it raise $200 million” in a piece published the day the outcome of the round was announced.
Currently, Starbucks’ second-largest market is China, after the US. According to Quartz, in less than nine months after launching Luckin Coffee had opened 525 outlets across major cities in China.
“In domestic Chinese media, Luckin has aggressively courted comparisons to the world’s best-known coffee chain,” reads the Quartz piece. “But Luckin isn’t a Starbucks copycat—rather, it meshes trends in China’s tech industry with the coffee-shop model mastered by its rival.”
Luckin Coffee is app-based — when customers walk in, they’re asked to download the app and pay using WeChat Pay or the outlet’s branded “coffee wallet,” no cash allowed. Luckin Coffee also offers a delivery service, with some of the outlets dedicated to just filling delivery orders.
“After this round of financing, we will focus on product development, technique innovation and business expansion,” Qian said, as reported by Mingtiandi.com, in a statement on Luckin Coffee’s WeChat account. “We are confident that the best match between product quality, cost performance and buying experience can be achieved through mobile Internet and big data.”
