Just a year-and-a-half old, Luckin has not only completed a successful Series B-plus round, the company is valued at $2.9 billion post-money, which is a step up from $2.2 billion just four months ago according to TechCrunch. This level of investment will aid Luckin with its quest to establish itself as a major player in the coffee service market, and as a serious rival to the U.S. chain Starbucks.
The chain has attracted some big investors, such as Blackrock. Although Blackrock has a a 6.58 percent share in Starbucks, the financial institution is hedging its bets and it has invested $125 million into Luckin’s new round through via a private equity fund. Other investors are Singapore’s sovereign wealth fund GIC, Chinese government-controlled China International Capital Corporation, plus Dazheng Capital and Joy Capital.
Luckin’s business model differs from Starbucks. While the U.S. chain is mostly about its cafes, Luckin provides a series of of last-mile coffee delivery centers, with coffee available via a digital app ordering service (with 650 thousand unique downloads to date).
The company also offers spaces for people to collect orders and sit down. The marketing demographic is very much towards busy white-collar workers. Currently Luckin is available in some 2,000 locations, including pick-up stations, cafes and small preparation kitchens.
With the new investment, Luckin aims to expand its digital ordering services and to open 4,500 outlets by the end of 2019, according to the company’s founder Qian Zhiya, a former executive at auto rental firm Car Inc. This will mean overtaking Starbucks, which currently dominates the China market with more than 3,600 stores and has around 55 percent of China’s ready-to-drink coffee market.
