Tencent-backed grocery startup Missfresh closes in on US$500m fundraising

[HONG KONG] Tencent Holdings-backed Missfresh is on the verge of closing US$500 million of new financing to quicken expansion after the Covid-19 outbreak bolstered demand for fresh groceries, people familiar with the matter said.

Beijing Missfresh Ecommerce Co, which counts Goldman Sachs Group and Tiger Global Management among its backers, recently wrapped up the second tranche of a funding round that will raise a total of about US$300 million and another one billion (S$199.5 million) to 1.5 billion yuan of Chinese currency funding, the people said, requesting not to be named because the matter is private. A third and final tranche will be completed soon but the financing has so far valued the grocery delivery startup at about US$3 billion before investment, the people said.

A company representative declined to comment.

Missfresh - one of a clutch of startups Tencent backed during China's Internet boom - is competing in a cash-burning sector with deeper-pocketed corporations including Alibaba Group. Consumers sheltering at home during the Covid-19 pandemic have reinvigorated the once-difficult online groceries arena, and Missfresh now needs ammunition to attack a Chinese online fresh foods sector that could reach US$178 billion by 2025.

The company, founded in 2014, has more than 1,500 mini-warehouses that promise deliveries as fast as within an hour, it said in a statement in July. Missfresh had nearly 25 million monthly active users as at May last year. It handled 10 billion yuan of transactions in 2018 and had generated positive cash flow by the end of that year, the company said at the time.

The funding will help tide Missfresh over during tough times in the venture capital (VC) market. VC funding plummeted at the start of 2020 with investors stranded at home and increasingly risk-averse. Excluding the latest effort, the Beijing-based startup has raised nearly US$900 million via eight funding rounds from investors including Jeneration Group and Genesis Capital, the company has said.

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