Lalamove completes $100m fundraising

HK logistics startup receives backing from investors including Shunwei Capital, which was set up by Xiaomi founder Lei Jun.

Lalamove, a Hong Kong-based courier and delivery service, has completed a $100 million round of fundraising, a senior executive at the company told FinanceAsia on Tuesday.

Leading the Series C round was Shunwei Capital, a venture capital firm set-up by Lei Jun, who also founded Xiaomi, the Chinese technology company. Existing backers Xiang He Capital, a Chinese investor, and MindWorks Ventures, a Hong Kong-based venture capital investor, also participated in the round.

“This round moved very quickly by normal financing standards in venture capital. We had a lot of inbound interest for this specific round because we are growing very quickly,” said Blake Larson, head of international at the same-day delivery and logistics provider.

Lalamove in January raised $30 million in a Series B round from investors including Xiang He – which has also put money into China’s largest streaming site iQiyi, online traveling agent Qunar, online video platform PPS and app store 91 Wireless – and MindWorks Ventures.

At the time, it announced it would use the money raised to expand into 100 cities and, in July, Lalamove achieved this milestone. Lalamove is now in more than 100 cities in China, Taiwan and Southeast Asia.

“We actually didn’t need to raise more money because our cash flow position was very strong,” said Larson. However, accelerating the pace of expansion to more cities is the main driver for the fundraising, according to Larson.

“We are starting to see a lot of our cities that are mature, i.e. roughly two years old, are turning profitable, so we know our model is very sustainable. We are not raising money to fund ongoing business operations to offer hefty subsidies [in order to] keep the market share.”

There are 200 to 250 "addressable cities" in China, said Larson.

In terms of revenue, “we’ve been growing at 20% month-on-month for almost the last two years,” said Larson.

That rapid rate of growth has a lot to do with China’s booming e-commerce industry, which drives up the demand to move goods more efficiently, and an inefficient logistics sector.

He Liming, chairman of the China Federation of Logistics & Purchasing, told a logistics summit in June that “total social logistics costs for China in 2016 exceeded Rmb11.1 trillion ($1.69 trillion), which is larger than that of the US, making China the world’s largest logistics market.”

According to National Development and Reform Commission, the cost of logistics in China took up about 14.9% of the national GDP in 2016, down 1.1 percentage points from the previous year.

Founded in Hong Kong in 2013 as EasyVan, Lalamove uses mobile platforms and real-time GPS vehicle tracking to connect customers with professional van, motorcycle, lorry and truck drivers. It now has more than 15 million users and more than 2 million drivers on its network.

For the Chinese market, Lalamove charges a subscription fee to its truck drivers, which varies depending on the different levels of access to orders. For non-China markets, the business model works similarly to ride-hailing companies such as Uber, with Lalamove taking a 15%-20% commission from every order.

Getting crowded

As the growth story develops, so is the number of competitors.

In China, 58Suyun merged in August with intra-city logistics platform GoGoVan, based in Hong Kong. The combined group is planning to expand to more cities, including in Southeast Asia, as well as a potential IPO, the executives told FinanceAsia in a recent interview.

Huochebang, a Guizhou-based truck delivery firm also known as Truck Alliance, has so far raised $327 million, according to Crunchbase data, from institutions including Baidu Capital, Tencent Holdings, IFC Venture Capital Group, Hillhouse Capital and DCM Ventures.

In Southeast Asia, Indonesia's ride-hailing giant Go-Jek is also offering logistics services. Thailand-based Deliveree on Monday closed its Series A funding round, grabbing $14.5 million to expand in Southeast Asia. Meanwhile, Singapore's Ninja Van is now aiming to raise as much as $60 million in venture funding.

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