Luckin, a Chinese coffee startup that aims to dominate rival Starbucks in the Chinese coffee market, has raised $150 million in a Series B-plus fundraising round, according to a report. The fresh capital values the company at $2.9 billion, which is an increase of $700 million from four months prior.
One of the many companies that have invested in Luckin is BlackRock, which owns a 6.58 percent stake in Starbucks and contributed $125 million through its own private equity fund. This means that BlackRock, which is based in New York, now has its hands in two competing coffee companies in China. There are some key differences in the two models, however: Starbucks has focused on physical locations, while the Luckin model is more of a last-mile delivery store for picking up orders, with a focus on white-collar professionals.
Starbucks has not simply taken a backseat during the Luckin expansion – it recently partnered with Ele.me, Alibaba’s food delivery arm.
The timing of the funding round suggests Luckin is moving through its cash rather quickly, as evidenced by the fact that it raised $200 million in a Series A round and another $200 million in a Series B, all in the past year. Luckin Founder Qian Zhiya said the company went through $150 million in just the six months after the company’s launch. A lot of the money went toward customer discounts, he said, and the company’s expansion was expensive as well.
Luckin has about 2,000 stores – which is up from 1,700 in December – with prep kitchens and pickup stations in 22 cities in China. The company wants to have 4,500 outlets by December of this year.
Starbucks has had a healthy head start, as it entered the country 20 years ago. It’s also been expanding lately, and it has 3,600 stores throughout 150 cities in the country, which is up from 3,300 in May of 2018.