MissFresh, a Chinese online grocer, announced yesterday that it has raised a $495 million funding round led by China International Capital Corp., with participation from new investors ICBC and the Abu Dhabi Capital Group, as well as existing investors Tencent, Goldman-Sachs ans Tiger Global. This brings the total amount raised by MissFresh to $1.4 billion.
That is a lot of money, even by today’s frothy standards, and reportedly gives MissFresh a pre-money valuation of $3 billion. For comparison, here in the U.S., grocery delivery startup Instacart has raised a total of $2.1 billion with a valuation of $13.7 billion.
This funding also highlights how online grocery shopping isn’t just big business in the U.S. The COVID-19 pandemic has forced lockdowns around the globe, spurring massive adoptions of online grocery shopping. In the U.S. online grocery shopping has experienced month after month of record customers and sales since the pandemic began, hitting $7.2 billion in June.
It’s worth pointing out MissFresh’s business model, which foresakes big, centralized warehouses in favor of smaller distribution centers. There are 1,500 of these smaller distribution hubs located closer to residential areas allowing for faster delivery and a a reduction in cold chain costs. We see this type of centralized versus distributed distribution models playing out between companies like Kroger, which is building large robotic fulfillment warehouses that cover large geographic areas, and Takeoff Technologies, which builds micro-fulfillment centers inside existing supermarkets, closer to where people actually live.
The question now is exactly how much consumer behavior around grocery shopping has permanently changed because of the pandemic. Will convenience and lingering fears over the virus continue to push grocery e-commerce even higher? MissFresh, at least, now has the money to find out.