Lalamove on track to become next start-up unicorn from Hong Kong
Logistics venture backed by Xiaomi’s Lei Jun will use the US$100 million raised in the current round of funding to expand in Indonesia and Malaysia
Hong Kong logistics start-up Lalamove said on Wednesday that it has raised US$100 million in the latest round of funding, placing its valuation to close to US$1 billion, giving further impetus to its expansion plans in Southeast Asia and maintain its market leadership in China.
The funding round was led by ShunWei Capital, a venture capital firm that counts Xiaomi CEO Lei Jun as one of its founders. The investment round also saw participation from previous investors such as Xiang He Capital and Hong Kong’s MindWorks Ventures.
Lalamove chief executive Chow Shing-yuk saidthat the funding places the company’s valuation at close to US$1 billion. Companies which are valued at above US$1 billion are typically labelled “unicorns” in the start-up world.
“We were originally planning to raise only US$30-40 million,” said Chow. However “we actually received about US$300 million [in offers from interested investors] but that was too much, so we settled on US$100 million.”
The company had previously raised about US$50 million in total funding.
But Chow’s goal is not to achieve unicorn status. In fact, he said that it is unlikely that the company will raise additional venture capital financing and will instead go for an initial public offering (IPO) within the next two to three years.
“Financially we’re pretty decent, we're cash-flow positive,” said Chow.
The New York Stock Exchange has already approached Lalamove for a potential listing on the bourse, Chow said, but he prefers the Hong Kong stock exchange.
“Our first choice is always [to list in] Hong Kong,” he said. “I’m from Hong Kong, and I think that [the city] needs some examples of successful tech companies listing here.”
Lalamove currently operates in more than 100 cities in China and claims to be the market leader in terms of transaction volumes. Funds raised from its latest round will be used to strengthen its leadership position and expand into new markets in Southeast Asia such as Indonesia and Malaysia, Chow said.
On the mainland, Lalamove's largest competitor is 58 Suyun, which recently merged with Hong Kong-based delivery company GoGoVan. The joint entity, which is still known as GoGoVan outside China, is valued at more than US$1 billion, which made it Hong Kong’s first unicorn after the deal.
But Chow is not fazed by the 58 Suyun and GoGoVan deal, and is confident that Lalamove can retain its grip on the market.
“In 2014 and 2015, we had over 100 competitors in China, some even had the same user interface [as Lalamove],” Chow said. “Back then we had less resources, less people, we were not number one ... now with this round of funding, and leading in most cities we operate, we believe we can take on the challenge.”
Lalamove will use the fresh funds to expand its talent pool. It plans to hire another 100 employees to focus on improving its technology and services to further shave down delivery time and improve efficiency as the company makes a push towards offering enterprise solutions for logistics. This includes enterprise delivery for big companies as well as giving enterprise customers access to an API (application programming interface) that they can embed into their platform to use Lalamove services.
Its enterprise customers include Ikea in Singapore, Google in Hong Kong and Line in Bangkok, according to the company.
Chow said that Lalamove hopes to operate at 10 times its capacity within three years. Currently, the company has about 20 million users and a network of 2 million drivers.
The average time it takes for a driver to show up after an order is placed is about 10 minutes, he said, although the company is looking to reduce this to about five minutes.
“We are actually the fastest delivery company in the world, from placing the order to have it completed
takes an average of 46 minutes, faster than any company,” Chow said. “When [customers] place an order on the platform, there will [almost] always be a match [between driver and customer]... the rate is 99 per cent.”