Meituan-Dianping, a Chinese food-to-flights startup, is quietly increasing its exposure to India.
It was a key investor in Swiggy’s latest $210 million funding round held earlier this month, after debuting here in February with a $100 million funding round in the food-delivery service, according to data from research firm Tracxn. The lead investors who pumped in money in the latest round included South Africa-based Naspers and DST Global, Swiggy announced on June 21.
And while the eight-year-old Chinese company with a $30 billion turnover is mostly an unknown entity in India, food-tech isn’t its only connect to the subcontinent. In April, it acquired for $2.7 billion the Beijing-based bike-sharing firm Mobike, which launched operations in India this May.
The Meituan story
After multiple failed attempts to create Facebook and Twitter clones for China, Wang Xing, now 39, set up Meituan in 2010 as a food-delivery player. The company later diversified into several other verticals, taking on giants like WeChat in the race to create a “super app.”
Five years after its founding, the Tencent-backed firm merged with Alibaba-backed Dazhong Daingping. Subsequently, Tencent became its main backer, while Jack Ma’s Alibaba cut its stake and invested $1 billion in rival Ele.me instead.
And lately Meituan-Dianping is having a good run with some 320 million users using the app for a range of services from buying movie tickets and getting restaurant recommendations to making travel bookings. The company’s revenue doubled to over $5.4 billion last year, and it is flush with funds after raising $4 billion last year. It also ranks fourth in CB Insight’s most valuable startups list, beating even Airbnb and Elon Musk’s SpaceX.
Meituan-Dianping is now reportedly gearing up for a blockbuster stock market debut in Hong Kong. Bloomberg reports that Meituan-Dianping is eyeing a $6 billion initial public offering at a $60 billion valuation. This will make it Hong Kong’s second multi-billion listing after Xiaomi goes public in early July.
However, there are fears that the business is accumulating losses and its services are spread too thin. “Meituan-Dianping is waging numerous battles at once, and will not necessarily win any of them,” Reuters Breakingviews columnist Alec Macfarlane wrote.
Nevertheless, Meituan-Dianping should have some some valuable lessons for Swiggy, which is eyeing grocery and medicine delivery in India.
The India story
The Chinese investor is one of the many global players spreading their roots in India’s startup industry. Food-tech is especially hot given the sector is expected to grow to $2.5 billion by 2021 on the back of rising internet penetration and a young consumer base.
Alibaba backs digital payments platform Paytm and grocery delivery service BigBasket. Ant Financial, Alibaba’s payment affiliate, pumped in $150 million into Swiggy’s main rival, Zomato. Tencent, already an investor in Hike, Ola, and Flipkart, is now looking to spend up to $15 million on early-stage Indian startups.
Meituan-Dianping’s investments in Swiggy follow this trend. But it’s not just about the money.
“We want to not only take full advantage of Chinese capital,” founder and CEO Xing said in April, referring to Swiggy, “but also to introduce Chinese internet market expertise overseas.”