Startups

What Is Luckin Coffee, And Why Did It Raise $200M?

Morning Report: The biggest round out today is $200 million for China’s Luckin Coffee. What is it?

Chinese startup Luckin Coffee announced a $200 million raise today. The company’s new investors include Joy Capital, GIC, Legend Capital, and Centurium Capital.

The funding round values Luckin at $1 billion, so say hello to the world’s newest unicorn.

The scale of capital and the fact that the round is labeled a Series A is confusing. To fill you in this morning, here are a few notes from what we’ve picked up about the company.

First, Luckin Coffee has rapidly grown. Per our own Celia Wan, the company “expanded [seemingly] overnight” and is now “everywhere in China.” In her experience, the company is working to provide an upscale experience at a reasonable price point. It’s using a mass-store model to compete with Starbucks in China.

(On the mass expansion point, this article noted that when the author first installed the Luckin app, “[i]t showed that there were no stores in Shenzhen yet, but dozens were under construction.” The next week the same author noted some of the stores were already delivering coffee.)

The Starbucks point is critical. Quartz reported this morning that “Starbucks’ second-largest market after the US is China, where it has over 3,300 stores.” Luckin wants to challenge the foreign giant domestically.

Critically, however, Luckin also powers delivered coffee to offices and other locales. As with much in China, the company’s app is critical to interacting with its hybrid physical and digital experience.

But while Luckin is rapidly building out its footprint, there is more competition on the horizon. Tim Horton’s, Canada’s pride, is also making the jump to China. With 1,500 stores planned, it’s going to be a three-way race.

From The Crunchbase Daily:

Global startup funding set new highs in Q2

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Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

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