Food delivery startup Ele.me to raise $1 billion from Alibaba

Food delivery businesses have been going through tough times globally. Recently, US based Sprig shut down operations after raising $56 million. However, Alibaba Group appears to be undeterred by demise of Sprig and others.

According to Bloomberg, it plans to invest about $1 billion in Ele.me, one of the largest players in China's food-delivery segment. The group along with its financial arm, Ant Financial Services Group, will value Ele.me at between US$5.5 billion and US$6 billion.

Importantly, this is the second-largest startup fundraising event in China after Didi Chuxing. Last month, the ride sharing app had gobbled US$5.5 billion.

Besides delivering food, Meituan also provides urban services including group-buying, online restaurant reservation, take-out service. Sales of such services are slated to reach $1.1 trillion this year.

Ele.me competes with Tencent backed leading O2O platform for urban service - Meituan Dianping. Interestingly, Alibaba was one of the early backers of Meituan. Later in 2015, Meituan and the Tencent-funded Dianping merged to form Meituan-Dianping. Post-merger, Alibaba’s holding in the merged entity fell considerably.

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Pic credit: Technode