Anyone who’s looked at investment trends in China over the last couple of years has probably noticed that investors there really, REALLY like delivery startups. Billions of dollars are being poured into everything from laundry delivery startups to food delivery startups, and Alibaba just spent $1.25 to acquire a 27.7% stake in one of the latter. Known as Ele.me, the food delivery startup has already raised $350 million from a number of investors, but this investment makes Alibaba the largest shareholder.
Alibaba Group Holding has agreed to purchase a minority stake in Ele.me, a Chinese online food delivery start-up. The deal is valued at $1.25bn (£837m, €1.14bn) in exchange for a 27.7% stake. This is not the first capital raise for the start-up. Ele.me, meaning “Hungry Now?”, raised $350m (£234m, €319m) earlier this year from investors including Sequoia Capital, CITIC Private Equity, Tencent Holdings, JD.com and Dianping. The move to invest in an online-to-offline services (O2O) company such as Ele.me will allow Alibaba to attract more users to its own platform, considering that a growing number of the Chinese population use their mobile phones for everything – from shopping to booking restaurants. The deal also makes Alibaba the biggest shareholder in Ele.me, according to Reuters. Other O2O service providers such as taxi apps and restaurant review apps that connect smartphone users with offline businesses have seen increased investor interest from companies, including Tencent and Baidu.