Alibaba just invested $1.25 billion into this food delivery startup

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.