Chinese tech company seeks US$500m to prepare for tough times

[HONG KONG] Tencent Holdings Ltd-backed grocery delivery startup Missfresh is seeking up to US$500 million of new funding to help tide it over tougher times, according to people familiar with the matter.

Beijing Missfresh Ecommerce Co, which also counts Goldman Sachs Group and Tiger Global Management as backers, is looking to fetch a valuation of at least US$3 billion, the people familiar said, requesting not to be named because the matter is private. The company plans to raise US$300 million to US$500 million at a valuation of as much as US$4 billion, one of the people said.

The plans are preliminary and subject to change the people added. Missfresh declined to comment about the fundraising details in a text statement.

A slew of Chinese startups are racing to replenish their war chests before what many foresee as painful times brought on by a slowing economy and market uncertainties unleashed by the trade war. Missfresh - born out of an unprecedented tech boom in China - is competing in a sector of heavy cash burn that has attracted titans including Alibaba Group Holding Ltd.

The five-year-old company has more than 1,500 mini-warehouses that promise deliveries as fast as within one hour, it said in a statement. Missfresh had nearly 25 million monthly active users as of May. It handled US$1.5 billion worth of transactions last year and had generated positive cash flow by the end of 2018, the company said in a statement.

If Missfresh's attempts at fundraising are successful, it could help the company prepare for testing times. Venture deals in China tumbled 77 per cent to US$9.4 billion in the second quarter from a year earlier, while the number of deals roughly halved to 692, according to the market research firm Preqin.

After eight rounds of fundraising to date, Beijing-based Missfresh has raised a total of nearly US$900 million from investors including Jeneration Capital and Genesis Capital, the company said.

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