Pulling in close to news of Hong Kong startup GoGoVan’s merger with 58 Suyun – a deal that reportedly makes the combined group worth $1 billion – another Hong Kong-based startup, Lalamove, announced its Series C funding of $100 million, led by mainland’s ShunWei Capital. The VC firm is cofounded by Xiaomi’s chief executive Lei Jun.
It’s easy to draw comparisons with GoGoVan, another on-demand delivery startup that calls Hong Kong home. Lalamove was founded in late 2013 by Chow Shing Yuk, a former professional poker player; GoGoVan was started the same year by a trio of young Hong Kong entrepreneurs (featured on Asia’s 2016 30 Under 30), now the wunderkinds of the local tech startup scene. Both logistic firms found success by branching out of home base Hong Kong and into Southeast Asia and China, before getting eyed by big mainland China investors.
Lalamove provides delivery services across Asia and says it has around 2 million drivers across 50 cities in mainland China, and six in Southeast Asia. It would be a mistake to think of the startup as simply a personal Uber van delivery service of sorts, for getting furniture delivered on your next move and so forth; Lalamove is a full fledged logistics on-demand service for SMEs.
“Ninety-seven percent of our business is in SMEs. While we still get a decent consumer usage – and we’re happy to serve them – you only move once a year. For us, that payback is a lot more difficult,” says Blake Larson, head of Lalamove’s international division.
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Some of their big clients are companies like IKEA, Burger King and Line – or as Larson puts it – “anyone who doesn’t [want to] think of logistics and competency and is looking for ways to reduce capital expenses. Lalamove [can] provide scaled delivery without companies having to hire or train drivers, or think about any of the logistics.”
Take the partnership with Asian mobile messaging platform LINE: LINE MAN is the platform’s first dive into providing delivery services, from parcels to food, in Asian metropolis Bangkok. The potential is huge, as LINE has over 33 million users in Thailand.
This opportunity and market makes Bangkok one of the biggest markets for Lalamove in Southeast Asia, says Larson. Another city with potential is the sprawling Philippine capital of Manila, which according to Larson is currently “the fastest growing city ever.”
And crucially, Lalamove is moving from the large delivery vans they launched with to a smaller and ever-present motorcycle delivery operation in Southeast Asia. Larson emphasizes the importance of having a fleet of motorbikes at disposal in cities in that region, where the high traffic congestion means that many take to two-wheels. Other cities with the same potential “with motorbikes everywhere” are Jakarta, Hanoi and Kuala Lumpur, cities next on Lalamove’s expansion plan.
Then there’s the biggest potential right across the border: mainland China. No motorbikes currently operate there, but Lalamove has vans and trucks running in across 100 Chinese cities. A breakdown of Lalamove users across cities was unavailable to FORBES, but Chow says that the company is “wholly focused on both growth in SEA and China, looking at Lalamove as a whole.”
In any case, the road ahead looks bright for a startup facing a competitive market. “For us, we may have been able to take on more funding, but if we can’t accomplish what is needed at $100 million at this time, we probably wouldn’t gain much more from taking on say, $200 million or $500 million,” says Chow.
This round of funding follows Lalamove’s $30 million Series B in early January. Is the company looking to IPO next? “We are always looking to be IPO ready, but have no direct plans to follow directly with an IPO,” says Chow, the now retired poker player.
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