Coffee start-up Luckin is China’s latest unicorn after first funding round

Chinese coffee start-up Luckin has become the latest member of the unicorn club with a reported US$200 million to US$300 million Series A funding round that values the company at over US$1 billion, according to mainland tech news site 36kr.com, citing people with knowledge of the matter.

A spokesperson for Luckin said the company had no comment on the report, but last month its top executive indicated that early stage funding was in the works.

“Our initial [funding] investment will likely exceed one billion yuan (US$156 million),” Jenny Qian Zhiya, chief executive of Luckin Coffee, said in a press briefing in Beijing last month. “We have plenty of cash,” she added, declining to specify exactly how much.

Beijing-based Luckin Coffee, seen as an up-and-coming challenger to Starbucks in China, is banking on the “new retail” model to achieve success.

Starbucks is currently China’s dominant coffee provider with a market share of about 58.6 per cent, according to Euromonitor International. It also estimated the coffee shop market in China was worth over US$4.5 billion last year.

With five million cups sold in the four months since its founding, Luckin Coffee has adopted an on-demand service model and heavy subsidies for its roll-out in China.