Baidu’s food delivery service Waimai looking to raise $500m: report

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China’s O2O food delivery sector is a apparently still in the cash-burning phase. In late summer, Chinese O2O food delivery startup Ele.me raised a US$630 million series F round, and now Baidu’s O2O food delivery subsidiary Baidu Waimai is reportedly looking to do the same. Sina Tech reported on Tuesday that the company began a search for capital in November and aims to close the round next month. Supposedly, it’s looking to raise US$300 to US$500 million.

Baidu declined to comment on the Chinese media report. Tech in Asia has also contacted Baidu for comment (we like to double-check) but the company again declined.

Reportedly, Baidu plans to use the biggest chunk of the incoming investment capital (40 percent) on improving its platform. Smaller chunks (20 percent each) will go to product development, new category expansion, and marketing.

Information about the planned round comes from a leaked Baidu planning document. Tech in Asia has not seen and cannot verify the authenticity of the document, but it reportedly also contains details about Baidu Waimai’s performance. For example, the document suggests that Baidu Waimai did RMB 8 billion (US$1.2 billion) in transactions this year, and that its target for 2016 is a total transaction volume of over RMB 25 billion (US$3.8 billion). It also says that the service has about 11 million monthly active users on mobile.

Given that the planned round and other details aren’t officially confirmed, all of this should be taken with a grain of salt. But it does make sense that Baidu Waimai might be looking to raise some extra cash in a market that’s looking increasingly like the place for a proxy war between the BAT companies. In vehicle O2O, it’s Baidu-backed Uber versus Tencent- and Alibaba-backed Didi Kuaidi, and in food O2O the major competitors are Baidu’s Baidu Waimai, Tencent-backed Ele.me, Alibaba’s Koubei, and the newly-merged Meituan-Dianping (which does delivery O2O in addition to Groupon-style deals).

If rumors are to be believed, things could be about to get even more interesting, as Alibaba is reportedly engaged in investing in Ele.me as well, to the tune of about US$1.2 billion. If that turns out to be true, then we’ll have a situation in food O2O that’s very similar to the situation in vehicle O2O, with Baidu standing behind its contender while Tencent and Alibaba team up to back its strongest competitor.

(Source: Sina Tech)