Beijing-based neighborhood store start-up Huimin has acquired control of O2O (online-to-offline) peer Beequick, as a lack of new funding for these type of start-ups is forcing industry players to survive through mergers and acquisitions.
Beijing-based Beequick, backed by Hillhouse Capital, Tiantu Capital and Sequoia Capital, was reportedly cutting staff last summer as it failed to raise additional funding to keep the cash-burning business going.
With the acquisition by Huimin, which itself raised RMB1.3 billion (US$192 million) from domestic RMB funds in November, Beequick will survive as an independent unit under Huimin.
But the deal also marks an official end to Beequick’s aspirations for an initial public offering, which appeared plausible in 2015 when it completed a US$70 million series C financing round from Hillhouse, Tiantu and Sequoia.
The two companies said there are various opportunities to pursue cost saving and create synergies after the merger.
After the completion of the acquisition, on which no financial details were announced, the two companies plan to consolidate their supply chain resources and enhance cooperate on convenience store operations.
Established in 2013, Huimin currently operates 450,000 neighborhood stores across China. These modern stores offer standardized products and services, as well as computer and phone recharging facilities and umbrella deposit.
Beequick, on the other hand, provides one-hour delivery of fresh produce and other consumer products from convenience stores to customers after they purchase products on its mobile app.
In November, China Innovation Investment (Beijing) Ltd., China United SME Guarantee Corporation and Western Securities invested RMB1.3 billion (US$192 million) in Huimin, with participation from existing investors Morningside Ventures, Zheshang Venture Capital and GP Capital.
In 2015, Huimin raised close to US$100 million from Shenzhen Fortune Venture Capital, GP Capital, CITIC Private Equity, ZheShang Venture Capital and others.