Luckin Coffee has the money to burn again, which is still the money of Starbucks' largest investor.

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When it comes to Luckin Coffee, the first thing that comes to mind is "does Lucky still have money to burn today?" . It may not be the most important thing whether the new product "Little Deer Tea", which is not even American, latte or even coffee, is good or not. If one day, Lucky announces that there will be no discount and no subsidy, maybe it will be time for Chinese people to give it up.

But here comes the "happy" news! Luckin Coffee announced on April 18 that he had received a total of $150 million in new investment in addition to the round B financing completed in November 2018, of which $125 million was invested by private equity funds managed by BlackRock.

BlackRock is?

For ordinary coffee lovers or caffeine users, who gave Luckin Coffee the money is actually not a matter of particular concern-as long as Lucky's coupons will be distributed as usual, continuous subsidy activities will be enough.

But this time, let's take a look at the investors this time. Because BlackRock is the biggest investor in Starbucks.

BlackRock is the largest listed investment management group in the United States, headquartered in New York, USA, and serves clients through its offices in the United States, Europe and Asia. BlackRock ranked 235th in the Top 2018 Global Brands compiled by the World Brand Lab in December 2018.

The top five institutional shareholders of Starbucks, which has a total equity of 1.24 billion, are Vanguard Group,Inc., BlackRock,Inc., State Street Corp, Capital World Investors and MorganStanley. Among them, the largest institutional shareholder is American Vanguard Group, whose investment belongs to the passive allocation of index funds, while BlackRock Investment, the second largest shareholder, is the largest active investor in Starbucks. BlackRock owns a total of 81.8 million shares in Starbucks through a number of sub-funds, accounting for 6.58 per cent. At its closing price on April 17, BlackRock held Starbucks shares with a market capitalization of $6.14 billion.

The world's largest asset manager led the investment to Starbucks' Chinese competitor Ruixing. Lucky's valuation rose to $2.9 billion from 2.2 billion last year.

If you don't make money now, you have no future?

In December last year, the media exposed Luckin Coffee's business plan for round B financing: Luckin Coffee had a cumulative sales income of 375 million yuan, a gross profit of-433 million yuan (gross profit margin of-115.5%) and a net loss of 857 million yuan in the first nine months. Although most people know that "you don't make money in the early days of starting a business", the scale of Lucky is really a little scary. Although Lucky responded at the time: it is certain that the loss for the whole year will be much larger than this figure. It is an established strategy to quickly occupy the market through subsidies, and losses are in line with expectations. But once something happens (imminent listing, chairman's loan, mortgage coffee), people can't help but predict on the keyboard: lucky is going to die again.

However, judging from today's public financing, Luckin Coffee, who is not making money, is valuable in the eyes of American investors.

Last year, someone posted a video on YouTube saying that Ruixing tasted better after blindly testing Starbucks and Ruixing lattes. However, capital will not compare this. In the eyes of American investors, the Chinese coffee market that gave birth to Lucky, the unicorn, is full of attraction.

According to the London International Coffee Organization, compared with the global average growth rate of 2%, China's coffee consumption is growing at an astonishing rate of 15% a year. It is expected that by 2025, China will grow into a giant coffee consumption empire of 1 trillion yuan. The domestic coffee market has greater potential-Starbucks, which brings a fashionable coffee culture, knows best, and won't its investors understand that?

Unicorns and mermaids are not opposed to each other.

In May 2018, Luckin Coffee openly "provocatively" sued Starbucks for suspected monopoly. Moreover, Lucky's goal is clearly aimed at Starbucks: to take it out at home. However, for investors and rational customers, Lucky and Starbucks are not on the opposite side.

For coffee drinkers, the emergence of Rui Xing has brought more choices. If you want to have a cup of coffee more cheaply and quickly, many people will choose to turn on the lucky APP; on their mobile phone. If you want to sit down and enjoy the coffee more leisurely, maybe if you buy lucky the next day, you will not hesitate to switch to Starbucks' arms-this is an unusually common daily scene in more and more Chinese people.

Whether it is more than 20 years of education at Starbucks or the impact of Lucky for a year, the domestic coffee market has attracted a lot of attention. Starbucks has a strong first-mover advantage, even if the growth rate is now weak; lucky has a "new retail" pedigree, what matters is not whether it makes money but the model it leaves behind. So, for investors, both are good goals.

Lucky, with a new round of financing, will not slow down more and more. Whether it is the "millionaire" event or the new "Little Deer Tea", Ruixing is not just to sell a cup of coffee, to get more users is the king. Whether you complain about Luckin Coffee's quality or not, at least it is worth the hundreds of millions in the eyes of investors.

Photo Source: Internet

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