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Baidu to Raise $200M to Finance O2O Food Delivery Expansion

| Jul 16, 2015 08:03 AM EDT

The law requires food vendors to provide better information disclosure about their products.

Baidu Waimai, an online food delivery service launched by Baidu, has expressed plans to raise $200 million in its latest round of financing, following CEO Robin Li’s announcement on June 30 that it will invest 20 billion yuan ($3.2 billion) in Baidu Nuomi, its Online-to-Offline (O2O) group-buying service, in the next three years.

In a report published in Tencent's tech news Web portal, Baidu Waimai said that the new round of financing will raise the company's value to $800 million, higher than $700 million for major rival Ele.me. The company is one of Baidu's spin-off businesses looking for an independent investment.

According to the report, one of the reasons for the financing is that Waimai, a take-out business, is a drain on Baidu resources; hence, it needs more sales knowledge and sales channels. By going on independent operation, the spin-off business will be more motivated.

The report said that Meituan Waimai, a major rival of Baidu Waimai, had finished a $700 million financing in January, but is now seeking another round of financing which, when completed, will raise the value of the company to $15 billion.

Kong Zhenbing, Baidu Waimai's CEO, however, said that Baidu Waimai's clients are mostly office workers who can afford to make higher-priced orders, while its competitors Meituan Waimai and Ele.me's major customers are college students.

Kong said that since the takeout services are the largest business in the city logistics sector, the long-term goal of their online food ordering and delivery platform is to realize city logistics.

The Baidu Waimai CEO added that since logistics is not labor-intensive but technology-intensive, it would be a huge advantage for Baidu as it is the largest search engine in China.

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