Alex Turner

When people leave China and relocate to other countries, they miss the ease of having applications that transport meals to them. For the past nine years, Fantuan, a startup located in Vancouver, has been working toward bringing the experience of Chinese meal delivery platforms to Western countries. Just recently, it successfully raised some more funds to make more significant progress toward its aim of offering authentic Chinese cuisine to people all over the world.

The venture capital firm Celtic House Asia, which invests in first-generation immigrants, and GrubMarket, a startup food supply chain with a valuation of over $1 billion in 2021, were responsible for raising $40 million for Fantuan, which translates to “rice balls” in Chinese.

Vision Plus, a venture capital business established by Eddie Wu, who was recently named as the chief executive officer of Alibaba, and JSD Capital, a boutique private equity firm, are two other investors participating in this initiative. Following the completion of the fundraising, the firm chose not to publish its valuation.

Besides institutional investors, Fantuan also received funding from several influential powerbrokers in China’s retail technology sector. These powerbrokers include the co-founders of Ele. I am a pioneer in the field of food delivery. Alibaba acquired me in 2018. Bianlifeng, a chain of unmanned convenience stores; Qunar, a GGV-backed travel booking website that larger rival Ctrip purchased; and Dianping, a more capable Chinese version of Yelp that Meituan, a significant player in the food delivery sector, owns.

Randy Wu founded Fantuan in 2014 while attending Simon Fraser University to study economics. He was inspired to create Fantuan by the rapidly growing popularity of meal delivery applications, specifically in China. Before dropping out of college to work full-time on what he considered his shot at “copy from China,” Wu ran the firm himself and wore numerous hats initially. One of these hats was physically carrying meals around the city of Vancouver. Notably, Meituan served as his standard of measurement.

Yaofei Feng, his co-founder, whom he had met online while playing Dota 2, joined Wu almost immediately. Feng bravely decided to leave his position as a software engineer at Amazon in Seattle and move to Vancouver due to Wu’s business venture.

As a result of the migration of millions of Chinese people to Western nations, the company’s founders were counting on the rising demand for high-quality Chinese cuisine in Western countries. As of 2020, there were approximately 10 million migrants of Chinese descent from other nations, according to research by the International Organization for Migration (IOM).

“Food from home is a kind of spiritual refuge when you are living abroad,” said Wu in an interview with TechCrunch. These words were taken from Wu’s statement. Even though Chinese cuisine was complicated in Saskatchewan, I still vividly recall the first Chinese supper I enjoyed three months after arriving there.

There is more to Fantuan’s aim than just delivery. Taking a page out of Meituan’s playbook, an all-in-one platform for local services in China, the company’s ultimate goal is to become the destination for Chinese people outside China to find and enjoy various leisure activities.

Additionally, its partnership with GrubMarket is reminiscent of Meituan’s vertical growth, in which the food delivery network connects restaurants with producers of ingredients supplying those eateries. By facilitating connections between farmers and clients such as Whole Foods and Costco, GrubMarket may use Fantuan to expand its reach to include mom-and-pop eateries in the future.

In just two years after its inception, Fantuan has established itself as the leading platform for the delivery of Chinese cuisine in Vancouver and has reached net profitability. It continued to be lucrative for another five years until the COVID-19 epidemic was in full swing, at which point it began aggressively expanding into the United States. This year, its yearly income is anticipated to be close to one hundred million dollars.

Delivering Chinese cuisine promptly might be challenging. The process of cooking can take a considerable amount of time. In contrast to platforms that are not exclusive to any one cuisine, those that concentrate on a single category have a smaller density of restaurants, which results in a longer delivery time. On the other hand, Wu said that Fantuan was able to attain an average delivery time of forty minutes across several cities, including Vancouver, Toronto, London, San Francisco, and Sydney.

There is a correlation between the availability of drivers and the delivery time. As a result of Fantuan’s preference for Chinese-speaking drivers who can converse with immigrant restaurant owners, recruitment attempts may not be successful in densely populated and costly cities like San Francisco. According to Wu, drivers are driven to Fantuan because the average order value from Chinese restaurants is almost “double” compared to that of significant food delivery platforms. This means that drivers receive more tips during their deliveries.

According to Wu, Fantuan’s customer retention rate is about 90 percent after five orders in twenty-four months. Active users make up about 1.2 million of the two million accounts that have been registered with the platform.

Wu thinks that Fantuan’s capacity to bring on board a wide variety of genuine Chinese restaurants is one of the principal advantages of the company. The platform uses the on-the-ground sales formula that Chinese technology companies frequently use to digitize traditional retail. This recipe entails physically visiting clients and creating connections during face-to-face interactions.

“Our business development specialists would each manage approximately 80 restaurants and conduct frequent visits to these customers, teaching them tips such as how to do marketing and how to pack more efficiently for delivery,” said Wu. “They would also pay frequent visits to these customers.”

As of right now, Fantuan has over 500 employees located all over the world. At the beginning of this year, Yinfeng Lu, who had previously worked as a sales executive at Meituan, became the chief operating officer.