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English|A Startup in the Shadow of A Giant


English|A Startup in the Shadow of A Giant
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Entrepreneur Zhao Jianfeng has created a number of successful startups, including the recent one in the education industry. 
By Zhao Hejuan, Yang Jin and Gao Mengyang
BEIJING, August 24 (TMTPOST) – The takeover of a delivery startup by China’s e-commerce giant Alibaba has been seen by many as a happy ending. However, its founder argued that the analogy to “being married to a rich man” was a misconception.
“It was actually the lockdown of a bride in the basement，” said Zhao Jianfeng, who launched Dianwoda in 2015, referring to Alibaba's acquisiton of the firm in 2020 in an exclusive interview with TMTPost.
Zhao revealed that the trajectory of Dianwoda was its "love and hate" relationship with Alibaba, the predominant e-commerce player in China.
“However, in the eyes of Alibaba, Dianwoda may be nobody because Alibaba has bullied so many,” added the entrepreneur.
A Pioneer in the Delivery Industry
“Dianwoba”, the precedent of Dianwoda, was among the first batch of Internet-based delivery companies in 2009. The industry grew quickly and as of 2012 there were nearly 1,000 delivery firms in China.
With the entry of giants and their massive capital inflows in 2015, the dynamics of the delivery industry was completely changed: brutal consolidation was inevitable.  
In January 2015,Dianwoba reached an inflection point with the approaching of Alibaba on the horizon. A Vice President of Alibaba’s investment department paid a visit to Dianwoda. However, their conversation ended abruptly after a dozen minutes, Zhao told TMTPost. The first meeting was a prelude to a saga characterized by suspense and frustration.
In February 2015, the delivery market already had the presence of search mammoth Baidu, technology and gaming giant Tencent and Alibaba. Meituan received $700 million in its D series of financing while Elema raised $630 million in its E-round financing. Baidu Waimai received $350 million and Alibaba invested RMB6 billion in Alibaba’s subsidiary Koubei.
With deep-pocket giants present in the industry, small and mid-sized financial investors were deterred from entering the sector. “No financial investors dared to invest in the sector and Dianwoba was doomed,” Zhao recalled.
On May 29, Zhao decided to overhaul the company’s business by offering all merchants access to its logistics capacity. In 26 days, the new Internet-based logistics platform Dianwoda went online. Soon the company started raising money.
“Alibaba was the most desirable investor based on its business strategies, capital strength and history,” recalled Zhao. He reached out to Alibaba, which responded with a positive signal.
In July, Albaba’s subsidiary Ant Group’s investment department contacted Dianwoda regarding investments. By then, Zhao learned that any investment into his firm had been ruled out by Alibaba’s investment department. The subsidiary picked up where Alibaba Group stopped mainly because Alibaba’s business department liked Dianwoda due to potential synergies between the two. Ant Group has a food delivery platform named Koubei. In September, Ant Group became a shareholder of Dianwoda.
Backed by strong capital, Dianwoda accelerated its expansion. The delivery industry is about “daily orders” to some extent. By October, daily orders reached 350,000 in 21 cities. “We became No.2 in the industry by daily orders in 120 days,” recalled Zhao.
According to Zhao’s plan, daily orders were expected to surge to 1 million by February 2016, the highest in the industry. But the business expansion would lead to a capital crunch.
In early November 2015, Dianwoda held its first Board of Directors meeting, in which Zhao asked Ant Group to increase their investments. However, the board rejected Zhao’s request and instead asked the company to slow its business growth pace.

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