Behind Luckin Coffee's "Coming Ashore": IDG's Gamble and New Faces

"New Consumption, New Investment, New Narrative." By Zhiyan Chen

On November 17, Luckin Coffee released its Q3 2025 earnings report before US market open. Total revenue reached 15.3 billion RMB ($2.14 billion), up 50.2% year-over-year. Net profit hit 1.28 billion RMB, swinging to profitability from a year-ago loss. By market close that day, Luckin's pink sheet shares traded at $40.00, compared to $1.54 when it first landed on the pink sheets in 2020 — a gain of 2,497.4%.

This should have been a routine earnings disclosure, but at this particular moment, its significance extends far beyond the numbers. Just days earlier, Luckin CEO Jinyi Guo publicly stated at the Xiamen Entrepreneurs' Day conference that the company was "actively pushing forward with the process of relisting on a major US exchange."

Luckin later clarified to media: "There is currently no confirmed timeline for returning to a major exchange. The priority remains executing our business strategy and focusing on growth." Even so, the magnitude of Luckin's turnaround is enough to secure its place in Chinese business history.

"Reaching shore" — a term loaded with connotations of surviving tribulation and rebirth in Chinese — may well become Luckin's reality.

Five years have passed since the 2020 scandal. In that time, Luckin was delisted from Nasdaq, paid massive fines, and was effectively pronounced dead by the market. Yet it has miraculously "turned the tables against the wind": over 29,000 stores, making it China's largest coffee chain in practice; outlets now in Singapore, the US, Malaysia and beyond; and Guo projects 2025 full-year revenue will exceed 50 billion RMB.

In the public narrative of Luckin's resurrection, Centurium Capital is undeniably the lead protagonist. As the core investor, Centurium led Luckin's debt restructuring and corporate governance overhaul, became controlling shareholder in January 2022, and its founder Hui Li assumed chairmanship. The market broadly credits Luckin's rebirth to Centurium's heavy bet and stewardship.

Now, revisit the turning point of what may be the most "miraculous" story in Chinese business history — January 27, 2022. That night, Centurium announced it had led the acquisition of shares from certain Luckin shareholders (namely, the original founder Charles Lu's team). Among the buyer group members was a name that could not be ignored — IDG Capital (hereinafter "IDG").

This transaction, disclosed in SEC filings, described IDG joining Centurium's buyer consortium to take over more than 383 million Class A ordinary shares from entities controlled by Charles Lu, Jenny Qian, and their families, which were then in liquidation.

By 2022, IDG had long since acquired a certain reputation across the venture capital world: old enough to have introduced venture capital to China, but whenever discussed, the diplomatic would call it "steady" while sharper tongues labeled it "conservative."

Why would such a firm appear in the buyer group for Luckin — a "castoff" that the market shunned at the time?

When everyone believed Luckin's story was over, IDG chose to bet alongside Centurium, Luckin's earliest investor, amid the "ruins." Behind this rarely mentioned name in the buyer group lies not just a "bold gamble" by a reputedly conservative player, but also an overlooked side of this institution that has grown symbiotically with China's investment industry.

Part 01

Deliberately Entering the Eye of the Storm

Rewind to late 2021 through early 2022. Luckin had just emerged from the mire of the fraud scandal, not yet profitable at the company level. Meanwhile, capital market enthusiasm for "new consumption" was cooling rapidly, with skepticism mounting everywhere.

The investment opportunity arose from a judicial auction. The original founder Charles Lu's pledged shares were being liquidated, and IDG gained entry into the buyer group, acquiring shares through a public court auction.

Why did IDG enter at this moment?

IDG Capital Partner Kui Guang Niu told An Yong Waves that IDG's interest in Luckin actually began at its founding. But because the "iron triangle" (Charles Lu, Erhai Liu, and Hui Li) had left limited funding room, IDG never found a suitable entry point. After the fraud scandal created a rupture, IDG's team began closely tracking Luckin's operating data and conducting systematic validation.

"We collected receipts from store opening," Niu recalled. "Our statistics showed that pricing and cup volume data were fairly accurate."

To strengthen validation, IDG Capital also partnered with third parties to conduct on-the-ground research at dozens of stores over one to two months. Two key facts emerged: first, Luckin's sales had not been affected by the scandal — "there was no cliff-like drop"; second, Luckin had gradually reduced its heavy subsidies, dynamically adjusting discounts and coupons to effectively raise prices, while user numbers and sales volume grew simultaneously.

This meant market demand for Luckin's product was real, with meaningful price elasticity. The fraud scandal had primarily shattered capital market confidence, not consumers' coffee cups.

With exhaustive due diligence data and deep industry understanding, IDG won the trust of lead party Centurium and entry into the buyer group.

"Selling coffee is a business that's not complicated to understand," Niu believed. From a business judgment standpoint, IDG's investment decision was not difficult. The team's assessment: Luckin's store network, digital systems, brand mindshare, and management team were all healthy, but its expansion strategy suffered from "forecast bias" — attempting to use "short-term subsidies" to cultivate a coffee consumption habit that would take "10 to 15 years" to form. Through the early 2022 transaction, the "good asset" could be separated from the "bad strategy."

What cemented IDG's decision to invest was its insight into Luckin's scale potential. At the time, Luckin had fewer than 6,000 stores. But IDG's models showed this number was far from the ceiling. "We believed there should be at least 20,000 stores, 30,000 would of course be even better."

This was a bold prediction. What IDG bet on was not merely the high-value national coffee model Luckin built through digital capabilities and standardized management, but the terrifying replicability of this model across China's vast lower-tier markets.

Facts proved IDG's "gamble" correct. In the November 17 earnings report, Luckin's store count reached 29,214 — approaching the "even better" target IDG envisioned.

What made this investment particularly special was that IDG initiated it proactively. For such an institution, the risk of investing in Luckin far exceeded the financial dimension.

"Internally, we believed this project could only succeed, not fail — this wasn't just about a single project's profit or loss, but concerned IDG's reputation," Niu said.

In 2018, the An Yong Waves team conducted exclusive systematic interviews with multiple IDG partners and former IDG investors. Partnership culture, institutional interests, intellectual temperament, and extreme reputation consciousness were the traits most frequently mentioned about this firm.

An institution often externally labeled "conservative" had, at the market's most panicked moment, wagered what it valued most: its "reputation." In today's world of simultaneous opportunity and challenge, IDG clearly was not content to merely be a "steady" financial investor.

Part 02

Beyond "Safe Bets"

Paging through IDG's recent investment portfolio, Luckin's "gamble" is no isolated case. Bambu Lab, SHEIN, Insta360, Pony.ai, Dreame, XPeng — companies full of controversy and developmental twists — are all there. These are clearly not results of playing "safe."

When IDG Capital invested in Bambu Lab in late 2020, the consumer 3D printer market was broadly considered a "rapid prototyping tool" — a niche product only serious makers would use. Many investment institutions at the time, given the hassle of use, high failure rates, and slow speeds, didn't even consider it a real "product."

The contrarian bet was that IDG wasn't wagering on the market itself, but on a group of top-tier engineers led by Dr. Tao Ye. Internally, IDG defined them as "industry disruptors."

When Bambu Lab's first prototype proved 3D printers could be simple, fast, and reliable, IDG realized this product was not merely a better prototyping tool — it could enter enterprises as a true productivity tool, and enter households as a personal manufacturing device every family could own. IDG subsequently added two more rounds of investment.

Today desktop 3D printers have become one of the world's fastest-growing prosumer products, and Bambu Lab is among the key innovation engines in this space.

This contrarian logic traces back further to IDG's support for Insta360. In the action camera domain, GoPro was once unassailable. IDG made a major bet on a Chinese startup led by "post-90s" founder Jingkang Liu, eventually becoming its largest external shareholder.

"We believe in the new generation of young people, believe they possess excellent product sense, aesthetics, and global vision," Niu told An Yong Waves.

After the bubble in new brand investing deflated, the hottest term in recent years has been RBF — Revenue-Based Financing — targeting brick-and-mortar owners in food & beverage, retail, and services with stable cash flows, investing in single stores and taking a cut of daily or monthly revenue. IDG did not choose this short-term yield approach, but instead continued placing heavier, longer-cycle bets in cultural tourism along the lineage of Ctrip, Home Inns, Huazhu, Hanting, Wuzhen, and Yada International.

The Yixing Yaohu Town project, with total investment of 13 billion RMB, is a representative case. This collaboration between Yada founder Jianning Jiang and Wuzhen Scenic Area founder Xianghong Chen aims to build a national benchmark "theme park-style resort town" across 20,000 mu of planned land.

An Yong Waves learned from IDG that around 2018, building on prior experience with Wuzhen and Gubei Water Town, IDG developed deeper understanding of cultural tourism projects' long-term value and integrated developments' innovation potential, leading to a team consensus to invest in Yaohu Town. However, the pandemic erupted right as the project launched, with construction delays stretching repeatedly. Despite immense internal pressure, IDG did not abandon the project but found every means to continue financing. By bringing in more capital, seeking local resources for joint support, and other methods, after more than five years, Yaohu Town officially opened on December 28, 2024.

IDG's investment in Yaohu Town is naturally contrarian in today's investment industry. It also demonstrates its ambition in consumer investing to evolve toward "heavy asset" and "long-cycle" operations — far exceeding traditional venture capital scope, closer to a reconstruction of industrial ecosystems.

"For Yaohu Town, we saw contrarian value — when others felt such projects had long cycles, high risk, and dared not invest, we believed we had the courage and capability to do them, with less market competition. Long-term, such projects' market value grows precisely because of scarcity," said IDG Capital Partner Jianguang Li, who oversees the Yaohu Town project.

Yaohu did not simply replicate IDG's prior Wuzhen and Gubei Water Town experience with leisure, vacation, family, and business positioning, but instead pioneered a "new generation lifestyle gathering place" angle. In less than a year, Yaohu Town achieved its annual revenue target of 365 million RMB. Its integrated marketing case was selected for "Cultural Tourism Good Brand" and won a national-level award.

To date, IDG has been investing for over thirty years, with total AUM ranking at the absolute top of the industry. What supports its ability to simultaneously manage massive capital and continuously embrace innovation, risk, and uncertainty is not mysterious — it remains the "contrarian" thinking investors revere. This "contrarian" stance rests on one hand upon an exhaustive due diligence system so meticulous it's almost clumsy, on a commitment to "innovating new categories" in consumption; on the other hand, upon patience.

IDG Capital Partner Lian Meng, who made successive bets on star companies like HeyTea and SHEIN, told An Yong Waves: "The most important thing in life is long-term companionship." He applies this philosophy to founders, and it equally reflects the institution's attitude toward assets — willing to spend time waiting, waiting for the perfect moment to swing when bubbles dissipate and value returns.

Meanwhile, patience also brings cognitive iteration for the institution itself. In Luckin's story, Niu noted that IDG's understanding of Luckin "evolved as the company changed." Initially, IDG's focus was also on profit margins, but it gradually recognized that in coffee, a fully competitive industry, Luckin's "core moat or excess returns came from scale." This dynamically adjusted understanding as the enterprise developed also allowed room for correcting some investment decisions.

And Meng himself offered a "reflection" in the interview. He frankly told An Yong Waves that he previously held "major biases and errors" in his thinking. "Before, what I considered 'good' meant things I'd give friends as gifts." This obsession with "taste" and "good things" led IDG to capture a series of brands emphasizing aesthetic value like To Summer and Acne Studios.

"But aesthetic taste is subjective. From Pinduoduo and Luckin onward, I deeply realized that understanding diverse user perspectives is a crucial lesson," Meng said. "And I should respect Pinduoduo and Luckin more than most people."

Part 03

Entry and Iteration

Of course, not all investments lead to happy endings.

During the brief new consumption wave around 2022, HutoTou was a complete miss for IDG. On this failure, IDG's internal post-mortem was twofold: on one hand, Managing Director and Consumer Head Fan Wu summarized, "new consumption itself wasn't the problem — the valuations and excessive growth expectations it brought were the problem."

But on the other hand, IDG developed further category understanding. Niu told An Yong Waves that unlike baking, coffee isn't constrained by "frequency issues," and it's both a functional beverage and carries "cultural attributes."

This reflection on failure also made IDG more calm and restrained in the later stages of the frenzied consumer investment competition, deliberately avoiding multiple consumer brands with soaring valuations. Wu recalled that during that period, "not investing was winning."

It is through such reflection and accumulated experience that IDG's consumer investing reveals a clear evolutionary path. Counting from its 2008 entry into consumer sectors, IDG's consumer investing divides roughly into three stages —

Stage 1.0: Global Brand Localization. Representative cases like Moncler and Farfetch, with the logic of serving as "guides" for the China market, helping European and American brands come to China.

Stage 2.0: Evolution of New Channels, New Brands, New Categories. Starting with Three Squirrels, IDG seized the "e-commerce brand" opportunity, betting that new channels could reach consumers more efficiently, birthing a new generation of brands. When new consumption and new brands exploded, IDG bet more heavily on category innovation, investing in "category creators" like HeyTea, To Summer, and Genki Forest.

Stage 3.0: Emphasizing Technology Innovation and "Bidirectional" Globalization. Representative cases include Luckin, Bambu Lab, SHEIN, Insta360, and Anker Innovations — supporting quality Chinese consumer companies going global. Meanwhile, Acne Studios, Gentle Monster, Rossignol, and the Lakrids By Bülow Denmark candy acquisition represent helping valuable international brands expand into China and even global markets from a Chinese perspective.

If the core keywords of IDG's Stage 3.0 consumer investing are innovation and globalization, then M&A will be the primary tool for deepening this practice.

Fan Wu, with backgrounds at Blackstone and Bain Capital, is driving this strategy's implementation within IDG. She judges that China is gradually entering a period of low interest rates and steady GDP growth. In this context, earning more stable relative excess returns matters more, and consumer + M&A is a cycle-appropriate investment choice.

But Wu also notes this path isn't easy. "M&A transactions require relatively long-term磨合 and negotiation — from preliminary due diligence to post-investment management, what's needed is not just patience but deep understanding of business operations."

Nevertheless, IDG has a clear roadmap for M&A opportunities: first, control stake sales from "foreign companies exiting China"; second, MBOs (management buyouts) in partnership with management, collaborating with excellent professional managers to drive long-term enterprise development.

This marks a fundamental shift in IDG's role in consumer sectors — from "minority equity" participation toward heavier, more complex "control" perspectives.

This autumn, IDG Capital completed acquisition of majority stake in Danish innovative candy brand Lakrids By Bülow, with plans to drive Lakrids By Bülow's expansion not just in China but globally.

"In the 1.0 Moncler era, IDG took a small equity stake, providing assistance in the China market. Now, IDG has stronger confidence and capability to manage a global consumer company," Wu told An Yong Waves.

One thing is evident: capabilities and experience IDG previously accumulated in deals like MLS's acquisition of Osram and Wumart's acquisition of Metro are continuously migrating into consumer sectors.

At this moment, return to that question the An Yong Waves team posed to IDG seven autumns ago — what does IDG ultimately want to become?

On this road of consumption that always has exits, this 32-year-old investment institution is evolving toward a more mature hybrid: not only maintaining its distinctive "steady" label, but also embracing and welcoming more emerging variables; not merely serving as guide for foreign brands entering China, but aspiring to become global operator for new consumer forces; not just pursuing financial returns through minority equity investments, but entering the arena to become a key player in the more concrete industries that consumption radiates into.

Investing in Luckin at its moment of crisis is merely the ultimate epitome of this institution's "B-side." At 32, IDG can still become what it hopes to become.

Image source | Unsplash

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