Source Code Capital portfolio company Linji Convenience Store announced the completion of its $30 million Series B round, with existing investor Source Code Capital continuing to increase its stake.

源码资本·April 2, 2019·0·3

Linji Convenience Store's average daily sales per store exceed 6,000 yuan, with comparable store sales up more than 50% year over year.

Linji Convenience Store, founded just over a year ago, has reportedly completed a $30 million Series B round led by Capital Today. Source Code Capital, which led the company's Series A, also doubled down as an existing shareholder. Kathy Xu, founder of Capital Today and widely known as the "Investment Queen," has built a formidable track record in consumer retail.

Since its founding, Linji has raised nearly RMB 300 million across three rounds from top-tier firms including Capital Today and Source Code Capital.

Linji was established in December 2017 and hit 100 stores by July 2018 — just eight months later. In May 2018, it acquired nearly 30 stores from local Hefei chain "Youmenlu." By March 2019, Linji operated over 200 locations across Hefei, Wuhu, and Ma'anshan, making it the largest convenience store chain in Anhui Province by store count.

Image source: Linji Convenience Store

Founder and CEO Zhongjian Liu brings more than 20 years of convenience store industry experience, having previously served as general manager and chairman of Shizu. In 2000, Liu led his team from Wenzhou, steadily expanding through acquisitions of local players including "Zhenshenghuo," "Minfeng," and "Dangjiaren" — effectively ending the fragmented, warlord-like competition among Wenzhou convenience stores.

After consolidating the Wenzhou market, Liu pushed into Zhejiang Province. By 2017, the chain had surpassed 1,700 stores, becoming Zhejiang's largest and ranking among the top three national chains by directly operated stores (excluding gas-station-affiliated convenience stores).

In April 2017, Liu stepped back from his previous role. By late 2017, he had assembled a founding team of seasoned operators from mainland China and Taiwan to launch the Linji brand. The team brought deep operational expertise and a proven ability to open stores rapidly and execute mergers and acquisitions.

Zhongjian Liu, Founder & CEO, Linji Convenience Store

Linji targets young consumers, locating stores in office buildings, hotels, apartments, mixed-use developments, and transportation hubs. Built around the concept of "just a few steps from your neighbor, a good neighbor in just a few steps," the chain sells "convenience" and "space" as its core products — a modern urban convenience store format.

Linji offers five daily meal occasions — breakfast, lunch, dinner, afternoon tea, and late-night snacks — with most locations operating 24 hours. Every store averages 12 leisure seats where customers can relax, charge devices, and use WiFi free of charge around the clock. Human touches like complimentary scales help create a "third space" beyond home and office.

Linji's growth isn't just fast — its per-store performance has also impressed the industry. Current daily sales average over RMB 6,000 per store, with comparable-store growth exceeding 50% year-over-year. Acquired Youmenlu locations have seen sales climb more than 35%. Fresh and ready-to-eat now account for over 30% of sales, online channels over 10%. Gross margins have reached levels comparable to top domestic chains, and more than half of stores have already crossed the break-even threshold.

"I was genuinely surprised the first time I visited a Linji store," Kathy Xu said. "I didn't expect to find this kind of convenience store in Hefei. The store design and merchandise display were well-executed, the atmosphere comfortable. It's not a large company, but their fresh and ready-to-eat offerings are impressive. I tried the tea eggs and hot dry noodles — they tasted good, and the quality was consistent. The staff seemed genuinely enthusiastic and energetic. When I asked, I learned they were all college recruits."

"Mr. Liu and his team are on their second entrepreneurial journey. Their positioning is precise: focused on second-tier cities, going hard on fresh and ready-to-eat, combining direct operation with acquisition, opening stores densely to quickly capture consumer mindshare in select cities. Their execution is extraordinary — they live in group dorms with bunk beds and run together for exercise every day. With that kind of entrepreneurial passion and execution, I believe they can absolutely compete with Japanese convenience store chains."

As a board member, Kaisi Chang of Source Code Capital noted that when Source Code invested in 2018, Linji had just 20 stores. Within a year, store count grew 10x, with daily sales and fresh-food mix both steadily improving. "That pace of growth reflects Mr. Liu's entrepreneurial drive and the team's operational capabilities, which we deeply respect. Convenience stores aren't just critical offline traffic gateways — they're also a quintessential example of manufacturing-driven retail, and they're entering a golden period of development. We believe Linji can seize this market opportunity and continue its rapid growth, creating greater value for consumers."

Pei Liang, president of the China Chain Store & Franchise Association, noted that in 2017, China's chain convenience stores surpassed 100,000 locations with RMB 190 billion in sales — a 23% industry growth rate delivering double growth in both stores and revenue. In 2018, convenience store metrics remained strong with continued rapid expansion. This trend will persist for a considerable time, and more top-tier capital will flow toward pragmatic, grounded convenience store startups.