On November 17, Luckin Coffee released its third-quarter 2025 earnings before the US market opened. The company reported total Q3 revenue of RMB 15.3 billion (USD 2.1 billion), up 50.2% year-on-year. Net profit reached RMB 1.28 billion (USD 179.2 million), marking a return to profitability. By market close that day, Luckin’s shares traded over-the-counter at USD 40, up 2,497.4% from USD 1.54 when it first landed on the pink sheets in 2020.
This should have been a routine earnings disclosure, but at this moment its significance extends beyond the numbers. Days earlier, Luckin CEO Guo Jinyi said at the Xiamen Entrepreneurs’ Day Conference that the company is actively pursuing a relisting on a US main board. Afterward, Luckin clarified to media outlets that there is no confirmed timeline for a main board return and said its priority remains execution and development. Even so, the company’s dramatic reversal is enough to secure its place in China’s business history.
The phrase “coming ashore,” which in Chinese conveys surviving catastrophe and being reborn, may soon describe Luckin’s reality.
Five years have passed since the 2020 scandal. During that time, Luckin delisted from Nasdaq, paid substantial fines, and was nearly written off by the market. Today, it oversees more than 29,000 stores, making it China’s largest coffee chain. New locations have opened in Singapore, the US, and Malaysia. Guo projects full-year revenue will surpass RMB 50 billion (USD 7 billion) in 2025.
In the public narrative of Luckin’s turnaround, Centurium Capital is widely viewed as the main architect. As a core investor, Centurium led the debt restructuring and corporate governance overhaul. It became Luckin’s controlling shareholder in January 2022, with its founder Li Hui stepping in as chairman. Many observers attribute Luckin’s revival to Centurium’s high-conviction bet.
The story’s pivotal moment came on January 27, 2022, when Centurium announced it had led a deal to acquire equity previously held by Luckin’s original founders, the Lu Zhengyao team. Among the buyers was a name easy to overlook but impossible to ignore: IDG Capital.
The transaction appeared in US Securities and Exchange Commission filings. According to the documents, IDG joined Centurium’s consortium to acquire more than 383 million Class A ordinary shares from entities controlled by Lu, Qian Zhiya, and their families, all of which were undergoing liquidation.
By 2022, a perception had taken shape in China’s venture ecosystem. IDG, one of the earliest foreign venture firms to enter China, was widely regarded as steady and established. A more pointed characterization might be conservative.
Why, then, would such an institution join the buyer group for Luckin, which many considered a bad asset?
While most believed the Luckin story had ended, IDG chose to bet alongside Centurium, an early backer, placing a wager on an asset that had been written off. Behind this name in the consortium lies not only a high-stakes move from a firm known for caution but also a lesser-seen side of an institution whose history is intertwined with China’s investment landscape.
Entering the eye of the storm
In late 2021 and early 2022, Luckin had only recently emerged from the accounting scandal and had yet to generate company-level profit. Meanwhile, investor enthusiasm for “new consumption” was fading quickly.
The investment opportunity originated from a judicial auction. Shares pledged by founder Lu were being liquidated, giving IDG a chance to acquire a stake through a public court auction and join the buyer group.
According to IDG partner Justin Niu, the firm had been watching Luckin since its founding. But in its early years, the founding trio of Lu, Liu Erhai, and Li Hui left little room for new investors. After the scandal, the situation changed. IDG began monitoring Luckin’s operational data closely and launched its own verification effort.
“We started collecting receipts from stores as soon as they opened each morning,” Niu said. “Our analysis showed that pricing and cup volumes were essentially accurate.”
To strengthen verification, IDG hired a third party to conduct a one-to-two-month field investigation across dozens of stores. Two key findings emerged:
- First, sales had not collapsed after the scandal. There was no cliff-like drop.
- Second, Luckin was gradually scaling back subsidies and raising effective prices through dynamic discounts and vouchers, while maintaining user growth and increasing sales volume.
This signaled that demand for Luckin’s coffee was real and that the product exhibited price elasticity. The scandal had damaged investor confidence, not consumer appetite.
With thorough due diligence and a deep understanding of the industry, IDG gained Centurium’s trust and secured a place in the buyer consortium.
“Selling coffee is not a complicated business to understand,” Niu said. From a commercial perspective, IDG believed Luckin had a healthy store network, digital infrastructure, brand positioning, and management team, but it had misjudged its expansion strategy by trying to cultivate coffee drinking habits through short-term subsidies. The 2022 transaction allowed IDG and Centurium to separate asset value from strategic missteps.
What ultimately convinced IDG was its view of Luckin’s scale potential. At the time, Luckin had fewer than 6,000 stores. IDG’s model suggested the ceiling was far higher:
”We believed there should be at least 20,000 stores, and 30,000 would be even better.”
It was a bold prediction. IDG was betting not only on Luckin’s digital capabilities and standardization but also on its ability to replicate a low-cost, mass-market model across China’s lower-tier cities. That bet proved correct. According to Luckin’s November 17 earnings release, the company now has 29,214 stores, close to IDG’s forecast.
The investment was unusual in another respect. IDG acted proactively, and the risks extended beyond financial exposure. “Internally, we felt this was a project that simply could not fail. It was not just about profit and loss but also IDG’s reputation,” Niu said.
In 2018, 36Kr reporters interviewed several IDG partners and former employees. Themes such as partnership culture, institutional discipline, intellectual rigor, and reputation consciousness came up repeatedly. For a firm often regarded as conservative, staking its name on Luckin reflected a different posture: IDG was no longer content to make only safe bets.
Not just making safe bets
Luckin isn’t IDG’s only contrarian move. Its investments include Bambu Lab, Shein, Insta360, Pony.ai, Dreame, and Xpeng Motors, many of which faced skepticism or volatile growth trajectories.
When IDG invested in Bambu Lab in late 2020, consumer 3D printers were widely dismissed as niche, slow, and unreliable. IDG did not bet on the market but on the team of engineers led by founder Ye Tao. When the company’s first prototype showed that a 3D printer could be fast, reliable, and easy to use, IDG doubled down. Its conviction was eventually rewarded.
The same logic applied to Insta360. In a category dominated by GoPro, IDG backed a young founder born in the 1990s, Liu Jingkang, and ultimately became the company’s largest outside shareholder. “We believe in the new generation,” Niu said. “They have strong instincts for products, aesthetics, and global markets.”
As enthusiasm for new consumer brands cooled, revenue-based financing gained momentum by targeting businesses with stable cash flow. IDG avoided such short-term, small-ticket investments. Instead, it expanded its legacy in travel and hospitality through Trip.com, Homeinns, H World Group, Wuzhen, and Yada International by investing in longer-cycle cultural tourism assets.
One example is the Yaohu Town project, with a total investment of RMB 13 billion (USD 1.8 billion). Created by Yada founder Jiang Jianning and Wuzhen’s Chen Xianghong, it aims to build a resort town on 20,000 acres of planned land. Construction was delayed by the pandemic, but IDG stayed committed, securing new funding and local partners. Yaohu Town opened on December 28, 2024, and within one year reached its annual revenue target of RMB 365 million (USD 51.1 million).
Across more than 30 years of investing, with assets under management among the largest in the industry, IDG’s primary capability has remained consistent: a willingness to embrace innovation, risk, and uncertainty, grounded in due diligence, long-term thinking, and patience.
Partner Lian Meng, who backed Heytea and Shein, summarized the philosophy: “The most important thing in life is long-term companionship.” This applies to founders and increasingly to assets. IDG is willing to wait for value to reemerge after hype fades.
Patience also shapes its internal learning. In Luckin’s case, Niu said IDG’s understanding evolved over time. Initially, margins were the priority. Later, IDG realized that in a hypercompetitive coffee market, Luckin’s returns would come from scale, leaving room for course correction.
Lian reflected on his own shift in perspective. “I used to think ‘good’ meant products I would give to friends,” he said. That instinct helped IDG identify brands defined by strong visual identities, such as To Summer and Acne Studios. “But taste is subjective,” he added. “After Pinduoduo and Luckin, I realized how essential it is to understand diverse consumer perspectives. And I should respect Pinduoduo and Luckin more than most people.”
Entry and evolution
Not every investment leads to success. Tiger Attitude, a bakery chain, was one of IDG’s most significant misses during the 2022 consumer boom. According to managing director and consumer lead Fan Wu, the firm’s internal review concluded that the issue was not consumer brands themselves but inflated valuations and unrealistic expectations.
The team gained new insight: unlike bakery goods, coffee consumption is not constrained by frequency. Coffee is both functional and cultural.
The introspection helped IDG stay disciplined as the consumer-brand frenzy continued, deliberately avoiding overpriced deals. “Not investing was already a win,” Wu said.
Through these cycles, IDG’s consumer strategy has evolved across three phases:
- The first focused on global brands entering China, such as Moncler and Farfetch.
- The second emphasized new channels, brands, and categories, capitalizing on e-commerce and backing companies such as Heytea, To Summer, and Genki Forest.
- The third and current phase emphasizes technology and globalization, leading to investments in Luckin, Bambu Lab, Shein, Insta360, and Anker.
IDG supports Chinese consumer companies expanding overseas while helping international brands enter China, including Acne Studios, Gentle Monster, Rossignol, and Lakrids by Bulow.
If innovation and globalization define the third phase, acquisitions are becoming the primary tool. Wu, whose background includes Blackstone and Bain Capital, helps drive this strategy. She believes China is entering a period of lower interest rates and stable GDP growth, making stable excess returns more important. Mergers and acquisitions in the consumer sector fit this environment.
But execution is challenging. “Acquisitions require long negotiations and deep operational understanding, from due diligence through post-deal management,” she said.
IDG’s roadmap highlights two main opportunities: exits by multinational firms that lead to sales of controlling stakes and management buyouts in partnership with experienced operators. This marks a shift from minority investing toward more active control.
This fall, IDG acquired a majority stake in Lakrids by Bulow, a Danish confectionery brand, with plans for global expansion rather than a China-only strategy. “In the Moncler era, IDG took small equity positions and helped with China expansion. Now we have the confidence and ability to manage a global consumer company,” Wu said. Capabilities gained from past deals, such as acquiring Osram with MLS and Metro China with Wumart, are now flowing into the consumer sector.
Seven years ago, 36Kr asked IDG what it ultimately wanted to become. Today, the answer is clearer. As the consumer sector continues to evolve, IDG, now in its 32nd year, is becoming a more sophisticated hybrid. It aims to remain steady while embracing new variables. It seeks to serve as a bridge for global brands entering China, a global operator for Chinese brands going abroad, and an investor capable of taking either an active or minority role depending on the situation.
Its high-stakes investment in Luckin remains one of the clearest expressions of what the firm has become. And at 32, IDG is evolving into the institution it strives to be.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Chen Zhiyan for 36Kr.