Behind Luckin's "Comeback": IDG's "Gamble" and New Faces

New consumption, new investment, new narrative.

Text | Chen Zhiyan

Source | Undercurrent (ID: waves36kr)

Cover source | unsplash

On November 17th, Luckin Coffee released its financial report for the third quarter of 2025 before the U.S. stock market opened. The total revenue in Q3 was 15.3 billion RMB (US$2.14 billion), a year-on-year increase of 50.2%. The net profit reached 1.28 billion RMB, achieving a turnaround from losses compared to the same period last year. As of the close of trading that day, Luckin's pink sheet was reported at US$40.00 per share, a 2497.4% increase compared to its US$1.54 per share in the pink sheet market in 2020.

This should have been a routine performance disclosure, but at the current time point, its significance goes far beyond the financial report figures. Just a few days ago, Luckin CEO Guo Jinyi publicly stated at the Xiamen Entrepreneurs' Day Conference that Luckin is "actively promoting the process of returning to the U.S. main board for listing."

Afterwards, Luckin's official side supplemented to the media: "Currently, there is no definite timetable for returning to the main board for listing. The primary task at this stage is still to implement the business strategy and focus on development." Even so, the huge turning point that Luckin has experienced is enough to leave its mark in Chinese business history.

"Coming ashore," a term full of the meaning of "rebirth after a catastrophe" in the Chinese context, may become a reality for Luckin.

Five years have passed since the turmoil in 2020. In these five years, Luckin delisted from the NASDAQ, paid huge fines, and was almost pronounced dead by the market. Now, it has miraculously "turned the tables against the wind": with over 29,000 stores, it has become the de facto largest coffee chain brand in China; it has also opened coffee shops in countries such as Singapore, the United States, and Malaysia; Guo Jinyi even predicts that the company's annual revenue in 2025 will exceed 50 billion RMB.

In the public narrative of Luckin's "resurrection," Centurium Capital is undoubtedly the absolute protagonist. As the core investor, Centurium Capital led Luckin's debt restructuring and corporate governance, and became the controlling shareholder in January 2022. Its founder, Li Hui, also served as the chairman of Luckin. The market generally attributes Luckin's rebirth to Centurium Capital's heavy investment and operation.

Now, let's look back at the turning point of this "miraculous" story in Chinese business history - January 27, 2022. That night, Centurium Capital announced that it had led the acquisition of the equity of some of Luckin's shareholders (i.e., the team of the original founder, Lu Zhengyao). Among the members of the buyer group, there was a name that could not be ignored - IDG Capital (hereinafter referred to as IDG).

This transaction was described in the SEC's documents. Specifically, IDG joined the buyer consortium led by Centurium Capital and took over a total of more than 383 million Class A common stocks from the entities under the control of Lu Zhengyao, Qian Zhiya, and their families, which were in the process of liquidation at that time.

By 2022, IDG had already formed a potential consensus in the entire venture capital circle: it was an established institution that introduced VC into the Chinese market. However, when talking about IDG, those with high emotional intelligence would say it was "prudent," while a more pointed description would be "conservative."

Why did such an institution appear in the buyer group of Luckin - a "cast - off" that the market avoided at that time?

When everyone thought the story of Luckin was over, IDG chose to place a bet in the "ruins" together with Centurium Capital, the earliest investor in Luckin. Behind this rarely - mentioned name in the Luckin buyer group is not only a "bold gamble" by a recognized conservative, but also another side of this institution that co - exists with the Chinese investment industry and has not been noticed.

Actively breaking into the "eye of the storm"

Back to the end of 2021 to the beginning of 2022. At that time, Luckin had just emerged from the quagmire of the accounting fraud scandal and had not yet achieved profitability at the company level. At the same time, the capital market's enthusiasm for "new consumption" was rapidly cooling down, and there were many doubts.

The investment opportunity originated from a judicial auction. The equity pledged by the original founder, Lu Zhengyao, was liquidated, and IDG got the opportunity to participate in the buyer group and took over the shares in an open court auction.

Why did IDG enter the game at this moment?

Niu Kuiguang, a partner at IDG Capital, told "Undercurrent Waves" that IDG's attention to Luckin actually started at its inception. However, since the financing space released by Luckin's "iron triangle" (Lu Zhengyao, Liu Erhai, and Li Hui) was not large before, IDG did not find a suitable investment opportunity. After the accounting fraud scandal at Luckin, a rift emerged, and the IDG team began to closely monitor its operating data and carried out systematic verification work.

"We collected receipts from the moment the stores opened," Niu Kuiguang recalled. "After statistics, we found that the data such as price and cup volume were relatively accurate."

To strengthen the verification, IDG Capital also joined hands with a third - party and spent one to two months conducting on - site research on dozens of stores. Then, two key facts were discovered: First, Luckin's sales volume was not affected by the scandal, and "there was no cliff - like decline"; second, Luckin gradually narrowed its high - value subsidies. Through the dynamic adjustment of discounts and coupons, it actually increased the selling price, while the number of users and sales volume were not affected and achieved double - growth.

This means that the market's demand for Luckin's products is real and has a certain price elasticity. The accounting fraud scandal mainly impacted the confidence of the capital market, not the consumers' coffee cups.

With detailed due - diligence data and a deep understanding of the industry, IDG successfully won the trust of the leading party, Centurium Capital, and was able to enter the buyer group.

"Selling coffee is a business that is not complicated to understand," Niu Kuiguang believes. From a business judgment perspective, it was not difficult for IDG to make this investment decision. The team's judgment was that Luckin's store network, digital system, brand awareness, and management team were all healthy, but there was a "prediction deviation" in its expansion strategy - trying to use "short - term subsidies" to cultivate a coffee consumption habit that takes "10 to 15 years" to develop. At the beginning of 2022, through the transaction, it was possible to separate the "good assets" from the "bad strategy."

What made IDG determined to invest in Luckin was the insight into its scale potential. At that time, Luckin had less than 6,000 stores. According to IDG's calculation model, this number was far from reaching the ceiling. "We thought at that time that there should be at least 20,000 stores, and 30,000 would be even better."

This was a bold prediction. It can be said that what IDG bet on was not only Luckin's high - cost - performance national coffee model created through digital capabilities and standardized management, but also the terrifying replication ability of this model in China's vast sinking market.

Facts have also proved that IDG's "bet" was correct. In the financial report released on November 17th, as of now, Luckin has 29,214 stores and is moving towards the "better" goal that IDG thought of.

What makes this investment special is that it was actively made by IDG. For such an investment institution, the risk of investing in Luckin far exceeded the financial level.

"We internally believe that this project can only succeed and not fail - this is not only about the profit and loss of a single project, but also about IDG's reputation," Niu Kuiguang said.

In 2018, the "Undercurrent Waves" team conducted exclusive and systematic interviews with several partners at IDG and some investors who had left IDG. The partnership culture, institutional interests, intellectual air, and extreme care for reputation were the characteristics most frequently mentioned about this institution in the interviews.

An institution often labeled as "conservative" by the outside world has staked its most cherished "reputation" when the market was at its most panicked. In today's business world full of both opportunities and challenges, IDG is obviously not satisfied with just being a "prudent" financial investor.

Beyond just playing it "safe"

Looking through IDG's list of invested companies in recent years, Luckin's "gamble" is not an isolated case. Companies full of topics and with tortuous development paths, such as TROZ, SHEIN, Insta360, Pony.ai, Dreame, and XPeng Motors, are prominently listed. These are obviously not the results of playing it "safe."

When IDG Capital invested in TROZ in late 2020, the consumer - grade 3D printer market was generally regarded as a "rapid prototyping tool" - a niche product used only by senior makers. In the eyes of many investment institutions at that time, because it was troublesome to use, had a high printing failure rate, and was slow, it could not even be called a real "product."

The anti - consensus aspect of this investment is that IDG bet not on the market itself but on a group of top - notch engineers led by Dr. Tao Ye. Internally, IDG defined them as "industry disruptors."

When TROZ's first prototype machine proved that 3D printers could also be simple, easy - to - use, fast, and reliable, IDG realized that such a product was not just a better prototyping tool. It could enter enterprises and become a real productivity tool; it could also enter thousands of households and become a personal manufacturing tool that every family could own. Therefore, IDG made two consecutive additional rounds of investment.

Now, desktop 3D printers have become the fastest - growing Prosumer (professional consumer) products in the world, and TROZ is one of the key engines of innovation in this field.

This anti - consensus logic can be traced back even earlier to the support for Insta360. In the action camera field, GoPro was once an unshakable hegemon. However, IDG heavily invested in a Chinese startup led by the "post - 90s" founder, Liu Jingkang, and eventually became its largest external shareholder.

"We believe in the new generation of young people and believe that they have excellent product perception, aesthetics, and a global perspective," Niu Kuiguang told "Undercurrent Waves."

After the bubble in new brand investment dissipated, the hottest term in recent years has been RBF, or Revenue Based Financing, which is targeted at entity owners in the catering, retail, service, etc. sectors with stable cash flows. It only invests in single stores and shares a certain proportion of the daily (or monthly) revenue of the single store. IDG did not choose this approach that aims for short - term returns. Instead, it continued to make moves in the heavier and longer - cycle cultural and tourism track along the lines of Ctrip, Home Inns, Huazhu Group, Hanting Hotel, Wuzhen, and Yada International.

The Yixing Yaohu Town, with a total investment of up to 13 billion RMB, is one of the typical cases. This project is a reunion of Yada founder Jiang Jianning and Wuzhen Scenic Area founder Chen Xianghong, aiming to build a national benchmark "theme - park - style resort town" on a planned land area of 20,000 mu.

"Undercurrent Waves" learned from IDG that around 2018, based on its previous experience in Wuzhen and Gubei Water Town, IDG had a deeper understanding of the long - term value of cultural and tourism projects and the innovation potential of complexes. Then, with the consensus of the team, it invested in Yaohu Town. However, as soon as the project started, the pandemic broke out, and the construction period was postponed again and again. Despite great internal pressure, IDG did not abandon the project but tried every means to continue financing. Through introducing more funds and seeking support from local resources, after more than five years, on December 28, 2024, Yaohu Town officially opened.

IDG's investment in Yaohu Town is also an anti - consensus move in today's investment industry. At the same time, this move also shows its ambition to evolve towards "heavy - asset" and "long - cycle" operations in consumer investment - far beyond the scope of traditional venture capital institutions and closer to a reconstruction of the industrial ecosystem.

"For Yaohu Town, we saw the value of anti - consensus. When others thought such projects had a long cycle, high risks, and were not worth investing in, we believed that we had the courage and ability to undertake such projects, and there would be less market competition. In the long run, the market value of such projects will become greater due to their scarcity," said Li Jianguang, a partner at IDG Capital in charge of the Yaohu Town project.

Yaohu did not copy IDG's previous experience in Wuzhen and Gubei Water Town and continued the positioning mainly for leisure, vacation, parent - child, and business. Instead, it took a new angle of being a "gathering place for the new generation's lifestyle." In less than a year, Yaohu Town has achieved its annual revenue target of 365 million RMB. The town's integrated marketing case was successfully selected as a "good cultural and tourism brand" and won a national - level award.

As of now, IDG has been making investments for more than 30 years,