Meituan.com, one of China’s largest group-buying websites, announced Thursday that it received $50 million in its second round of venture capital financing and that it has started a third round.

The financing comes from Alibaba Group, Northern Light Venture Capital, Walden International and Meituan’s first-round investor Sequoia Capital. 

Meituan didn’t reveal the amount of investment from Alibaba, but said Alibaba had been given a seat on its board of directors.  

The first round of funding was used for business expansion, promotion and technical R&D, the second round would be used for service optimization, technology and product innovation and cultivation of professional staff, according to Meituan’s CEO Wang Xing. 

“As a leading group-buying company in China, Meituan is still attractive for investors,” Chen Shousong, an e-commerce researcher at consulting firm Analysys International, told the Global Times Thursday.

“The group-buying market has a limited capacity, and big companies such as Meituan, Lashou and Nuomi, which have received rounds of financing, are developing rapidly while smaller ones are lagging behind. There will be only 50 to 60 national group-buying websites at the beginning of 2012,” Chen said. 

“Meituan has not realized net profit yet, but has a gross profit of 10 percent so far, the highest in the industry,” said Wang Huiwen, Meituan’s vice president. CEO Wang Xing added that it would take three more years for the company to make a profit. 

Most group-buying websites in China have not yet started to make a profit, said Chen from Analysys, “as they are still in the process of scrambling for market share.”

Group-buying firms need financing for long-term support as competition is becoming more fierce, Chen added. “However, a good team, which determines the right positioning of the company and executes tasks efficiently, is the crucial internal factor. And those who can provide better services can be winners.” 

By the end of May, China had 4,500 group-buying websites, according to a report released by tuan800.com, a group-buying website portal. 

Since its launch on March 4, 2010, Meituan recorded total sales of 230 million yuan ($35.53 million) by March this year. 

It expects to achieve a sales volume of 1.6 billion yuan in 2011.