Yuanji Forest, valued at 40 billion yuan, is copied to other consumer products, who is it to "challenge"

Money never sleeps.

At present, venture capital is intensively flowing into cutting-edge consumer product companies, and water is splashed.

On the contrary, because of the popularity of Yuanji Forest, the investment incubator behind it, Challenger Capital, is gradually emerging.

The reports about them mostly stay in the "hidden capital empire behind the Yuanji Forest.

" Because this little-known investment institution, in addition to investing in Yuanji Forest, has also invested in dozens of new and old consumer product companies such as Vigor 28, Pan Women's Square, and Mstand.

Challenger Capital, which was established in 2014, did not register until November 2020 before registering the official WeChat public account, and with an external declaration "We are not an investment institution chasing the wind, we have our own mission", high-profile recruiting and accelerating expansion.

Before attending the Dolphin Club’s New Domestic Products Summit (Hangzhou) on March 27, Challenger Capital partner Zhou Hua accepted an exclusive interview with the whale business and explained the investment logic of Challenger Capital and the development trend of the consumer goods industry for the first time.

In addition, from the perspective of investment institutions, I also shared how to promote the innovation of China's consumer goods industry.

When we perceive challenger capital with limited public information, we need to ask more: Who does challenger capital "challenge"?

Challenge the traditional fund model

Challenge the traditional fund model

"I am not interested in pure financial investment.

We are more willing to be a'partner (partner) who brings capital and shares' to help and accompany a valuable enterprise to grow together.
" Zhou Hua said.

He himself is an inter-bank investment and has two entrepreneurial experiences.

He was the earliest employee of Ctrip and experienced the rapid development of the Internet.
Then he joined SouFun and became the vice president of marketing.
When the mobile Internet emerged, he joined After Focus Media, it really began to contact the consumer industry.
During this period, I met Tang Binsen, the founder of Yuanji Forest and the founding partner of Challenger Capital.
The two hit it off and they joined forces for institutional investment in October last year.

Zhou Hua told the whale business, “Before, I felt that the primary market investment was relatively unfamiliar, and I didn’t dare to step into it.
I first used my own funds to invest, and then cooperated with Panda Capital.
During the period, I learned about the specific ways of institutional investment.
, Understand the difference between investing your own money and investing LP money.
"

Before full-time investment, Zhou Hua had two entrepreneurial experiences, which is similar to the experiences of other partners of Challenger Capital.

They started from entrepreneurs as investors, and jointly summed up a set of "challenge" standards:

1.

China is promising: the giants develop to a certain extent and the response will be slower, although now the head of each category in the consumer field is dominated by foreign and joint venture brands.
However, in the future, I believe that the top 10 in each category will have 3-4 local brands.

2.

Challenge the giants: many areas have been verified by big brands, but big brands have existed for a long time, the system is relatively bloated, and many aspects cannot meet the needs of current consumers.
But the size of the market they are in is certain.

3.
Invest in good products: Challengers like product-oriented companies and products that have been proven by the market and have repurchases and good reputation.

4.

Believe in young people: Challengers believe that the preferences of young people can lead the future development of the consumer market.

Based on these principles, challengers will start screening projects and entrepreneurs.
At present, the challenger manages RMB 8 billion funds, 70% of which are partners' own funds, and the remaining 30% of funds come from selected LPs.
They must have the ability to empower enterprises and help entrepreneurs.

"We don't expect to make money from management fees.
Investment is just one of our "grabbing hands".
We need to go deep into the invested companies, support them at the strategic and tactical levels, and provide supporting and accelerated services.
" Zhou Hua emphasized.

Help entrepreneurs "challenge" giants

Help entrepreneurs "challenge" giants

In the creed of Challenger Capital, "Challenge the Giants" is a prerequisite for the success of aspiring entrepreneurs.
If it is just the slogan stage, of course it is not convincing.
Therefore, Yuanji Forest can be regarded as a challenge to Coca-Cola's fame, and it has also laid the confidence for challengers to help entrepreneurs and challenge giants.

According to a report from China Investment, the latest valuation of Yuanqi Forest exceeds RMB 40 billion.
This company has only been established for six years.
As early as two years ago on Tmall Double 11, the sales on the whole network beat Coca-Cola and Pepsi on that day.

How to do it?

How to do it?

To make a long story short, Tang Binsen, who made his fortune in games, uses the product development process of a game studio to make consumer products inside Yuanji Forest.
Coke is often rejected by young people because of its high sugar content and unhealthy conditions.
Yuanji Forest put forward modern requirements such as "sugar-free" and "health", and the upstream R&D department and raw material supply will transform the products according to the demand.
The company's sales, marketing, and other resource allocations are all configured around products.

After Yuanji Forest became a benchmark project, Challenger Capital took the accumulated experience to help more emerging companies challenge traditional giants and traditional companies to complete their own challenges.

In Zhou Hua's mind, Vitality 28 is a classic case of old brand transformation.
This brand was once a national brand, the CCTV standard king, equivalent to Liby in the 1990s.
Later, it became depressed.
Challenger invested in it in 2018.
At that time, the annual sales volume was only 10 million.
Challenger first helped to re-do market research, product positioning, packaging reform, and then increase the channel laying, and do something different from Liby on the market.
, Unilever products.

When encountering difficulties, he also helped him through them.
The annual sales volume of Vitality 28 reached 100 million in 2019 and 1 billion in 2020, a growth rate exceeding 10 times.

In addition to consumer product brand investment, focusing on the upstream and downstream layout of the consumer industry is also the direction of challenger capital.
There are already investments in convenience stores, retail service SaaS and other tracks.

Challenger investment mainly focuses on the A round and earlier.
The largest single investment can be invested in 25% of the entire fund size.
For early projects, a single investment is about 5 million US dollars, but there are also single investments like Pan Women's Square.
Billion projects.

For venture capital, the key to stage 0-1 is "investment.
" Many traditional investment institutions are fond of entrepreneurs who are senior executives of large companies.
But in the eyes of challengers, the success rate of executives is not higher than that of grassroots entrepreneurship.
Because the way of thinking of executives is completely different from that of entrepreneurs, there are many retreats, and they can go back to work if they are unsuccessful.

In addition, executives suddenly start a business, and face the risks of sudden changes in the team, differences in attitudes of others, and possible decline in their own quality of life, and they have a strong sense of gap.
In addition, there must be setbacks in starting a business, and executives are relatively easy to waver, while grassroots entrepreneurs often have no retreat.

Entrepreneurs who challenge giants often have no directional standards, and it is difficult to judge from family, education, and background.
But the most needed commonality-a strong desire.

Zhou Hua's impressive entrepreneur is Li Qiang, the founder of Pet Home.
He once achieved financial freedom by advertising in Shenzhen.
After a few years of rest, he became depressed.
Then I decided to start a new business and moved from Shenzhen to Beijing to work in the pet industry.
The financing was not smooth and it was very painful.
The money in the account was not enough to pay wages.
In addition, the domestic pet industry was still immature, but he still survived.

Conversely, challengers also have companies that are not good at investing——

1.
Those entrepreneurs who love to tell science fiction stories, engage in concepts out of nothing, and innovate for the sake of innovation.
Challengers generally see less.
Challengers have to invest in mature markets where there are established markets, entrepreneurship does not need to cultivate markets, and there are already giants.
We must dare to be the world's queen, and compete for the first.
Dare to be the world refers to the product category, and the first refers to the ability to make a good product.

2.
Entrepreneurs who prefer to play with traffic, because the product itself has no special features, traffic is getting more and more expensive, the marginal benefit is getting lower and lower, marketing costs have not been reduced, price competition is incentivized, and it is impossible to make a good product.

Zhou Hua said: "Now with the changes in traffic and channels, at the beginning of the brand creation, you can rely on live broadcasts to increase sales.
If the brand is too much, it will "cannot stop the medicine" and be kidnapped by the channel.
" Many entrepreneurs now spend most of their minds.
In terms of how to manage marketing, only short-term benefits are seen, and the product is the foundation of the brand.

How to replicate the experience of Yuanji Forest?

How to replicate the experience of Yuanji Forest?

Zhou Hua also admitted that the cost of learning for each track is relatively high, which is equivalent to starting a new business.
For him, the biggest challenge is his own learning ability, whether he can keep up with the development of the times, and whether his experience can continue to help entrepreneurs.
In this process, the individual must keep inputting.

In fact, consumer product entrepreneurship is inseparable from: products, brands, and channels.
The challenger’s previous investment and incubation of Yuanji Forest, refines its methodology, and the accumulated experience and resources form a "middle stage", which can then be reused in other consumer products.

In addition to the domestic market, Yuanji Forest is also exploring at the sea level.
They have a dedicated overseas market team, which is currently effective in the Singapore and Southeast Asian markets.
Some Chinese supermarkets in North America can already buy Yuanji Forest.
Before, everyone looked at consumer products and only looked at how they were sold in the Chinese market.
In the future, they will definitely use the global market as a reference.

Zhou Hua said, “As an investor, the most valuable thing is to empower the key nodes of the invested project in the strategic aspect.
In the tactical aspect, we have basically walked the way they are about to take, and sometimes we will share and communicate.
.
"

Of course, the experience of Yuanji Forest is not omnipotent, and the power of capital is not possessed by all consumer goods entrepreneurs.
Moreover, the category attributes and characteristics are different, and Yuanji Forest cannot be copied completely.

Before bringing capital into stocks, Challenger Capital will "post-investment services and pre-investment" to diagnose routine problems for entrepreneurs.
Sand table simulation, if they are asked to be CEOs, what will they do with regard to product tune, target groups, channel order, etc.

In terms of post-investment, Challenge Capital will establish an internal think tank, textualize experience and systematize training, and provide it to the CEO of the invested company for learning.
In addition, a founder's meal will be held regularly every month, and everyone will meet new sparks in the party.

Zhou Hua believes that China will surely come out with "Suntory" in the future, even if it is not Genki Forest, it is another company.
Now the acceptance of domestic products is high, and the domestic supply chain is very complete.
China's channels are also very strong after integration.
This phenomenon is an inevitable trend.

Consumer products resist the economic cycle, while the development of consumer brands has a life cycle.
The capture of investment opportunities in the entire industrial upgrading and transformation cycle is the investment trail of challenger capital.
There will be no specific investment volume targets each year, but more based on It depends on the market rules and the fate of the entrepreneur.

"Capital + accelerated service" deeply participates in the growth of a company.
Whether it can become the challenger capital's biggest challenge to the future uncertainty, we must continue to explore.

Source: WeChat public account "Whale Merchant"

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