Traffic Channel Changes, Net Red Brands Emerge: Xiang Feng Investment Xu Ying Decoding Consumption Investment Methodology

With the rapid growth of new retail and social business, to the right time for live telecast, the dramatic changes in the flow of online and offline channels have led many new consumer brands to come to prominence. The consumer industry has also become one of the few areas in the winter that remains active, attracting the influx of entrepreneurs and investors. Even people in the industry say, "all consumer goods are worth doing again."

"The consumer domain seems to have a low threshold, and the net red brand is repeated, but the failure rate of the new brand is very high." Recently, Xiang Feng investment executive partner Xu Ying said in an interview with the twenty-first Century economic report.

She said that unlike consumer Internet, consumer brands are more traditional, which involves many external factors such as supply chain, location, personnel training and so on. This is a challenge for cross-border entrepreneurs and investors. And Xiang Feng has more than 10 years of investment experience and resource accumulation in the consumption field. The team understands what problems the enterprises will encounter and can also help them in the selection of commercial real estate, supplier cooperation and channel cooperation.

Xu Ying kept his neat short hair, and revealed a frank and capable hand. In the early days of her career, she had worked as an auditor, a strategic investor and a financial adviser. With a curiosity about the investment industry, Xu Ying joined Xiang Feng to invest in China Fund in 2009, responsible for the early investment of TMT industry, focusing on the Internet, consumer and e-commerce projects.

In the following 11 years, the rise of mobile Internet, the advent of consumer upgrading, and the draught of hard technology stations... Cheung Fung invested around the two main lines of high technology and big consumption, and launched 91 star projects such as 91 assistants, motorcycle parks, skylines and so on. The fund management scale is over $1 billion.

Xu Ying, who lives in it, throws out a lot of famous projects, such as singing karaoke software, brand new underwear inside and outside, net black tea brand Lele tea, glasses D2C brand LOHO and tidal platform YOHO. Today, she puts most of her energy into consumption and investment, and sums up her own investment methodology.

Consumer investment Quartet

The growth of entrepreneurial projects is inseparable from the high degree of tacit understanding and cooperation between entrepreneurs and investors. In the internal investment of Xiang Feng, the growth of consumption items is usually divided into four stages. The team will conduct a targeted inspection of the projects at each stage and eventually form a harmonious Quartet.

At the beginning of entrepreneurship, projects are often in the market stage. At this point, entrepreneurs may have only a frame of mind for what they want to do. Investors should determine whether the product direction is in line with the large consumption trend and whether there is market opportunity in the category. The judgment basis is mainly reflected in the flow channel, such as whether Internet red is willing to endorse products, and whether the channel providers are willing to accept products. The acceptance of traffic source means that the product has the market success factor, and is conducive to the rapid development of the future.

The second is the product stage. When the company has the flow as the basis, whether there are enough good products to accept the test of the flow will decide whether the company is a short-lived net red brand or a truly powerful brand. For companies in the stage of product, investors focus mainly on more refined data such as user retention. At the same time, whether the product has enough gross margin space and whether the cost is further compressed may also be the direction that needs to be focused.

"Third is the organizational stage, which is the stage of enterprise muscle, expansion capability and compensation board. At this time, the growth of enterprises may be slowing down, but the improvement of organizational structure can help enterprises go further. " Xu Ying said.

For many consumer projects, they may already have the capability of supply chain from the flow end to the product end, but there are still some problems in the development of online channels. In addition, the company's brand building capability, product iteration capability, and supply chain deepening capability may be short boards that need to be made up.

The fourth is the brand stage, which is a late stage of maturity for enterprises. Enterprises investing in this stage mainly examine whether it has shaped the brand tonality and value proposition, and has a very strong fan group, which supports enterprises to continuously extend their brand awareness in the direction of category channels.

If you compare a business to a person, these four stages are equivalent to, first of all, whether he can first attract you. Then contact you, speak and act to express the essence. Third show his muscle power. Fourth expressing the inner soul. " Xu Ying said.

In December 2019, Xiang Feng invested in the A round of the new consumer brand "Wang full" of the online cereal. "When we are in touch with the king, we are in the market stage. When investing, it has grown to the product stage and verified the strength of the product. Now, Wang is full of evolution towards the organizational stage, constantly attracting talents to make up the team short board. Xu Ying said.

It is understood that Cheung Feng team from the beginning of this year and Wang full contact, when the king full has completed Angel round financing, there is no new round of financing plan, the company's shipments are still relatively small, the popularity is not so high. After six months of contact, Xiang Feng made investment decisions.

"We tend to contact each other for a period of time for each consumer brand project, which makes it easier to observe the company's operational data and the learning ability of the founding team." Xu Ying said.

Many people regard King's full food as breakfast food, which is not a great track. Xiang Feng's team initially worried about this, but later, through interviews with users and channel members, the team gradually dispel doubts.

On the one hand, in the breakfast scene itself, Wang is full of potential to become the main category. Due to the gradual disappearance of mobile breakfast stalls in a second tier city, we need to find a substitute. For young people, there is usually no time for complex operations such as cooking in the morning. Eating instant cereal is a good choice. On the other hand, because of the good taste, many consumers eat the king's food as a snack. In the future, healthy and ready to eat products will give Wang full hope to cover more scenes and expand more categories.

Becoming net red is the basic skill of consumption items.

In addition to Wang full, Xiang Feng also invested in two consumer items such as ramen noodle and LeLe tea in 2019. Xu Ying said that the pace of investment in the team did not slow down because of what the outside world called "the winter". And in terms of consumer brands, Xiang Feng may continue to make the early layout of angel wheel and A wheel, which means that the number of projects to be invested in the future may be more.

In the case of the tea drinking project like Xi Cha and Na Xue, long ago, with the rapid development of capital strength, why did Xiang Feng still insist on two rounds of capital injection for Lele tea in 2019?

Xu Ying said the team actually contacted the company two years ago when Lele tea opened its first store. At that time, the team wanted to see new opportunities in the offline chain, and felt that there was a great opportunity for tea and baking in Lele tea. Because people drink more beverages in summer, they need more bread and sweets in winter. The combination of milk tea and baking can not only increase the price of the guests, but also make a good supplement during the peak season.

On the other hand, the tea drinking + baking mode also poses a great challenge to the founding team and supply chain management. Because these are two completely different categories, it is difficult to guarantee the same quality and speed of iteration, and also set strong requirements for the setting up of team organization structure.

"Lele tea insists that these two categories go hand in hand, in fact, it also creates a very high threshold, showing the competitiveness of the team." Xu Ying said.

At the early stage of contact, the Xiang Feng team had two doubts about Lele tea. First, whether it is net red shop or sustainable consumption. Second, does it have the chance of scene iteration? After observing the Lele tea for a long time, the Xiang Feng team finally dispel doubts.

Xu Ying explained that, first of all, milk tea is not an out of the box consumption category. Chinese consumption of milk tea is long-standing. From street stores to chain stores, Chinese people are more keen on milk tea than coffee, and products themselves are constantly upgrading. At the same time, the original milk tea shops are usually street shops or B1B2 layers of shopping malls, which is a supplement to catering. Lele tea is a good place to enter the shopping center, forming a leisure consumption scene similar to Starbucks, which has a very clear distinction with traditional milk tea shops.

Is the investment of Wang Feng full and LeLe tea a preference for the net red brand? Xu Ying frankly, Xiang Feng investment will actively contact the net red brand. However, whether the net red brand is a gimmick or a company that can repurchase and fan precipitation is time tested. This is also a need for the team to observe further before making investment decisions.

"In the four stage of the growth of consumer companies, the market stage is mainly to test the flow of brands. From this point of view, becoming a net red brand is the basic skill of the company. Xu Ying said. Only by grasping the ability of everyone's eye to gain popularity, will products have the chance to further verify their strength with products.

In terms of the withdrawal of consumer items, Xu Ying said that listing and merger are feasible exit paths. For example, in IPO, the Hong Kong stock market already has Lining, Anta and other quality companies. In the case of mergers and acquisitions, when the development of consumer start-ups has entered a stable period, the profits will be considerable. For large consumer brands, the acquisition of small brands has a strategic supplementary effect.

"When we invest in a project, we must hope that it is at least a company with a market value of more than 10 billion. If there are other possibilities for mergers and acquisitions in the course of development, we will not exclude them. " Xu Ying said.