When an S-level entrepreneur founded a startup company

wen | Ren Qian

Edit | Liu Jing

One day in January 2021, investors from Sequoia China met with Tang Binsen.

At this time, Yuanqi Forest has not officially launched financing. In theory, this round of Sequoia has a greater chance of winning-Sequoia is the leading investor in the last round of financing of Yuanqi Forest. But the facts have proved that the complexity of the situation surpasses everyone’s imagination.

As one of the most watched growth-period consumer companies in 2020—perhaps none of them, when the news of Yuanqi Forest’s financing spread like wildfire, the investment industry was instantly disturbed.

Han Rui told that he continues to receive applications from friends on WeChat, hoping to communicate about the investment opportunities of Yuanqi Forest. The youngest partner of Gaorong Capital invested in Yuanqi Forest in 2019.

Another vigorous investor told me that some funds that had no way out could only resort to the most primitive method—blocking the door, so that after January this year, the front desk of the Liangmaqiao office of Yuanqi Forest was “overcrowded.”

This is the most delicate moment between investors. “Everyone is talking about who went to see the company today and who will see the company tomorrow,” an investor who participated in this round sighed. Even if they have confidence in themselves, they still face the various news that comes out every day. Inevitably worry.

Until the end of March-nearly a month and a half later than the original plan, Tang Binsen finally determined the participants in this round of financing: In addition to Sequoia’s continued lead investment, the old shareholders Longhu and Gao Rong will also participate. Two new lead investors, Warburg Pincus and L Catterton, and Temasek, a co-investor, were added.

Even so, the general proportion of investors is quite low. At present, the three institutions with the highest proportion of all external investors of Vitality are Sequoia China, Longfor Capital and Fengshang Capital-but they are basically around 5%, while most of the remaining institutions are below 1%. In contrast, after 6 rounds of financing, Tang Binsen and his related parties still hold more than 80% of the shares. It is worth mentioning that the challenger capital invested in the Angel Wheel was actually founded by Tang Binsen.

In China’s primary market, head effect is no longer a new story. And Yuanqi Forest is still a typical case: When an imaginative track, a company that does not necessarily need capital, welcomes a mature entrepreneur-and this entrepreneur is even a fund’s When at the helm, how investors will get along with him.

And such stories will continue to be staged.

Share battle

Although Yuanqi Forest has always been well-known, in fact, the competition for it in the capital market has become more and more fierce since 2020.

The first one in 2020The TS (Termsheet) is the Cathay Capital. In May of this year, Cathay Capital Chairman Cai Mingpo flew to Beijing, and two days after meeting with Tang Binsen, he signed TS. In fact, Xu Zhen, the managing director of Cathay Capital, saw it in the last round of Yuanqi’s financing, but at that time, the bubble water had just been launched. They had concerns about whether this category could explode and its potential and missed it. In this round, although the valuation seems to have risen by 3 times, the P/S has basically not changed, and Cathay has made a firm move.

When facing entrepreneurs who are inevitable, investment institutions often emphasize their post-investment ability. After all, there is no essential difference between money and money. Cathay’s outstanding brand in the investment circle is the global industrial resources, especially CEIBS resources. Before the official investment, Cathay introduced their LP-a top industry giant came in. Later, the two sides also released a new one on Taobao. Joint name.

At this time, the vitality is at a critical dividing line. In 2019, Yuanqi Forest completed sales of 900 million yuan, of which bubble water accounted for more than 60%, while this figure in 2018 was only 180 million. Guo Zhenwei, the managing director of Sequoia China who also invested in this round, said, “The beverage industry has been highly competitive since ancient times, and the dividing line is sales to 1 billion. This is the sign of the poker table.” And the vitality data at this time has been. Very close.

But this may not be the most critical. An investor in the consumer industry said that just as Yuanqi’s current round of financing, there were two benchmarking events in the consumer industry-Perfect Diary and Nongfu Spring have both reported IPO news. The former represents the capital market’s impact on new consumer brands. The recognition of the latter, and the latter has allowed Yuanqi to have a target Chinese listed company.

The race track at the time, the high-quality team, and the verified data-in just a few months, Yuanqi has become a company that no investor can avoid.

For Tang Binsen, the fund brand has not worked so well. What he needs more is the business blessing of investors. L Catterton’s Vice President of Global Opportunities, Chang Shuai, told that what investors are looking for at this time are: speed, timing, and “do you have the right angle.”

Leo Fang, the founding partner of Yiyuan Capital, told Tang Binsen that they had helped introduce a beverage family to Tang Binsen when the energy production capacity was limited. It is precisely because of this that Yiyuan was able to invest in this round of financing.

Before the two rounds of lead investment, Sequoia has already invested in Tang Binsen’s fund-Challenger Capital’s LP, which is equivalent to double support for Tang. This is a new gameplay in Yuanqi Forest Financing: It is said that the challenger capital holds a considerable proportion of the vitality share, and becoming a challenger LP is equivalent to becoming a vitality investor in disguise. For example, today’s capital Xu Xin, according to legend, she also looked at the vitality but did not invest in the valuation of 4 billion yuan, but she later became the challenger’s LP.

However, some people also pointed out that this is also Tang Binsen’s fundraising problem in order to solve the challenger’s fundraising., The challenger wants to raise a RMB fund, which is still not easy. “

At the beginning of 2021, the L Catterton team, which has “tracked the vitality forest for more than half a year”, also learned of the financing news. The consumer goods private equity fund owned by the French luxury goods giant LVMH has invested globally for more than 32 years. “The entire Chinese team is All in, always ready, and must be taken.” Chang Shuai said to him that before the company shared the materials, they had “prepared silently” for a long time. L Catterton also regarded vitality as a very high priority case.

A number of investors mentioned a detail: Once a fund acquired a share of vitality by buying old stocks, and then claimed to have invested in vitality. Therefore, in the latest round of financing, Tang Binsen asked investors to sign an additional clause, to the effect that the subject of the investment must be his own fund.

However, for many funds, the decision-making window period left by vitality is too short. An investor who requested anonymity said that some funds had to go beyond the “internal control process”, “even if only to get a little’oil star’ quota.”

But most of them were still turned away by Tang Binsen.

Born to be “proud”

Vitality Forest is not the prey of investors after birth.

Before 2020, there will be three main rounds of Yuanqi financing, with post-investment valuations of RMB 300 million, RMB 1 billion and RMB 4 billion.

Although according to Tang Binsen’s investment strength, he can pay the bill himself-in fact, he has also done so. In the previous rounds of financing of Yuanqi, he directly or indirectly holds investments in funds. But in these three rounds of external financing attempts, they were actually quite difficult.

In 2018, when Tang Binsen called out a valuation of 300 million yuan, he found Li Kaifu. Zhixingxingtong was the first incubation project of Innovation Workshop, and it was also the game company that brought the most returns to Innovation Workshop. Kai-Fu Li once even called Tang Binsen “the person who might become the next Ma Huateng”.

But even so, Kai-Fu Lee and his team did not vote after seeing the Yuanqi Forest-of course, in 2018, this is also reasonable. Innovation Workshop even wanted to pursue the investment, but Tang refused.

When Chuangxinchang gave up this investment opportunity, a little-known fund, Guangkong Zhongying, entered the market.

This is a fund (similar to Co-GP) co-operated by Everbright Holdings and Jiang Nanchun. This story is somewhat accidental: At that time, the person in charge of the case and Tang Binsen’s long-time partner Xie Xianlin were college roommates, and the former was looking for consumer goods.The brand has been around for some time, “In start-up companies that generally lack arms and legs, the vitality team is quite prominent, (Kuangkong Zhongying) paid in one and a half months.” An early vitality investor said to him.

However, unfortunately, due to the adjustment of the Everbright Zhongying Fund level, the 20 million yuan invested in this investment was the first to withdraw after obtaining several times the return.

In the summer of 2018, Tang Binsen called for a valuation of 1 billion yuan. As a fund focusing on the consumer sector, Fengshang had seen Pinduoduo in his early years, but he did not invest for various reasons. Tang Binsen first attracted Gao Feng: Similar to Huang Zheng, Tang was also a game entrepreneur. Unexpectedly, Gao Feng feels that the gaming background may be a plus for the consumer industry.

However, Tang Binsen also appears to be steadfast in financing-this is almost the keynote of every round of financing. What makes Gao Feng unbelievable to this day is that at that time there was even “there is no competing fund”, which allowed the pursuit of stability and Fengshang to have nearly half a year of exhaustion adjustment opportunities. It was not until March 2019 when the team visited and investigated the upstream and downstream of Yuanqi Forest, including the channel end, consumer end, and mobile sales rate, before Fengshang officially invested.

To some extent, this is the final underwater stage of the vitality forest. A big background is that since the second half of 2019, consumer investment has gradually risen, and the product sales of vitality at this time have also ushered in a steep rise-compared with 2018 revenue rose 5 times, 70% of sales came from bubbles water.

So much so that when Yuanqi planned to raise funds at a valuation of 4 billion yuan, “most mainstream investment and consumer institutions have contacted Tang Binsen.” Gao Rong Capital said to Han Rui.

However, although many investors recognize the vitality forest, most people still think that 4 billion is too expensive. If it is 800-900 million in sales that year, its P/S (market-to-sales ratio) is about 5-indeed higher than most similar companies. However, Zhang Peiyuan, the managing partner of Black Ant Capital, believes that based on the subversive style of vitality, the growth rate of scale and the future space, “the scale of tens of billions of dollars can be achieved with bubble water alone.” This project needs to be viewed from the perspective of a VC. In fact, The valuation model of traditional mature companies cannot be simply applied.

“The reality is that everyone is bargaining.” An investor who has dealt with Yuanqi said that this is precisely the point that Tang Binsen dislikes most, even when Yuanqi has not yet become a “competitive target.” “Before, Tang Binsen insisted on this point-every round of valuation was made by him, “Even if no one voted, he would say nothing.”

It is understood that after talking to Tang Binsen, a partner of the well-known consumer fund Tiantu Investment expressed approval of the company, and then generated a “very thick research report” internally. However, Tiantu believes that 4 billion is too expensive and hopes to invest at a valuation of 3 billion. Obviously, Tang Binsen does not accept counter-offers, Tiantu thereforeI dropped this item.

All sorts of accidents have caused this round of lead investors to be somewhat surprising: Longfor Capital, which is strictly a CVC (Corporate Investment Department).

“Longhu did not bargain, and at the same time showed full trust in Tang Binsen-this is especially needed for mature founders like Lao Tang.” An investor close to Tang Binsen said. It is precisely because of this that among the previous investors of vitality, Longfor may be the one who signed the “best terms”, that is, “may not be diluted by investors in the rear round”.

It is understood that Gaorong Capital is also investing in this round. Han Rui said that Gao Rong had been tracking vitality for more than a year, and one of the key variables for them to pull the trigger was “determined the degree of Tang’s all-in to vitality”. After the two sides met, they “made it together” on the spot. Investment decisions. One background is that Tang Binsen didn’t really leave until June 2020 because Zhixingtong was still in the gambling period, so some people would hesitate how much energy he could put into the vitality forest.

In 2020, Vitality Forest will obviously become the most popular startup company in the entire consumer sector. At this time, when someone asked Tang Binsen: “Whose ceiling is higher for Yuanqi Forest or Xicha?”, he was already reluctant to answer. He later relayed this question to an investor with a joke.

“One benchmarking with Coca-Cola and the other benchmarking with Starbucks, the business model determines the ceiling. Does this question still need to be asked?” the investor firmly said.

New version of venture capital story

I have discussed the relationship between entrepreneurs and investors, and the conclusion is: “If we regard investors and entrepreneurs as the two most critical forces in the business ecosystem, then the balance between them has already occurred. Tilt, the right to speak is gradually shifting to entrepreneurs.” And Yuanqi’s financing story is a typical case.

On the surface, this is a courtesy usually received by leading companies. For example, from October 2019 to present, the valuation of Yuanqi Forest has increased by a full 10 times in 18 months. “Did you say that the company’s fundamentals have changed a lot? It is true, but it certainly did not say how many times it is bigger.” A vigorous investor said that even in the mobile Internet era, such flywheel growth is rare. .

But Yuanqi Forest also has two key conditions: In the past year, the entire primary market has ushered in a large area of ​​fund over-issuance-the completion of a $1 billion fundraising by the head institutions, especially the US dollar fund, is no longer even an occasional phenomenon. , And consumption is an industry with low capital demand. This has also led to the fact that in the recent two rounds of financing, “the company has no specific timetable, and investors are chasing the start.”

But in addition, the deeper reason lies in: As the founder of a start-up, Tang Binsen not only has a continuous entrepreneurship, but also a continuous entrepreneur.A successful entrepreneur.

As we all know, Tang Binsen’s longest entrepreneurial experience before this is Zhixingxingtong-this game company focusing on overseas markets was later acquired with a total consideration of 2.66 billion yuan, a 28 times acquisition premium. In the few online videos, Tang Binsen most of the time appears as a “startup mentor”.

The Yuanqi Forest was originally only one of Tang Binsen’s investment projects. The reason why he decided to do it himself is that many investors mentioned that when he re-selected the entrepreneurial track, Tang Binsen checked the Forbes Top 100 rankings and found that the CEOs with the largest proportion were born in the consumer industry. From the perspective of age, Tang Binsen, born in 1982, Wang Xing and Zhang Yiming are the same generation of entrepreneurs, but he knows that the Internet industry has basically been set, and most entrepreneurs in the consumer industry are “uncle-level.”

What’s more different from ordinary entrepreneurs is that Tang Binsen is still an investor—a true investor. He founded Challenger Capital and completed a new fund raising of RMB 1 billion not long ago.

Some people in the investment circle said that the three words “challenger” mean “challenge all giants”. Prior to this, Tang Binsen invested in hundreds of companies through this fund, of which the layout in the consumer field is not less than many professional Consumer funds, such as Guanyun Baijiu, Ramen Talk, Cannibals, etc.

An investor who invested in Yuanqi believes that the identity of a challenger has shaped Tang Binsen’s strong “investor thinking”, “For example, the rapid iteration and multi-product operation emphasized by Yuanqi, these can all be regarded as an investment Human thinking mode.”

Almost every investor interviewed said that Tang is very good at “expressing in investor language”, so since the establishment of Yuanqi, he has never formally hired FA or BP (business plan). “But he controls the whole rhythm very well.”

To some extent, in the eyes of investors, being able to invest in Tang Binsen is a kind of honor. “S-class entrepreneurs like this are not something investors are willing to refuse.” A vigorous investor said to the top track looking for the top entrepreneurs This is the greatest guarantee for most great investments in history.

In previous venture capital stories, investors are used to talking about their various post-investment blessings to entrepreneurs. But almost every Vitality investor who accepted it showed great restraint. Some investors even declined the interview because of the reason: “For entrepreneurs like Lao Tang, everyone knows that we can only help. Of.”

Another investor who “accounts for only a few tenths of a point” confessed that although from the perspective of absolute returns, investment vigor may not bring huge cash returns, what investors expect is “no matter what you invest in Go in and get the share, as long as you canJust stay with him. In the future, everyone can do bigger things together. “

As for investors and entrepreneurs, one of the most politically correct relationship positioning is: looking at each other squarely and achieving each other. But in the past ten years of Chinese business history, investors are not only indispensable, they are often the biggest variable that determines the company’s success or failure, and they have also been given extraordinary meaning and expectations. But this may only be a phased situation. In the final analysis, the most critical person in all successful business stories is always the entrepreneur himself.