The store, valued at $500 million, cut the leeks of consumer investors

Every time I chat or interview with investors, there is one word that almost all investors will mention: consensus. The difference is that some investors adhere to the "consensus principle", while others look for "non-consensus tracks".

The principle of consensus usually refers to the large track involving people's livelihood and card neck, starting from the trillion level, which is usually recognized by most people, that is, a track that is certainly worth investing in. Non-consensus tracks usually represent a small number of investment institutions entering the market 1-2 years in advance before the outbreak of some subdivided tracks; in addition, "non-consensus" has another meaning.

Among the investors or FA friends I've talked to, they'll use "non-consensus" to describe their incomprehension of certain investment and financing cases in the industry, such as "I don't understand why this track is on fire", or "We have also studied this track internally and have not found the logic of make sense." ”

The reason why so much is repeated above is because the two tracks that will be discussed in this article, the discount store and the new consumer brand, perfectly represent the "consensus principle" and the "non-consensus track", and visually, the two form a kind of closed loop too perfectly.

This obviously cannot be called a good thing.

"The last capital darling": 7 rounds of financing in 3 years

As we all know, 2021 is the first year that discount stores are heavily invested by investment institutions, and there are many reasons that belong to the general environment, such as repeated epidemics, economic downturns, and people's love for new consumption, so investors have begun to invest in discount stores.

However, the first wave of small-scale entrepreneurial boom in china should be around 2015, basically in the form of e-commerce platforms and financing. Unlike now, the hot word for forms at that time was not "discount", but "destocking".

This is very interesting, hiding some information, perhaps can be used to explain why the latter wave is not so high traffic and investment heat.

First of all, the project, with "discount" and "destocking" as its own labels, has given their story a qualitative, the former to C, the latter to B. Secondly, in China after 2015, the e-commerce story of to B has become somewhat unreasonable, and the previous year's Pinduoduo, which was also based on low prices, was established, and financing was frequently rejected.

In this wave of destocking projects, love inventory should be a project that is running well at present.

According to public information, AiKu was established in 2017 and financed 7 rounds, and the most recent round of financing occurred at the end of 2020 and was invested by Gimpo. Love Inventory is definitely worthy of the "darling of the last capital", the highest financing amount is 110 million US dollars, and the investors also include Zhong Ding Capital, GGV, Black Ant Capital, Gopher Capital, Noah Wealth, Legend Capital and other head institutions.

In 2018, when I was doing the topic of destocking the market, I chatted with Wang Min, the founder of Love Inventory, and Sun Yanhua, his first investment institution, Zhong Ding Capital.

At that time, Wang Min made a comparison with me: if all the garment factories in China were to stop working, the inventory would allow Chinese to wear for 3 years, "The problem is how to help the brand side to clear the inventory in a more private way (the brand has its own price system) and quickly." ”

Like those destocked projects at that time, Love Inventory took S2B2C as the business model, B is mostly micro-business, mostly Baoma, the platform is also based on clothing and personal care, and C is a consumer below the third- and fourth-tier cities.

In 2018, Zhong Ding Capital led the first round of financing of Love Inventory for 100 million yuan, as the first investment institution of the latter, Sun Yanhua said to me, "Love Inventory was established not long ago, the valuation is not low; the road to China's inventory market is not clear, we need to bear the risk in this regard." Willing to invest heavily in love inventory, may be because you can understand it, so you dare to shoot it. Fortunately, we finalized it quickly, and during the National Day, I heard that other institutions also found them. ”

At that time, the benchmark of Ai Inventory was TJ Maxx (US) and TK Maxx (Europe), the parent company TJX, with a market value of nearly $70 billion, which is also the benchmark of today's new discount store project.

This year's capital darling: 2 years valuation growth of more than 100 times

Destocking things should not be easy to do, "good sale" before becoming one of the darlings of this year's capital, the predecessor was called "push and push", mainly online distribution, anecdotal news is that financing in 2019 is not smooth.

After the brand was upgraded to "good sale", according to the data of Tianyancha, at the end of 2019, the company quickly completed the angel round and the Pre-A round, and then three rounds were financed in more than 2 years, and many of the shareholders were Wuyuan Capital, GSR Venture Capital and Richu Capital.

It is understood that from 2019 after being invested by new venture capital, by the end of 2021, the valuation of good sales has risen by more than 100 times, reaching 500 million US dollars.

HitGoo, which was just established in 2021, has also been well financed, and has just been established with angel round investments from Star VC, Wang Gang, Jianfeng Evergreen and Gaorong Capital. In January this year, the company completed a new round of financing, less than half a year to raise two rounds, in the market environment of consumption is getting colder, it can be said that it is quite smooth. It is said that the valuation of the company has exceeded 1 billion yuan.

Companies on the same track also have Happy Capital leading tens of millions of small elephant life, and Lenovo Venture Capital and Innovation Workshop jointly blessed Otero, which was established in half a year and raised 3 rounds.

Most of the stories told by this discount store project are similar: helping dealers solve inventory problems, providing consumers with low-cost goods, promoting offline consumption, and stimulating domestic demand. For investors who pay the bill, such as Song Mo, an investor in Angel Bay Venture Capital who lives in Xiaoxiang, believes that the discount store is a huge market, "high cost performance is one of the long-term underlying driving forces for retail development." ”

Of course, I also received different voices, an industry researcher said that he is optimistic about the offline consumer economy, but "the logic is still not clear, the discount store of this offline economy is so much, I really can't understand." ”

Also confused, I stopped by to explore two discount stores that belonged to the head. The two discount stores are located on the basement floor of the mall, 100 meters apart, whether it is the VI design of the entire store, the display of goods, even the design of the logo, the use of fonts and the atmosphere creation inside the store.

"It must have raised a lot of money," a layman friend of mine couldn't help but sigh.

From the perspective of brand distribution, the brands in the store are roughly divided into three categories: 1) a large number of new consumer products, including first-line new consumer brands and their followers, usually the discount is indeed very low; 2) unknown imported goods, many from Southeast Asia or small eastern European countries, many are difficult to find on Taobao; 3) a small number of brands well known to mass consumers, such as Coca-Cola and Starbucks, but the discounts are generally not large.

My guess is that new consumer brands need a high inventory turnover rate and are therefore willing to sell to discount stores at prices similar to online subsidy prices – especially pro futures; importers have a similar logic that non-best-selling goods need to be cleared. Traditional brands have high bargaining power, so it is difficult for discount stores to get good prices, and the corresponding discounts are not so high.

The question is, does the inventory that helps the upstream digest really have to be sold?

A familiar investor told me, "Discount stores essentially take advantage of the fact that consumers like low prices, and the goods don't need to be really cheap, as long as people feel cheap, they can sell well." The investor also mentioned that due to the low price of individual products, consumers are willing to try more new things, which helps the sales of some second- and third-tier brand goods.

But another investor friend who looked at the discount store project but did not invest expressed a different view. He believes that the price of goods in discount stores is not only not much advantage, but also the homogenization of SKUs is serious.

"Take the self-heating hot pot as an example, after the epidemic, a number of new consumer brands that make self-heating hot pot have emerged, most of which have raised money, but the products are much the same." At any one discount store, you can see at least three or five different brands of self-heating hot pot products, which are very discounted, but not easy to sell. Such a low customer unit price model, open in the second and third lines may be able to succeed, open in the top business circles is simply suicide. Isn't this the discount store taking the investor's money and helping the investor who invested in new consumption before to take over the market? More ironically, they may have taken money from the same agency. ”

But when I checked out, the clerk of one of the stores told me that their store, like the mall, had opened six months ago and was selling very well. He pitched to me, "If you are a member, you can get rid of this order." "I looked at the price of the member - 99 yuan, and decisively WeChat paid 44 yuan.

A graveyard for new consumption?

Having said all that, I would like to say two words at the beginning of the palindrome: consensus and non-consensus.

The fire of new consumer brands has turned this new consumption into a consensus track. In the non-consensus track of discount stores, they carry a large number of new consumer products invested by consensus, which can be summed up in a tongue twister: investors use their own money to buy products produced with investors' money. It's a closed loop.

"Don't you think these discount stores are a lot like the graveyards of what you call new consumer brands?" When I left the two stores, my friend couldn't help but sigh again.

And I have only one question in my mind: what exactly is consensus and non-consensus? (Text/Joy, Source/Cast Network)