Image source @ Visual China
Wen | narrow broadcast, author | Pang Mengyuan, supervising producer | Shao Lele
Little Red Book is eager to improve its strategic territory through investment.
According to "Narrow Broadcast", the investment part of Xiaohongshu is divided into four departments, namely brand, consumer platform, enterprise service and internationalization, and the relevant recruitment information of the four departments can also be seen on the open recruitment platform. The head of the investment business was previously responsible for the strategy of Little Red Book, and worked at McKinsey, reporting directly to Mao Wenchao, founder and CEO of Little Red Book.
The internal position of the investment business began to rise from the middle of 2021. It is roughly the same as the time when the little red book was once planned to be listed in the market. In April last year, Reuters reported that Little Red Book planned to conduct an IPO in the United States around mid-2021.
Prior to this, Xiaohongshu had invested in projects such as mcN institutions to pick up stars, and there were fewer shots.
Before and after the node, the investment process of Xiaohongshu has accelerated significantly, with more than 10 sales in 2021, all in the field of consumer brands, covering beautiful pupils, personal care, tide play, fashion, low-temperature meat, etc., and mainly in the early stage, with a shareholding ratio of about 15%. With the exception of Moody's investment rounds, which are B+ and C rounds, other brands' investment rounds are concentrated in angel rounds, Pre-A rounds, or strategic investments.
At present, no investment projects in consumer platforms, corporate services and internationalization have been disclosed.
Investing in consumer goods is well understood. The categories of consumer brands invested by Xiaohongshu are in line with the popular content on Xiaohongshu, and the brand itself has the potential to "lead" a new trend or new idea. For example, panda bubu, a technology mother and baby brand invested by Xiaohongshu in January this year, has the concept of "solving the health needs of Chinese women", and its products cover maternal and infant, women's menstruation, and sexual health. On the Little Red Book, there are 240,000 notes about the "breast pump" alone.
Other projects such as the beauty pupil brand Moody, the pure makeup brand DewyLab, the toy brand coincidence mortise, the ski brand Snow Owl Technology, the food brand Jinmiantang, etc., are also classified as the popular beauty pupils, personal care, tide play, sports, skiing, food and other categories on the Little Red Book.
Another external factor that can sell so many consumer brands is that in the entire investment market, investment in consumer brands will cool down from the second half of 2021, which is a good opportunity for the new investor Xiaohongshu to start. New brands need Little Red Book's money, and they need Little Red Book's marketing position.
Of course, Xiaohongshu also wants to stand closer with some new brands through investment, and find possible solutions to the unified problems faced by the Internet community: how to deepen its brand service capabilities and e-commerce capabilities on the basis of maintaining the tone of the community.
According to a consumer brand that Narrowcast has contacted, one of the goals that Xiaohongshu Investment brands hope to achieve is to be able to use the "Input" provided by the brand to "verify the rules for the content maintenance of the platform's advertising products and the community".
Another invested brand also told "Narrow Broadcast" that their value is that Xiaohongshu will give corresponding support in the direction of product definition and strategic data.
In theory, after the establishment of xiaohongshu commercialization department matures, through brand investment, Xiaohongshu can more easily establish a connection beyond advertising and marketing with specific brands, empower its own precipitated data capabilities and user analysis capabilities to the brand, and even participate in product definition, product optimization and other links, thereby deepening Xiaohongshu's brand service capabilities and e-commerce capabilities.
But the little red book of this latitude plays more like a 4A company, and it is still far from a complete business ecology.
There is a difference between a platform and an ecosystem. In a richer business ecosystem, around the main platform, several layers of external partners are gathered on different sides, and everyone is intertwined with each other and can all benefit from this big ecosystem.
Investment in consumer platforms and corporate services may help Xiaohongshu take this step. Although there is no relevant investment project disclosure, according to "Narrow Broadcast", the consumer platforms that Xiaohongshu has paid attention to include a luxury trading platform, as well as the new tide play community/trading platform such as Suplay and Tide Play.
The interest in vertical trading platforms is similar to the business idea that Xiaohongshu once established a closed loop on the advantages of homestays and middle ages.
Since April 2020, Xiaohongshu has successively reached cooperation with the homestay apartment management system "Order Is Coming" and the homestay booking platform "Little Pig", directly connecting to each other's homestay management or booking entrance on the Xiaohongshu platform to attract homestay merchants to settle in Xiaohongshu. Homestay is a popular content on the Little Red Book, there are many high-quality grass content generated, through the transaction, performance-related platform to establish contact, to a certain extent, shorten the distance of users to pull grass.
This is a typical platform + platform partnership, one side provides grass or traffic capabilities, and the other side is a platform with core barriers such as transaction and performance in a vertical field, and the model is more "heavy". From the logical rather than the volume, the cooperation formed by Kuaishou and Meituan at the end of 2021 is the same, and Kuaishou has also tried more similar cooperation this year.
The cooperation between Xiaohongshu and other vertical platforms is also a "vertical" version of this model.
For example, tide play is also a popular content on the Little Red Book. In categories such as tide play, designers and newly popular digital collections, Little Red Book has a certain right to speak.
But the difficulty is that tide play is a very emphasis on the circle of the field, it not only needs generalized traffic, but also needs KOL, KOC traffic, and even private domain traffic, this part of the little red book has advantages.
Vertical platforms have trading scenarios for goods and goods, and they also need accurate traffic. For example, Suplay is a trendy IP consumer goods company with IP and channel capabilities, and its online box drawer mini program launched in 2019 has the functions of lottery, new product sales and second-hand circulation, and is currently expanding offline channels.
The function of the tide play family is more complex, set content planting, community information, e-commerce, second-hand transactions are equal to one, has held CTS tide play exhibition, and wants to cross from tide play to three pit categories.
However, the objective problem is that compared with a single consumer brand, such projects with platform attributes are more difficult to invest, need to mobilize more resources, and form a more complex internal game of business coupling. This is a challenge for Little Red Book at this stage.
In the direction of enterprise services, Xiaohongshu has not yet sold related projects. However, there was a high interest in the new retail project "FLIPOS", which is a store-related and data-related operating system in the field of new retail and new catering, serving more than 700 customers at the beginning of 2021, including brands in the fields of specialty coffee, roasting, light food, beauty industry, beauty and other fields.
If FLIPOS is used as an example to analyze, investing in corporate service business to help Xiaohongshu improve may be the ability to integrate online and offline that has been particularly emphasized recently. This is indeed the current focus of some capital after the new wave of consumer investment.
At the beginning of 2022, Conan, COO of Xiaohongshu, emphasized Xiaohongshu as a reflection of online community and offline real life in a dialogue with scholar Liu Qing; in March, "Anfu Road Online" launched in Xiaohongshu was also a model, moving the offline Anfu Road brand online and proposing the concept of "Anfu Road Online".
Different from investment in brands, consumer platforms, and corporate services, Xiaohongshu's international investment is more like financial investment and has little to do with business.
"Narrowcast" learned that Xiaohongshu's international investment mainly focuses on social networking, games, and Web 3.0 fields.
Although there are data that Xiaohongshu has increased its advertising promotion efforts overseas, xiaohongshu does not have a clear overseas business The reason why the Xiaohongshu investment team set up an international investment group and paid attention to the above areas may be because social networking, games, and Web3.0 are more active in foreign countries, with many projects and frequent transactions, and represent a direction with a high degree of consensus on the Chinese Internet.
Of course, it is not excluded that there will be an attempt to go to sea after the Little Red Book.
At this stage, there are also many domestic brands that make the sea, and the panda bubu mentioned above is considering going to sea, but the investment logic of Xiaohongshu on the panda bubu is as mentioned above, which is to see the user fit of both sides and the opportunity of technology in the mother and baby track, rather than going to sea.
Overall, the Xiaohongshu Investment Department has just started to try many parties, the team has not yet stabilized, and it is also necessary to find its own boundaries and unique value with the gradual clarification of the overall thinking of Xiaohongshu.
Although the giants are encountering anti-monopoly and regulatory problems, they are relatively mature. Tencent takes an open ecosystem, known as "handing over half a life to partners"; Ali takes a closed ecology, emphasizing the integration of the invested business and the Ali ecology, and is dominated by the Ali ecology; Byte is a typical Facebook model, which is based on acquisitions, and usually absorbs the core team together, and some acquisitions are even directly in line with the team.
More comparable to Xiaohongshu is Station B, and Station B is also trapped in the game of community atmosphere and platform profitability like Xiaohongshu. A few years ago, Station B began to expand its business territory through investment, and at present, it seems that the investment ideas of Station B are at least relatively clear, mainly games, films and television, supplemented by some MCN institutions and consumer brands. However, Station B has also been caught in the controversy of "blind investment" due to too much investment in consumer brands.
This is a long problem encountered on the road to community expansion, and what is more serious than "blind investment" is the community's unclear strategic positioning of itself. CVC, in particular, makes investments that are part of the strategy in itself.
Little Red Book is more or less facing all kinds of "unclear" problems. From the early swing of the attitude towards e-commerce, to the attitude towards the brand in the later period from friendly to strict, at the same time, in the community governance, it has fallen into controversy such as falsehood and filter. For Xiaohongshu, who sprinted for IPO, it is already very urgent to establish a stable attitude towards community atmosphere, brand settlement, and commercialization, and to come up with an effective profit model.
Originally, observing the investment style is a window to understand the platform strategy, but now, the Xiaohongshu Investment Department has not yet made public remarks, and the projects that have been publicly sold are more like financial investments.
Investment is a fast track from platform to ecology, and the prospects of this channel are very good, but it is difficult.
At present, the plate of Xiaohongshu is very large, but it is limited by various factors such as platform strategy, capital scale, and organizational capabilities, and the overall role can be marked with a question mark.