This time, Wei Zhe is interested in the hot and controversial electronic cigarette industry. And he’s in now.
In July 2019, media reported that Smoore, the world’s largest ODM manufacturer of e-cigarettes, completed a new round of financing, with investors including Coatue and Vision Knight Capital(Jiayu Fund), the world’s famous hedge funds.
In response to this rumor, Wei Zhe, chairman of Jiayu Fund, said in an exclusive response to Chinanet, “We did invest in Smoore.”
According to the public information, in 2018, Smoore’s net profit was 785 million yuan, a year-on-year increase of 257%. “It had cash flow a long time ago, and we just” squeezed “it in.” Wei Zhe told Chinanet.
In the capital market, the relationship between enterprises and institutions has always been delicate. For Jiayu fund, which is a kind of fund with “no reason to join”, it makes sense for enterprises to sell shares. Wei Zhe says with a smile, what they want is not money, but “life”. “They want our life, they want us to work hard, and we insist on free consultation.”
“Profit” is king
Wei Zhe’s electronic cigarette is not a “follow the trend” phenomenon.
“It should be said that we have seen this industry for nearly three years.” Wei Zhe told Chinanet.
Since 2016, electronic cigarette has entered a high-speed development period. In 2016, 2017 and 2018, Smoore’s operating revenue was RMB 726 million, RMB 1566 million and RMB 3.434 billion respectively.
It is understood that Smoore was originally listed on the new third board and was officially delisted from the new third board on June 5, 2019. In response to the news that Smoore is preparing to go public again, the company said that the specific planning of the future capital market is in the process of evaluation.
In 2014, Yiwei lithium energy, the battery core producer, acquired 50.1% of the equity of Smoore with 439 million yuan, and took the controlling right of Smoore, providing absolutely advantageous resources for the upstream raw material supply of Smoore. Therefore, regarding Smoore’s “status in the industry” in the field of electronic cigarettes, Wei Zhe said, “if Smoore is on fire, the global electronic cigarettes will be out of stock for two or three months.”
“Tobacco is not good for society.” Wei Zhe doesn’t avoid the biggest controversy in the field of e-cigarettes, but “e-cigarettes may do two things that traditional tobacco can’t do, one is to reduce harm, which can’t be said to be harmless, which is to reduce harm; the other is to prevent teenagers from abusing through technology.”
It is worth mentioning that in terms of consumer goods investment, “brand” has always been Wei Zhe’s favorite. This time, he told Chinanet that he was considering “industrial value chain”.
“Generally speaking, we really like to invest in brands for consumer goods.” “However, when we analyzed the e-cigarette industry chain and value chain, we suddenly found that the brand side of the industry was very busy, but did not earn money,” said Wei Zhe. One month’s profit of the supply chain side is one month’s income of many brands. ”
According to CVSource investment data, from January to October 2019, more than 30 domestic e-cigarette brands raised more than 1 billion yuan in total. Under the capital frenzy, “since the beginning of 2019, almost every day, a new e-cigarette company has been established.” An e-cigarette entrepreneur previously told Chinanet.
As an investor, Wei Zhe doesn’t think it’s enough to be called “a war of technology content”. These start-ups don’t have core technology and efficient production capacity, they are basically brand marketing, and technology and production capacity barriers are in the supply chain.
“Round V” investors
Smoore, with an annual net profit of 785 million, is not the only case in WeiZhe’s hands.
“Our trend hasn’t changed. We don’t care whether the company is financing or not. 80% of our investment projects are not financing. We call it” non market. ” “They are not in the market financing state, they are investment opportunities created by our consultation,” WeiZhe explained to Chinanet.
Over time, WeiZhe called such an entry “V round”. “You ask me which round I can’t tell. It’s V round. It’s our original round of VKC. A lot of people say do you run for Round A? I said we have some big Round A, Round A is the last round. ”
In WeiZhe’s view, capital can not constitute the competitiveness of Jiayu Fund. What is really competitive is the ability beyond capital, which can help enterprises improve their operation and management ability.
Jiayu fund’s “consulting service” lasts for a minimum of 3 months and a maximum of 2 years. WeiZhe laughs to Chinanet to say, investment after consulting is more like a kind of “interest binding”.
“80% of the projects we have invested in are because they want us to enter into continuous consultation. The best way for us to “bind interests” is that my consultation has provided you with value, and the quality of the consultation has a direct impact on the income of our investment. ”
WeiZhe often joked that he accompanied the old lady across the road like Lei Feng. However, after crossing the road, Lei Feng doesn’t want red packet(money), but they do.
What if you don’t give them red packet?
“Never mind. You can cross the next road by yourself. But if you give us red packet, we will continue to accompany you across the next road. ”
However, contrary to the logic of “consulting”, Jiayu fund is still active in the field of hard technology which is not familiar later.
“I don’t know technology myself, and our team knows very little about technology.” WeiZhe said frankly. However, in 2019, the profits of 30 technology companies under the management of Jiayu Fund will be 7.5-8 billion yuan, and more than 10 companies will make more than 300 million yuan.
WeiZhe explained that these companies have special requirements for upstream technology, “so we rely on the companies with more than 300 million yuan of profit and 10 billion yuan of market value that we have invested to jointly break through their upstream technology.”
It is WeiZhe’s hard core science and technology “Introduction to investment” that has passed the technical verification of the invested enterprises and placed the largest order.
For example, Jiayu Fund’s investment in Jiuyin technology relies on Anker, an institution invested enterprise. As the first brand of cross-border e-commerce, Anker hopes to invest in leading earphone and smart sound noise reduction technology. When Anker is optimistic about Jiuyin technology, WeiZhe can bet without any scruples.
“Our internal decision-making is very simple. If the enterprises we invest in dare to give orders, we dare to write checks.” WeiZhe said.
I don’t regret not investing Pinduoduo
WeiZhe likes the founder of “self iteration ability”.
Huang Zheng of Pinduoduo is one of them. WeiZhe revealed that he had paid attention to Pinduoduo and appreciated Huang Zheng very much. However, out of the basic judgment of the industry, he believes that Pinduoduo cannot reach the “life and death line of 70 yuan per customer” of the e-commerce industry, and can only “bear the pain and give up”.
He explained that Pinduoduo’s customer acquisition cost is excellent, but logistics cost is a rigid indicator. If the gross profit of the product is set at 20-30 yuan, 70 yuan can basically cover the national logistics. It’s almost impossible for the national logistics to be lower than 12 or 13 yuan. The city logistics will be reduced from 8 or 9 yuan to 5 or 6 yuan. It’s impossible to be lower without using robots or drones.
“This means that someone will always pay for your logistics. From the business model, it’s very sad that the threshold of” 70 yuan per customer “is that we can’t convince ourselves in this matter.” He told Chinanet.
In July 2018, Pinduoduo was listed in the United States. Based on the closing price on October 15, 2019, Pinduoduo’s market value is as high as 39.4 billion US dollars, which has surpassed Baidu’s (37.3 billion US dollars), and the investors behind Pinduoduo have made a profit of 100 billion RMB.
However, WeiZhe said that he did not regret, “It did not reach 70 yuan per customer. “He repeatedly stressed to the net.
However, the “Pinduoduo” incident inevitably caused a debate within Jiayu’s team. The theme of the debate was “do you want to change the way to judge the industry?”
Finally, the team’s consensus is not to change, rather missing than changing their basic judgment on the industry.
Under such perseverance, if facing the case that they want to get, will WeiZhe team be willing to do “at all costs”?
In the face of the question, WeiZhe replied without hesitation, “No. No project is worth anything. “