Tencent and ByteDance are fighting new consumption again

Nobody wants to lose

In addition to the competition for user traffic, "touteng" quietly started the battle for new consumption.

The battle between the heads and the heads has intensified one after another. For three years, Tencent and Byte have been using guns and arrows in the main battlefield of mobile content.

There is also a local war that is easily ignored by the outside world, which is secretly escalating. Unlike the gunpowder on the main battlefield, this time, the firepower of the two sides gathered in the current hottest investment spot-New Consumption and bought a group of "mercenaries" for real money.

On July 2nd, Bytedance invested in Li Ziqi’s contract company Wei Nian, which brought the small giant’s new consumer investment map to the surface. This is the sixth new consumer-related company invested by BYTE in half a year.

And Tencent has not shown weakness. Since the beginning of this year, the number of investments in new consumer areas has reached at least nine.

Coincidentally, ByteDance became a new investor in Manner Coffee in mid-June, and Manner Coffee's three rounds of financing accumulated over 300 million U.S. dollars in six months. Since October last year, Tencent has participated in the financing of Canadian national coffee brand Tims twice in a row. The offline coffee track can be a focal point for Tencent and Byte to meet each other.

Regardless of Tencent or Bytedance, according to relevant data, the number of new consumer brands invested by the two giants in the past six months has exceeded that of the whole of last year.

Compared with the two, who can take the lead in new consumer investment? Who can hold out the next top stream of new consumption? Until the dust settles, the outcome is unknown. The recap of the rivalry between Tencent and Byte since last year may provide a glimpse into the boom that started in the first year of new consumption in 2020, and what is going on now.

01 Tencent: Focus on offline catering brands, pet-related is also good, mature companies are the main choice

According to data from Qiming Technology, Tencent has invested a total of 172 foreign investments in 2020. Since 2021, it has invested in 163 cases, with a total of at least 16 new consumption-related investments.

Food and beverage is the hottest track in new consumption, and it is also the area where Tencent has raised the most. Also in this field, let’s not mention Hi-Tea. From last year to the middle of this year, two companies have chosen to "bet" twice.

One is the Canadian national coffee brand Tims Coffee on the offline coffee track, which participated in the investment again in February this year following May last year. The other is Hefu Lao Noodles. In the D round in November last year, Tencent played one of the leading roles. In April this year, the launch of the new Hefu Lao Noodle brand "Xiao Nian Xiaojiu" is considered to be the "second curve of brand growth." "As a result, Tencent was still not absent in the E round just in early July.

Whether it's Hefu Lao Noodles or Tims Coffee, Tencent's offline catering is obviously betting on the top-tier in the future. In addition, many vertical foods have not given up.

Shengxiangting, a hot brine brand that focuses on Changsha flavors, has received a strategic investment of nearly 100 million yuan from Tencent's A round. The brand plans to increase the number of stores from the current 300 to nearly 2,000 in the next three years, which can be described as ambitious. According to Frost&Sullivan data, the retail sales of casual halogen products in 2020 will be about 123.5 billion yuan, and the compound growth rate of casual halogen products from 2015 to 2020 will reach 24.1%. The industry's development prospects are promising.

Snack food brand Weilong has completed the Pre-IPO round of financing, and it is very likely to become the first share of spicy food. The financing amount is about 3.542 billion yuan. Tencent participates as a co-investor.

Going back to the much-anticipated Hey Tea, it also recently revealed its latest round of financing, with investors all being old shareholders. In 2019, Tencent and Sequoia led the round C financing of Hey Tea. As a star project led by Tencent, they may continue to participate in this round. The 60 billion yuan valuation of Hey Tea will once again break the commercial value record of China's new tea drinks. In contrast, the "new tea drink first share" Naxue's tea valuation is only more than 30 billion yuan.

Another thing worth mentioning is that the Momo Dim Sum Bureau, a leader in the Chinese bakery category, which did not appear in the table, is known as one of the three most difficult chain brands for investment institutions to squeeze in. The original media reported that Tencent participated in the Momo Dim Sum Bureau’s A+ round of financing, but the company denied it.

The pet industry has a market size of hundreds of billions. Many sub-sectors, including pet food, pet health, pet supplies and pet services, are all hotspots sought after by capital and are also areas that Tencent focuses on.

Shanghai Chong, the parent company of the Weishi brand, has completed a 400 million yuan B+ round of financing, which is jointly led by Tencent Investment and Cathay Capital, or it has refreshed the single highest financing in the pet consumer product field. Within a week, Tencent also invested in a comprehensive pet service and merchandise retail brand "Petjia" APP, becoming the second-largest shareholder. Last year, Tencent also led the investment in the pet medical project Xinruipeng, which amounted to hundreds of millions of dollars, with a post-investment valuation of nearly 30 billion. Tencent moves frequently and continuously enters the pet service track, which shows its optimism about the industry's development prospects.

In addition, in the field of smart fitness, Tencent participated in two companies at the same time. Fitness, a fitness technology company established only two years ago, has maintained a leading position in the domestic smart fitness hardware track with a US$300 million Series B financing; and Keep, which has raised 7 times in 7 years, completed a US$360 million Series F round at the end of last year. Financing, the post-investment valuation is 2 billion US dollars. The same two fitness brands invested by Tencent, in the future, in the process of expanding the business boundaries of Keep, there may be a confrontation with Fix.

In the field of beauty, last year, when the perfect diary (Yixian e-commerce), the first Internet make-up that focuses on "domestic beauty", was listed, it introduced a cornerstone investment of 300 million US dollars. Tencent subscribed for 50 million US dollars of it; Tencent participated in Yanli, let It became one of the first and most watched capital transaction cases in the CS channel in the industry. As of June this year, Yanli has opened more than 130 directly-operated stores in more than 40 cities across the country. At present, the domestic beauty brand market is close to saturation, and it will be more difficult for capital to find high-quality targets in the future.

There is also a popular cosmetic contact track. The cutting-edge brand MOODY completed two consecutive rounds of 380 million yuan in B and B+ rounds in February, and received investments from Tencent and Xiaohongshu in March; the apparel track began to recover this year. , The fast fashion apparel brand group "Xi Ke" completed US$50 million in Series B financing, which was also led by Tencent.

In any case, from the perspective of these brands, Tencent's new consumer investment is also prudent, requiring high maturity in terms of the company's establishment time, operating model, and profitability.

02 Bytedance: a vertical brand that focuses on young people, and start-ups boldly try

According to data from Qiming Technology, the ByteDance Strategic Investment Department has invested 38 projects abroad in 2020. Since 2021, it has invested in 37 projects and a total of at least 11 new consumption-related projects.

Turning to the layout of Bytedance over the past year, the new consumption of young people will be the focus of Bytedance.

Whether it is tea represented by coffee and milk tea, or instant and light food online celebrity products based on Li Ziqi, Rilakkuma Hot Pot, Shark Fett, etc., Bytedance is a place where ByteDance is generous.

In the first half of this year, Manner completed three financings in half a year, with a cumulative financing amount of more than 300 million U.S. dollars, and Bytedance became a new investor. Manner is a local coffee chain brand in Shanghai. In just two years, it has more than 170 offline stores.

In addition to offline coffee, tea is also a big track for Byte and Tencent. inWE is known for its 500 million yuan investment by Liu Qiangdong, and Bytedance also participated in the investment last year.

At the moment, the most promising one is probably the "first internet celebrity" Li Ziqi's micro thoughts. On July 2, ByteDance invested in Weinian Brand Management, holding 1.48% of its shares, taking a fancy to its good performance in the new consumer sector.

Shark Feite is the No. 1 light food brand in chicken breast category sales across the entire network. ByteDance led the investment to complete a series B financing of 100 million yuan, and sales in 2020 have exceeded 200 million yuan. ByteDance won a new round of financing for the cutting-edge soda brand empty card in the beverage category. It is reported that after 2020 alone, 9 low-alcohol brands have received financing, which is popular track. ByteDance also invested in Lailai Hot Pot Series A financing. Lanxiong Hotpot's GMV will reach 200 million+ in 2020, and 4 rounds of financing exceeding 100 million yuan will be completed within one year, with unlimited expansion potential.

The consumption of young people’s lifestyle has not been spared by bytes, especially home-oriented.

One of the most eye-catching brands in the lifestyle and home furnishing category is Cloud Whale Intelligence, which focuses on cleaning robots. In March 2020, the A+ round was led by Bytedance; at the beginning of 2021, Bytedance participated in the vote again. In 2020, the sales of online sweeping robots will be 8.96 billion yuan, which is expanding rapidly. As the first gradient, Cloud Whale is valued at 6.5 billion after the new round of financing. According to "Latepost", in early 2021, there was fierce competition for investment in Cloud Whale. Another head fund, also an old shareholder, intentionally participated in the investment but failed to grab a share in the end.

Byte also invested in the smart home brand Miaodoudou Angel Wheel. This project is Ma Xuejun, the former president of Alibaba's urban life division and the initiator of the Tmall supermarket project, which is said to be an "upgraded version of IKEA."

It is also worth mentioning that in March of this year, BYTE participated in a half-and-half of NYSCPS, accounting for 7.8% of the shares. At that time, the brand value had reached 800 million yuan. In October 2020, half of the oral care products will be launched. According to the official introduction, the "Shanbanle Probiotic Mouthwash" went online for 80 days, and its sales exceeded 100 million yuan, ranking first in the oral care industry on platforms such as Taobao Tmall and Pinduoduo.

In summary, in the new consumption area of ​​Bytedance, whether it is the establishment time of the company or the customer group that the company focuses on, it is relatively young, and Bytedance dares to start when the company is founded. Perhaps this is also the most important. In line with the understanding and positioning of new consumption.

In addition, with Douyin e-commerce becoming the core business of Bytedance, this online celebrity and younger brands will inevitably have better sales results in the Douyin live broadcast room.

03 Tencent's robustness and byte courage, no one will necessarily lose

"Investment must not neglect consumption"

"All Chinese brands can do it again"

"New consumer brands are predicted to be China's most certain opportunity in the next 5-10 years"

These may be the three most popular sentences about new consumption since 2020. New consumption has been in the limelight in the venture capital circle for a while. According to statistics from it oranges, in 2020 alone, the amount of investment and financing in the new consumer sector will reach nearly 45 billion yuan, and 286 projects have been financed.

Regardless of the investment of Tencent or Byte, the outside world often links it to its main business, and guesses whether the invested company can develop in conjunction with other businesses at the strategic level.

In fact, the two companies that focus on new consumption may be more focused on financial investment. It is still impossible to verify whether the local war between the two parties will escalate.

According to the "LatePost" report, Byte's new consumer brand investments are all handled by its financial investment department, which was originally split from the strategic investment department. Byte's financial investment does not limit the direction, and can invest in projects that have nothing to do with Byte's main business. According to people familiar with the matter, the Financial Investment Department is guided by fast decision-making and pursuit of return rates, and the overall plate and voice are relatively small.

This also explains why Shark Fett, empty cards, etc. will appear in their field of vision. By seizing the top brands of popular tracks, the realization of monetization may be the only purpose.

Bold trial-and-error byte beating is just like driving product innovation internally. It has the courage to challenge the market, and it is also courageous to give opportunities to new players.

For Tencent, new consumption is attributed to the large consumption sector under the investment department. Xia Yao, the managing director of Tencent Investment, who specializes in large consumer investment, once introduced Tencent's consumer investment logic in interviews with various media such as "Shenzhen". According to him, Tencent’s investment in big consumption has three major investment directions. The first is the investment opportunities contained in the consumption upgrade of various industries (Tims China and MOODY are of this type); the second is China’s diverse population and multi-layer structure. Structural investment opportunities in the consumer industry (pet households, etc. belong to this category); the third is the investment opportunities derived from the digital transformation and upgrading of traditional consumer goods or service industries (and Fulao noodles belong to this category).

Online is approaching saturation, and Tencent’s major consumer investment has begun to adjust from online to offline, jumping out of Internet investment thinking, and focusing on a broader offline major consumer industry.

Under this logic, projects such as Tims China and Hi-Tea have emerged. Digital tools such as applets and WeChat have become new capabilities that Tencent has exported to invested companies to improve the operating efficiency of traditional catering stores.

Will financial investment necessarily exclude business chaining? Naturally not.

For byte, Douyin and other platforms can give enterprises more traffic and technical support, and Internet celebrities such as Li Ziqi can also expand their influence. Last month, Tencent Advertising announced the "Domain Seeing Supernova" plan, which will smash traffic to support 100 new brands. Internet giants have all seen the power that new consumer brands may show in the future.

Compared with investment projects such as entertainment and games, the meaning of choosing sides in the new consumer field is not strong, but the momentum of competition is not weak at all.

Both Tencent and Byte have seen the potential for new consumer brands to explode in the future, and investing in shares is only the first step, and the battle for the new consumer track has just begun.

Whether it is Tencent's stability or ByteDance's courage to give trial and error opportunities, it is hard to say who can vote for the next top consumer stream. After all, changes in user consumption are happening anytime and anywhere.