Banyan Tree Capital is quietly conducting a new round of fundraising.
The investment community has learned that Banyan Tree Capital’s fund, Chengdu Tianfu New Area Banyan Tree IV Kang Yong Investment Partnership (Limited Partnership), recently underwent a business change, adding a new partner, Guangzhou L’Oreal Baku Network Technology Co. This means that L’Oreal has invested in another Chinese VC.
Behind L’Oreal is a hidden European family – the Betancourt family. The 67-year-old Françoise Betancourt-Meyers, who succeeded her mother at the helm of the L’Oréal family, is ranked 10th in the Forbes 2021 list of the world’s richest people with a fortune of $78 billion (equivalent to about 500 billion yuan).
Now, the L’Oréal family is active in the VC circle as an LP. Back in October 2019, L’Oréal invested in its first Chinese VC, Kaihui Innovation Fund. The giant’s idea is obvious: it wants to fully reach all kinds of Chinese startups through VC institutions with a keen sense of smell. One of Banyan Tree Capital’s most representative cases in recent years has been its early capture of national beauty representative Perfect Diary.
L’Oreal is not an isolated case. International consumer giants are now investing in Chinese VCs – Starbucks has joined forces with Sequoia China to set up a venture capital firm; Nestle Group has invested in a local Chinese VC fund for the first time, becoming a cornerstone investor in the Tiantu Investment VC USD fund ….. Right now, China’s consumer track is exploding, which is bound to give birth to many world-class consumer giants with a market capitalization of 100 billion, and they naturally do not want to be absent.
L’Oreal invests in another Chinese VC as cosmetic giant comes down to LP
The famous L’Oreal quietly did LP, the so-called LP (Limited Partners), that is, limited partners, commonly known as the “golden father”, is a venture capital institution’s funders.
All this comes from a business change. SkyEye App shows that recently, Chengdu Tianfu New Area Banyan Tree IV Kang Yong Investment Partnership (Limited Partnership) has undergone industrial and commercial changes, adding a new partner, Guangzhou L’Oreal Baku Network Technology Co.
In 1997, L’Oreal China was founded by L’Oreal Group, the world’s largest cosmetics group, in China. After 24 years, L’Oreal has gradually become a leading player in the Chinese cosmetics market.
Information shows that L’Oreal China’s stake in Chengdu Tianfu New Area Banyan Tree IV Kang Yong Investment Partnership (limited partnership) was established in June 2019, and the managing partner is Tibet Rongkang Investment Management Co. The investment community understands that Chengdu Tianfu New Area Banyan Tree IV Kang Yong Investment Partnership (Limited Partnership) is the fund established by Banyan Tree Capital, a well-known domestic VC institution. In other words, this business change means that L’Oreal China has become an LP of Banyan Tree Capital.
Why did L’Oréal China choose Banyan Tree Capital? Since its inception in 2014, Banyan Tree Capital has been deeply involved in new consumption, new technology and other innovative entrepreneurial fields. In the new consumption field, Banyan Tree Capital has invested in projects such as Jindoduo, Gaotu Group, Yixian E-commerce, Tiger Live, Stone Technology, Waterdrop, BOSS Direct, Hello Travel, Dingdong Buy, Yuanqi Forest, and Deloitte App.
Most notably, Perfect Diary’s parent company, Yixian E-Commerce, is Banyan Tree Capital’s most notable IPO of the 2020 harvest.
Back in 2018, Banyan Tree Capital led the Series A round of funding for Perfect Diary, and continued to raise funds in subsequent rounds. An unconfirmed detail is that in the same year Banyan Tree Capital invested in Perfect Diary, L’Oreal had discussed an acquisition with Perfect Diary, but did not go deeper.
On November 19, 2020, Perfect Diary’s parent company, Yixian E-Commerce, successfully launched an IPO on the New York Stock Exchange with a market value of nearly $7 billion, making it a rare and phenomenal growth case in the venture capital community. As one of the three major external investors in Yixian Dianshang, Banyan Tree Capital holds 8.4% of the shares. Based on Yixian’s latest closing market value of nearly $7.2 billion (about RMB 45.8 billion), Banyan Tree Capital has quietly made a big profit.
The rise of domestic beauty products, represented by Perfect Diary, has changed the competitive landscape of today’s cosmetics market. Cosmetic giants such as L’Oreal seem to realize that instead of spending a lot of effort to kill, it is better to explore potential companies early on and start to choose to fund those VC institutions with a keen sense of what is naturally a more efficient way.
As Lan Zhenzhen, head of corporate communications and public affairs for L’Oreal North Asia and vice president of China, once said, “We see an unmet need in the Chinese market, a need that may be small now, but may have great potential in the future. We see the first opportunity, so we are going to incubate it and let it grow until it becomes independent. I believe the final result will be reflected in our performance.”
Being on the front line, Banyan Tree Capital partner Han Rui’s insight is even more profound, as he once mentioned in an interview, “Chinese beauty brands are experiencing an unprecedented window to truly communicate with consumers in both directions, with online tools and community-based tools that allow brands to truly own consumers, which was even unthinkable in the past. “
Sitting on 500 billion, why this hidden European family wants to be LP in China
Behind L’Oreal stands a hidden family – the Betancourt family.
From the second generation onwards, the Betancourt family has not intervened in the specific affairs of the group, always giving the outside world a sense of mystery. While many people know Liliana, few know her father, Eugène Schuyler, the founder of L’Oréal, who was born in Paris in 1881 as an apprentice in his father’s pastry store, but went bankrupt at the end of the 19th century due to the economic crisis.
Because of his love of chemistry, Schuyler enrolled in the Paris Institute of Chemistry and became a chemical chemist. in 1907, he created a sensation with his invention of a hair dye called Auréale. The following year, he founded the French Harmless Hair Dye Company, the predecessor of L’Oréal, for 800 francs.
In 1939, Schuyler renamed his business L’Oréal, meaning beauty. Lilliana, the daughter and only daughter of Schuyler and his first wife, was born in Paris in 1922 and, unlike her father, who was a workaholic, she always put her family first.
Perhaps knowing that his daughter’s ambition was not to manage the company, Schuyler made a decision that seemed surprising at the time – to include his daughter in his will only as an heir to his estate. He once said, “The offspring will always inherit, but they cannot inherit the management. The son of a general doesn’t necessarily have to be a general; don’t think you must be a boss just because you’re the son of a boss.”
Later, Schuyler handed over the reins of the company to François Dalle, the second-in-command of L’Oréal. For more than half a century thereafter, Liliana, although the company’s largest shareholder, served only in a director’s role, and was mostly supportive of the decisions of the president and management team. However, she was very good at handling relationships with successive L’Oréal management, and even had good personal relationships.
Schreyer’s forward-looking vision and strategy not only helped L’Oréal’s performance to rise, but also allowed her family to gather wealth and L’Oréal to become a big-name multinational international beauty company. In the 100 years since its creation, L’Oréal has had only six CEOs and has benefited from a succession of professional managers, starting with the second generation of heirs, who died in Paris in 2017 at the age of 94. Her successor is her daughter Françoise. She is ranked 10th on the Forbes 2021 list of the world’s richest people, with a fortune of $78 billion.
Now, the L’Oréal family has close ties with the global VC community. in December 2018, L’Oréal launched a venture capital fund, the BOLD Fund, in its corporate name, with the aim of investing in innovative companies with high growth potential and emerging brands, in which it has a minority stake. With the BOLD Fund, L’Oréal is actively identifying suitable VC institutions in China.
The most typical case is that in October 2019, L’Oréal announced the completion of its investment in venture capital fund Kaihui Innovation Fund, the first Chinese VC invested by L’Oréal.
At that time, Fabrice MEGARBANE, President and CEO of L’Oréal China, said, “L’Oréal’s investment in Kaihui is not simply to pursue financial returns, but more to leverage Kaihui to drive its global innovation layout.”
Duan Lanchun, Managing Partner of Kaihui Fund, added, “As a global beauty giant, L’Oréal Group is very focused on innovation in the beauty industry, such as new retail, big data, AI, and VR/AR directions, rather than just limiting to one product or one formula. With the emerging consumer models on the Internet in China, L’Oreal is also constantly exploring how to develop local beauty products in line with Chinese consumers’ consumption habits to better reach the new generation of Chinese consumers.”
The Chinese market is vast and complex, making it difficult for foreign companies to fully reach all types of startups through their own teams, and investing in VC funds helps L’Oréal become more closely integrated into the ecosystem of beauty tech startups, especially in China’s innovation ecosystem. Capturing cutting-edge consumer brands by being an LP has become the consensus of more and more multinational giants.
Joining hands with Chinese VCs, Starbucks, Nestle, L’Oreal are coming
International consumer giants have started to invest in Chinese VCs.
The most sensational one is the establishment of a venture capital fund by Sequoia China and Starbucks. As early as April 2020, Sequoia China and Starbucks announced a groundbreaking strategic partnership – Starbucks will join hands with Sequoia China to make strategic investments and conduct business cooperation in new generation restaurants and retail technology. 5 months later, Starbucks and Sequoia China joined hands to establish a venture capital firm –Starara (Shanghai) Investment Partnership (Limited Partnership).
According to SkyEye, Starara (Shanghai) Investment Partnership (Limited Partnership) was established with business scope including venture capital and investment management. The company has two major shareholders, namely Shanghai Starbucks Coffee Management Co. Among them, Shenzhen Sequoia Antai Equity Investment Partnership (Limited Partnership) is the executive partner of the company. This means that the coffee giant made investment with top venture capitalists to lay out the consumer track.
It is no coincidence that global food giant Nestle Group has also invested in a local Chinese VC fund for the first time. in August 2020, Tiantu Investment announced the completion of the first round of fund raising for the first phase of VC USD fund, in which Nestle Group is the cornerstone investor. The new fund will reportedly focus on growth companies that have the potential to become leading brands and lead the future lifestyles of China’s younger generation and emerging middle class.
This is not only Nestlé’s first investment in a China-based VC fund, but also Nestlé’s first investment fund in Asia, Oceania and Sub-Saharan Africa (AOA). The investment is designed to provide continued growth for businesses related to the food and beverage industry in China, and will also help Nestle expand its knowledge and external network in the emerging food and beverage sector in China in terms of brands, channels, and technology development.
Talking about this cooperation, Pan Pan, Managing Partner of Tiantu Investment, has told the investment community, “The big consumer ecology and value network built by Tiantu is highly compatible with Nestle’s industrial attributes, and the two sides can start a deep cooperation in the fields of brand operation, resource synergy and technological innovation to deliver more leading consumer brands to the Chinese and global markets.”
In addition to being an LP, the luxury “giant” LVMH has also set up its own VC organization to find projects in person.
L Catterton, now the world’s largest consumer goods private equity fund, was created by the merger of LVMH’s L Capital and U.S. private equity giant Catterton in 2016, with a total size of $14 billion.
L Catterton’s latest investment in China is the phenomenal consumer brand Yuanqi Forest. In April this year, Yuanqi Forest announced the completion of a new round of financing, with L Catterton as one of the leading investors.
The influx of consumer giants as LPs is a microcosm of the fire in China’s consumer circuit. Whether it is the newly listed Bubble Mart, Yixian E-commerce, or the burgeoning unicorn SheIn, coffee brand Maner, Nesher’s Tea, or Xi Tea, consumer companies are rising faster than imagined, and VCs are not scrambling for projects, they are scrambling for projects on the way, scrambling for time.
By the end of April, over 100 domestic consumer brands had received financing “The generational turnover of China’s new population is rapid, and as long as the rhythm of generational turnover continues. There will always be VC opportunities in China’s consumer sector.” said a well-known consumer sector investor. Everyone believes that China will definitely give birth to many world-class consumer giants with a market capitalization of 100 billion, and the bets are placed right now.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/loreal-she-has-invested-in-another-chinese-vc/
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