The following article is sourced from TuoZhongNet, authored by Ma Mujie.

After 15 years of establishment, Harvest Capital is now entering a period of extensive harvesting, at a time when various capitals are rushing to find new explosive targets in this arena.

*By Ma Mujie
*Source: TuoZhongNet

In the 15th year since the establishment of Jiawei Capital, 50-year-old Song Xiangqian has been evaluated by peers as "Old Song, you've waited for your era."

This judgment largely stems from the macro background of market operation – in 2021, the consumer sector, where Jiawei Capital has been deeply cultivating for 15 years, reached an unprecedented "windfall" moment. Compared to industries more significantly affected by policy regulations such as education, real estate, and healthcare, the consumer sector offers a longer and more robust growth path with stronger anti-cyclical properties.

While various capitals are rushing to find new explosive targets in this sector, Jiawei Capital calmly enters a period of extensive harvesting.

This year, Aimer Shares and Dongpeng Beverage went public within a week of each other. Especially Dongpeng Beverage, after going public, achieved 14 consecutive daily limit increases, with a market value surpassing a trillion yuan at one point. According to the latest market value of Dongpeng Beverage, Jiawei Capital, as the company's sole external shareholder, achieved a paper profit of up to 7 billion yuan.

In addition to the outstanding results on the investment side, Jiawei Capital also simultaneously obtained nearly 800 million yuan in strategic investment from Prodos and Sequoia China. According to Song Xiangqian, these events are undoubtedly historic turning points in Jiawei Capital's development.

From any perspective, for Jiawei Capital, the past 2021 was a significant and meaningful year. With the arrival of another new year, Song Xiangqian, adept at self-breakthroughs, will lead Jiawei Capital to continue deepening its focus on the people, on the "human world and its worldly delights," and strive to become the investment institution with the strongest commitment to the lifestyle of the people and the worldly delights.

**5 Days, 2 IPOs, One Case with a Nearly 7 Billion Floating Profit**

On the last day of April 2021, the day Dongpeng Beverage's IPO received approval from the China Securities Regulatory Commission (CSRC), Song Xiangqian made a bet with Dongpeng's chairman, Lin Muqin, on the issue price per share.

Unsurprisingly, Song Xiangqian, as an investor, won the bet. Even the subsequent rising trend of Dongpeng Beverage after going public was mostly anticipated by Song Xiangqian – on May 27, 2021, Dongpeng Beverage opened and quickly hit the daily limit, then continued to achieve 14 consecutive daily limit increases.

This case brought Jiawei Capital an investment income of nearly 7 billion yuan. As the only external investor selected by Dongpeng Beverage, Song Xiangqian stated that it was a win-win process, highlighting the rising power of Chinese consumption.

Just four days later, on May 31, 2021, Chinese "Steel Ring Underwear" creator Aimer Shares went public, opening with a 44% surge. And behind this leading domestic underwear company is Jiawei Capital.

Continuously achieving 2 IPOs in 5 days, evidently, Jiawei Capital in 2021 experienced a concentrated outbreak of performance. If we go back two months earlier, counting Babite Food, which officially landed on the Shanghai Stock Exchange in October 2020, Jiawei Capital achieved three successes in half a year, demonstrating its significant value accumulation in the consumer industry.

For the gains of Jiawei Capital this time, many may simply attribute it to Jiawei Capital precisely hitting the consumer trend in 2021. Indeed, this year, the craze for traditional consumption has been hyped to its peak, and VC/PE has, for the first time, focused on seemingly down-to-earth tracks such as instant noodles and baking.

However, this somewhat rough attribution is not entirely accurate. Since its establishment in 2007, Jiawei Capital has consistently adhered to the large consumer sector and has never deliberately followed the trend. If we must attribute the concentrated release of performance, the term "accumulating strength and releasing it" is most suitable.

After 15 years of cultivation, Jiawei Capital has built a national brand ecosystem covering "clothing, food, housing, transportation, medical care, education, entertainment, and elderly care," penetrating "80% of consumers' 80% of needs." Dongpeng Beverage, Aimer Shares, Babite Food, Wenheyou, Qiaqia Food, Jiagajiangyou, Laiyifen, Jurenzhijia, Laoxiangji, Xiaoguancha, Meituan Dianping, Meitu, Didi Chuxing are all representative works of Jiawei Capital.

Among them, Laoxiangji is currently in the IPO counseling period, and presumably, it will also go public on the A-share market shortly. At that time, Jiawei Capital's layout in the large consumer sector will be further expanded.

Digging deeper, Jiawei Capital's current "accumulating strength and releasing it" stems from its bottom-up investment determination, that is, a long-term optimism and unwavering belief in large consumer demand. Fundamentally, this comes from Song Xiangqian's in-depth insight and thorough understanding of China's macroeconomy and consumer market.

In recent years, the country's macroeconomic policy has focused on stimulating domestic demand and promoting a dual-cycle. Song Xiangqian believes that to stimulate domestic demand, it requires the support of technology and consumption. With the increasing completion of China's infrastructure, consumer spending is releasing enormous dividends.

One Year, Over a Hundred Companies Met, but Only Invested in Three

In 2021, Song Xiangqian met with over 100 entrepreneurs, conducting more than 500 meetings. However, out of these 100 companies, Harvest Capital ultimately invested in only three.

In a sense, when it comes to investment, Harvest Capital has chosen diligence. Song Xiangqian certainly understands that a more extensive and frequent investment approach may yield more opportunities, but he specifically chooses the best among them. Since he wants to "choose," it implies more research and judgment work.

Song Xiangqian has always adhered to an investment principle: only invest in projects that are among the top in their respective industries, avoiding those that are mediocre. Song Xiangqian stated, "The vast majority of transactions are not worth spending a lot of time on because most companies are destined to be mediocre."

Among these 100 companies, what impressed Song Xiangqian the most was a project related to the somewhat unconventional and potentially controversial "nightlife space." In this niche and non-mainstream field, this company has paved the way and set industry benchmarks.

In Song Xiangqian's view, the founder of this company possesses strong analytical skills. He is an entrepreneur who understands how to bring edge industries to the core through industrial and operational upgrades, eventually turning them into chain and brand entities.

"Young people need entertainment, relaxation, and social gathering places. They need to enjoy the beauty of ordinary life; this is a genuine human need," Song Xiangqian said. He believes that the nightlife space represents a substantial track within the entire consumer sector. However, currently, this field is relatively marginal, and its business models await further standardization and branding, presenting significant market potential.

Harvest Capital Achieves New Breakthrough by Introducing Prolos and Sequoia Capital China as Strategic Investors, USD Fundraising Underway

2021 was undoubtedly a significant year for Harvest Capital. After 15 years in the capital market, the firm made a breakthrough by venturing beyond its comfort zone, embarking on a new journey from 1 to N.

Apart from the continuous success in projects, the most representative event was Harvest Capital's new strategic investment of 800 million RMB from Prolos and Sequoia Capital China. According to Song Xiangqian, this infusion gave Harvest Capital a "mixed-race" genetic makeup.

While assimilating the insights and perspectives of these two top-tier institutions, Harvest Capital can further enhance its investment capabilities. However, during the process of growth, Harvest Capital must also navigate decision-making negotiations among major shareholders.

Song Xiangqian is well aware of this dynamic. "Many GPs in China want to be the sole decision-maker. I am one of the rare GPs in China who has diluted the company's equity and introduced professional investment institutions for shared governance," Song Xiangqian said. He enjoys this "self-imposed pressure" as it encourages personal progress and maintains a vigorous fighting spirit.

This mindset aligns with Song Xiangqian's personal commitment to lifelong learning, integrating knowledge with action. With 25 years of experience in the investment industry, he maintains good reading habits and has even pursued two doctorate degrees. Recently, Forbes China released its list of the Top 100 Venture Capitalists, and Song Xiangqian secured the 26th position, marking his third consecutive year on the list since 2019.

In Song Xiangqian's view, individuals, companies, and the world at large must interact. Through this exchange, one can absorb, summarize, and distill information, developing an independent thinking framework, a systematic thought process, and concrete methodologies that can be applied and continually upgraded in specific work.

While continuously iterating their understanding and optimizing the management structure, Harvest Capital is adjusting its focus and stage layout in response to changes in consumer groups and market environments. For example, in the current era of consumer empowerment, Harvest Capital will pay more attention to opportunities in innovative consumption and the integration of new models in traditional industries. In the future, the firm may deepen its investment in the consumer sector and extend to mergers and acquisitions. Additionally, according to Song Xiangqian, Harvest Capital is in the process of raising a sizable USD fund.

Regardless, Harvest Capital's commitment to deeply cultivating the consumer sector, tightly bound to the ordinary happiness of 1.4 billion people, remains unwavering. Even if Song Xiangqian personally engages in business ventures in the future, he is convinced that it will be in the realm of consumption. "Lao Song is dedicated to this in his lifetime."

Supporting Chinese consumption, empowering national brands, entering the realm of human life, and empowering people's lives – this is Song Xiangqian's investment logic and life pursuit. "Squatting down to see the world is vast and more beautiful."

Looking ahead to China's economic development in 2022, Song Xiangqian anticipates facing more challenges. However, with the gradual disappearance of the pandemic, the world will return to normal. In this process, the rise of Chinese consumption and its central role in upgrading and transforming the economic structure will become increasingly evident.

Regarding investment directions in 2022, Song Xiangqian believes that technology and consumption are two super tracks, representing the two major directions of the future. "On the one hand, technology will empower industries, ordinary people's lives, and contribute to China's economic growth. To achieve high-quality growth and structural transformation in China, it is crucial to seek productivity from innovation and technology, improving production efficiency. On the other hand, with the rise of the younger generation and the increasing desire for consumption among Chinese consumers, who are willing and daring to spend, China's consumer goods will enter a golden age."

Regarding the consumer market specifically, Song Xiangqian states that there will be no so-called explosive projects. In his logic, any internet-famous brand or trending product must first build product capabilities, corporate governance abilities, and basic skills in areas such as the supply chain. "This is the era when good people do business, and earning hard-earned money is worthy of respect."