This is a preview. Sign up with our free subscription program to receive China VC/Startup ecosystem newsletters, Chinese market and industry reports, and invitations to closed-door events.
Key trends
There were 142 investments in the past week. 60 of these deals were in the favored fields of healthcare and enterprise services, with consumption following in third place with 13.
Top Stories: VCs and Investments
Chinese healthcare portal DXY (丁香园) closed its USD 500 million Series E round, led by PE firm Trustbridge Partners. Existing investors Tencent and Hillhouse Capital also poured in cash.
The funds raised will be channeled to three core areas: DXY will expand its network of medical professionals to improve its healthcare consultation business, deepen cooperation with various stakeholders in the medical community to explore new business scenarios, and diversify services that are offered on its online platform.
Top IPOs of the week
Strawbear Entertainment (稻草熊娱乐)
IPO offering price range: HKD 5.10 — 6.16 (USD 0.66 — 0.79) per share
IPO filed: July 2020
Backed by Alibaba and iQiyi, Strawbear Entertainment was founded in 2014 and has so far produced 29 TV series and web dramas. The company is a frontrunner that produced prime-time series broadcasted across China’s top five stations in 2019.
Due to complicated negotiation processes involving investors, copyright owners, and distributors, it currently takes Chinese producers an average of 22.5 months to complete one TV series. With its centralized resource platform and deep network of TV stations across the country, Strawbear Entertainment helps producers cut that lead time down to 17.8 months, according to the company’s prospectus.
Strawbear’s annual revenue grew from RMB 543 million (USD 84 million) in 2017 to RMB 765 million (USD 118 million) in 2019. Despite headwinds brought by the COVID-19 pandemic, the company claimed a net profit of RMB 72 million (USD 11 million) in 1H 2020, surpassing that of the full 2019 fiscal year.
Several prominent institutional investors, including Snow Lake Capital and IDG Capital, participated as cornerstone investors in Strawbear Entertainment’s Hong Kong IPO.
Startups on our watchlist
Consumption
Moli Hard Seltzer (马力吨吨）
Founded in 2020, angel investment
Moli Hard Seltzer utilizes fruit juice in the fermentation process to produce refreshing sparkling wine (hard seltzer). The company raised tens of millions in yuan last week via an angel investment arm under Unilever.
In an interview with 36Kr, Moli Hard Seltzer’s founder, Chen Yicheng, explained that hard seltzers in the United States are typically fermented with sucrose, which produces a strong alcohol flavor. Moli Hard Seltzer, however, blends the fruit aroma with alcohol, which has become one of the product’s unique selling points.
Many young people in China now favor liquor with low-alcohol content. Wine is generally costlier, beer is typically loaded with carbs, and it is uncommon to binge on fruit wine. With its flavor, alcohol content, and low retail price like that of beer, sparkling wine presents itself as a balanced alternative and has a chance to dominate the low-alcohol liquor market.
According to research by Nielsen, hard seltzers account for 10% of the US beer market, but Chen believes that market share is heading to 15%. He explained that 42% of beer drinkers in the US opt for craft beers, while in China it is merely 1%, representing a huge opportunity.
As for 2021, the company aims to launch its products in glass bottles in March to cater to the banquet scene, and plans to introduce a new series in June to capitalize on the peak sales period.