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xiaohongshu rarely appears.

the investment community learned that hangzhou jinshajiang initial quantity venture capital partnership (limited partnership) recently added xingyin information technology (shanghai) co., ltd. as a shareholder. the fund manager is suzhou jinshajiang chaohua venture capital management co., ltd., also known as jinshajiang venture capital, which is the parent company of xiaohongshu.

in other words, xiaohongshu became an investor of jinshajiang venture capital.

as far as i can remember, this should be the first time that xiaohongshu invested in a venture capital fund. this move has a lot of history: as early as 2013, when xiaohongshu was just founded and people were still not sure about it, jinshajiang venture capital decisively made a payment and became one of the earliest investors. ten years have passed, and xiaohongshu has risen to become a super unicorn with a valuation of 100 billion yuan. in an interview last year, zhu xiaohu revealed,currently, xiaohongshu is his highest-profit project.

this scene can be regarded as a story of the venture capital circle repaying its mentor: "if you stick with me today, i will be your lp tomorrow."

xiaohongshu pays

invested in jinshajiang venture capital

let’s start with industrial and commercial changes.

qichacha shows that on august 27, hangzhou jinshajiang chuda venture capital partnership (limited partnership) had an investor change, adding xingyin information technology (shanghai) co., ltd. the fund was established in may 2022 with an investment of approximately rmb 155 million. its business scope is venture capital (limited to investment in unlisted companies), and the actual controller of the company is zhu xiaohu.

looking through the list of partners, familiar faces in the venture capital circle emerge one by one. partner information shows that the fund is jointly funded by jinshajiang venture capital, cicc qiyuan, sequoia china, sensetime, etc. in addition, wang xiaochuan and cao xi also invested in shares. this time, the newly joined xingyin information technology (shanghai) co., ltd., also known as xiaohongshu, holds about 12.89% of the shares in the fund.

in more than two years since its establishment, the fund has made 11 external investments, covering a range of sectors including ai software, smart driving chips, embodied intelligence, xr chips, etc., and almost all of them entered in the angel round.

after sorting out, this fund has captured some star companies, especially in the field of large models. for example, as one of the first investors, it invested in wuwen xinqiong, an ai large model infrastructure platform. wuwen xinqiong was established in 2023. the founding team was promoted and assembled by the department of electronic engineering of tsinghua university. the initiator is professor wang yu, the dean of the department of electronic engineering of tsinghua university, and his student xia lixue is the co-founder and ceo of the company.

there is also liblibai, which just announced its financing. founded in may 2023, liblibai is positioned as an ai image generation platform, dedicated to the creation and sharing of ai content, and completely changing the original creation methods of designers, painters, and self-media creators. so far, liblibai has completed three rounds of financing, with source code capital, gaorong ventures and gsr ventures participating in the angel round of investment, and mingshi capital leading the latest round.

"don't be superstitious about general big models." zhu xiaohu once said in his circle of friends, but in fact, jinshajiang venture capital should be one of the early investors with the most vertical aigc in china. he once suggested that all independent big model companies should move vertically, with scenarios first and data as king. this may be the logic behind jinshajiang venture capital's investment in wuwen xinqiong and liblibai.

zhu xiaohu's most profitable project

so why did xiaohongshu invest in jinshajiang venture capital? in fact, they already have a long history.

in 2013, 28-year-old mao wenchao finished his studies at stanford university and came to shanghai with his wuhan native qu fang to start a business.mobile internetthe trend had just emerged, and the newly launched xiaohongshu was like a shopping information magazine, and the first product it launched was 7 pdfs.

"we are just a small editorial department," mao wenchao recalled at the 10th anniversary conference of xiaohongshu. "mulan (qu fang) and i co-authored a shopping guide for the united states. i asked conan (xiaohongshu coo ding ling) who was far away in singapore to write a shopping guide for singapore. yingmu (xiaohongshu's third employee) was responsible for the visuals and layout of seven pdfs, and i also asked a friend to hand-draw the cover image."

during this period, lin renjun, managing partner of jinshajiang venture capital, and zhang yutong, former managing partner of jinshajiang venture capital, launched the first stanford entrepreneurship competition held by a chinese fund. among the 20 chinese teams, jinshajiang venture capital only invested in mao wenchao.

the idea at that time was not what xiaohongshu is now. many venture capitalists could not see how imaginative this company could be and were hesitant whether to invest.

"xiaohongshu was very inconspicuous at the beginning." zhu xiaohu recalled the details of the investment in the interface interview. "at that time, we signed the a round investment agreement and allocated some quotas to the brother fund. the legal documents were ready and the only thing left was to transfer the money.they stopped throwing, so we took over and threw in all the shots.”

starting from the first investment of us$250,000, gsr ventures has always been with xiaohongshu, and has made multiple rounds of investments since then, even following up on xiaohongshu's series d financing in 2018.

it was also in this year that xiaohongshu began to try to place ads in variety shows such as "idol producer" and "produce 101". a number of celebrities and artists joined xiaohongshu, and the number of users exceeded 100 million. after the d round of financing, xiaohongshu's valuation exceeded us$3 billion.

during the epidemic, xiaohongshu became popular again. it was at this time that xiaohongshu was fiercely sought after by primary market investment institutions.the peak valuation once reached us$20 billion (approximately rmb 140 billion).

the rise of xiaohongshu has overturned many people's imagination. earlier this year, xiaohongshu shared more specific annual data, giving the outside world a glimpse of its latest appearance. in 2023, monthly active users will increase by 20% year-on-year to 312 million, revenue will increase by 85% year-on-year to us$3.7 billion, and net profit will reach us$500 million. in contrast, in 2022, xiaohongshu's revenue was about us$2 billion and its loss was us$200 million.

after ten years of being a runner-up, xiaohongshu can be regarded as a classic battle in the jinshajiang venture capital map. in an interview with phoenix finance's "cover" in november 2023, zhu xiaohu revealed that xiaohongshu is currently the project with the highest return.

a scene of giving back from the venture capital circle

the scene of providing money to institutions that have invested in oneself and becoming their lp is frequently played out in the venture capital circle.

what impressed me most was that many of warburg pincus’ lps were its own invested companies. last september, warburg pincus signed a formal contract with yixing city, announcing that the first rmb fund of warburg pincus would be located in yixing city. soon after, lps arrived one after another, and the market value leader in the cro fieldwuxi apptecand assisted reproductive listed companiesjinxin reproductivethey have all signed limited partnership agreements and invested to become lps of warburg pincus.

warburg pincus has a deep relationship with these two companies: in 2008, warburg pincus was one of the investors in wuxi apptec's $63 million strategic financing; warburg pincus was also the earliest institutional investor in jinxin fertility and the largest institutional investor before the company went public. many years later, they both gave back to warburg pincus.

besidesbethanyinvested in sequoia china. in 2014, sequoia china became beitanni's angel investor with 2.75 million yuan, and then led its series b financing in 2016. beitanni went public in 2021, and sequoia china is the company's second largest shareholder. subsequently, beitanni invested 100 million yuan in sequoia's hangzhou sequoia shengheng equity investment partnership (limited partnership), becoming an lp of sequoia china, giving back to the mentor of the year.

this is a reflection of the venture capital circle giving back. in the past two years, we have witnessed such scenes: after achieving financial freedom, the car manufacturing tycoon he xiaopeng supported 5y capital, ggv capital, e-link capital, kinzon capital, variable capital and other institutions as lps. most of these institutions have invested in uc or uc davis founded by he xiaopeng.xpeng motors。

hesai technology founders li yifan, xiang shaoqing and sun kai jointly invested in lightspeed photosynthesis fund, which has invested in hesai technology three times and accompanied its growth all the way;zhou hei yain 2010, when financing was difficult,tiantu investment58 million yuan of support from the company, and eight years later invested 200 million yuan to become tiantu's lp;pop martfounder wang ning invested in vc institutions that had previously invested in him. he is an lp of black ant capital and fengqiao capital.qia qia foodgiving back to investor china renaissance capital...there are countless examples like this.

fundraising is still not easy, and it is hard to find market-oriented funds. therefore, we see that more and more gps are looking at the projects they have invested in and raising funds from the post-investment stage. in the early years, startups grew up with the support of vc/pe and stepped onto the stage of ipo. after seeing the power of venture capital, these successful entrepreneurs began to give back and contribute money and effort to vc/pe institutions.

as an investor in shanghai admitted, "developing the already grown investee companies and entrepreneurs into our own lps is a natural advantage." dong ruoyu, head of the shanghai angel investment guidance fund, mentioned that investee companies that have led ipos and have long been matched with institutional cores can become excellent cornerstone lps.

this is a precious stream of living water and a touch of warmth in the cold winter of rmb fundraising.