Decrypt the methodology behind Meituan Longzhu's successful investments in Mixue Ice Cream & Tea and Unitree Robotics.

At the beginning of 2019, Zhu Yonghua, a partner at Meituan Longzhu, boarded a high - speed train to Zhengzhou with a copy of Genghis Khan in hand. He was going to meet the founder of Mixue Bingcheng. This was a meeting he had managed to arrange after much effort, and it made Meituan Longzhu one of the key investors behind this year's "phenomenal IPO".

On March 3rd this year, Mixue Bingcheng was listed on the Hong Kong Stock Exchange, with its market value at the opening exceeding HK$100 billion. As of the close on August 22nd, Mixue Bingcheng's market value was nearly HK$180 billion.

This year is undoubtedly a bumper year for Meituan Longzhu. At the beginning of the year, Unitree Robotics became extremely popular, and the popularity and valuation of the humanoid robot track soared. Subsequently, Guming and Mixue Bingcheng were successively listed in Hong Kong, triggering a wave of enthusiasm in the tea - beverage consumption track. Behind these topics, Meituan Longzhu was an early investor.

The public often gets to know investment institutions through successful star projects. However, the time when investment institutions discover "gold" underwater needs to be traced back several years. Longzhu's investment achievements in the consumption and technology fields all stem from its layout three years ago, five years ago, or even earlier.

In 2024, Longzhu invested in Unitree Robotics, six months before its robots became a hit at the Spring Festival Gala. Mixue Bingcheng's only round of open financing before its IPO was in 2020, and Longzhu was the first confirmed lead investor and the largest institutional shareholder. For Guming, even earlier, in 2019, it was confirmed that Longzhu would lead the investment with a significant stake, holding about 8% of the shares.

In July, Unitree Robotics officially launched its IPO. If Unitree completes its listing, Longzhu will achieve its first IPO in the technology investment track and will be among the first institutions to share the listing dividends of China's embodied intelligence.

The market is constantly changing. Longzhu has been established for eight years. Every moment at present is both the harvest period of the previous investment stage and the cultivation period of the next stage.

Longzhu's past investment map in consumption was to focus on food and beverages and continuously make heavy bets on the same track. However, in Zhu Yonghua's view, this strategy was a product of the previous consumption cycle, and new changes should occur now. But in essence, the underlying investment logic remains the same, that is, to believe in the potential of the "era - specific categories" track and find and support the most outstanding enterprises within it.

Another changing narrative is technology. Taking the investment in Li Auto in 2019 as a turning point, Longzhu's subsequent investment strategy became clearer, that is, the dual - wheel drive of "consumption + technology".

In 2021, Longzhu established a technology investment team led by partner Wang Xinyu. Focusing on electrification and intelligence, the team pays attention to AI, robotics, and all cutting - edge technologies, captures the era - specific categories and enterprises in the technology field, and has invested in a number of technology innovation companies such as Darkside of the Moon, Unitree Robotics, Xinghaitu, Independent Variable, Shumei Wanwu, Unisoc, EcoFlow, and Kaye Technology, with particular emphasis on the layout of embodied intelligence.

Photography: Zhao Dongshan

"What to invest in" and "How to invest" are two inevitable questions in investment. Longzhu focuses on "outlier" and "timing". "Outlier" means finding extremely outstanding entrepreneurs and enterprises in this era, but this excellence does not follow a fixed pattern. "Timing" refers to the inflection point. How to judge the inflection point and invest at the appropriate time runs through almost every investment decision of Longzhu.

Excellence Has No Fixed Pattern

Looking at past cases, whether in consumption investment or technology investment, Longzhu's underlying strategy is the same: find the most outstanding entrepreneurs and then firmly support them.

In the past, Longzhu had a distinct investment style in the consumption field: focusing on food and beverages and daring to make heavy bets. In the first five years after the fund was established, Longzhu invested 7 billion yuan in only more than 20 projects, with an average investment of more than 300 million yuan per project.

Zhu Yonghua witnessed the boom of the Chinese consumer market in 2016 and 2017. In his memory, there were at least 100 consumer - related projects seeking financing every month at that time, more than 1000 in a year. However, the scale of Longzhu's first - phase fund was only 2 billion yuan. Assuming an investment of 50 million yuan per project, "it's actually like not investing at all".

Zhu Yonghua said, "In the primary market, if you spread your money across many baskets, it's very likely that all the money will seep through the baskets like water because truly good projects are extremely rare." So Longzhu's strategy is to identify the right track and make heavy investments in the most outstanding enterprises.

Longzhu judged that the "food and beverage" track is the most likely to produce brands with ten - thousand - store networks among the four basic needs of clothing, food, housing, and transportation, especially the tea - beverage industry. After in - depth analysis of the tea - beverage track, they further divided it into three price ranges: below 10 yuan, 10 - 20 yuan, and above 20 yuan.

Following this logic, Longzhu successively invested in Heytea, Guming, and Mixue Bingcheng, which are leaders in the three price ranges respectively.

Investment is also about investing in people. The core founder often largely determines the development of a startup company.

Longzhu does not confine the personality traits of founders to a certain profile. Longzhu believes that people should have the vitality to grow continuously, be resilient, passionate, and maintain their true selves. The excellence of "outliers" is diverse rather than following a fixed pattern.

When Wang Xinyu makes technology investments, he often checks whether his mindset is "keep open". "If you already have a fixed profile and say you definitely won't invest in university professors, definitely will invest in prodigies, or have some other fixed ideas, you may be a good investor, but not a top - notch one. If you use the profiles of Wang Xing and Zhang Yiming to make investments today, you'll never be able to find the next them because the times have changed."

The emergence of a group of AI entrepreneurs such as Wang Xingxing, Yang Zhilin, and Liang Wenfeng has proven that today, "extreme excellence" is manifested in different ways. For example, some people are extremely good at thinking, some are extremely good at execution, and some are extremely innovative.

"This requires us not to make decisions by following a formula but to have an open mindset and think uniquely about each project and founder." Wang Xinyu said.

Patience and Inflection Points

Many people like to use words like adventurous, radical, and lightning - fast decision - making to describe a VC because early - stage projects have higher uncertainties, and a non - consensus investment philosophy is needed to deal with risks. However, when reviewing Longzhu's past investment stories, the word "patience" is more suitable to describe its essence.

The difficulty in consumer investment lies in the fact that good consumer companies may not be short of money, and financing is not a necessity. How to get the most promising consumer founder to recognize and be willing to accept a lead investment has become a must - answer question for Zhu Yonghua. How to solve it? His answer is: find a perfect target and persevere.

In the tea - beverage track in the price range below 10 yuan, Mixue Bingcheng is undoubtedly the best target. And it was also the most difficult one to persuade. It took more than a year from the official start of contact between the two sides to the final confirmation of Longzhu as the lead investor.

Zhu Yonghua recalled that during that period, he just persevered, maintained communication, and got all the preliminary preparations and details in place. The rest was just patience. "At that time, they might not have decided whether to raise funds, but as long as they thought of me when they decided to do so, that would be enough."

In fact, before its listing, Mixue Bingcheng only had one round of external financing, and its shareholders were only Meituan Longzhu, Hillhouse Capital, and CPE Yuanfeng, with both Longzhu and Hillhouse serving as lead investors. At that time, Mixue Bingcheng was not short of money. Its net profit in 2021 was 1.9 billion yuan, almost the same as the amount of this round of financing at the end of 2020.

Source: Zhongtu Photo Library

In March this year, Mixue Bingcheng was listed on the Hong Kong Stock Exchange. Based on the latest market value, Longzhu's current investment return is seven times.

The same applies to technology investment. In the hottest track and on the eve of an explosion, how to find the best time to invest? Because the investment return rate varies at different time points. The essence of VC is to identify truly valuable enterprises and entrepreneurs at a relatively early stage and invest to obtain the maximum return.

In 2023, Longzhu led the A1 - round investment in Darkside of the Moon when its valuation was 600 million US dollars. Longzhu was the first to "pull the trigger". Now, the valuation of Darkside of the Moon has exceeded 3 billion US dollars.

On the surface, it was a very rapid decision. In May 2023, Wang Xinyu met Yang Zhilin in person for the first time in a restaurant near Darkside of the Moon's office building. After a three - hour communication, they finalized the investment intention.

In fact, Longzhu had been following the progress of GPT for a long time. Before the formal investment in Darkside of the Moon, the two sides had communicated online for nearly half a year. "Before the meeting, we had confirmed that they were world - class excellent in technology. After the meeting, we found that Yang Zhilin's thinking about the company's development, corporate strategy, and even management was very mature. This made us even more determined." Wang Xinyu said.

In Wang Xinyu's view, many projects are similar. The best time to plant a tree was 10 years ago. If you chase after a track or project only when it becomes popular, you will never be able to catch the inflection point.

He believes that discovering the inflection point requires sufficient professional knowledge and long - term patience, which means having a long - term in - depth understanding of the industry, establishing judgments and knowledge about technological trends, maturity, and time points, and paying long - term attention to outstanding entrepreneurs.

Wang Xinyu met Wang Xingxing in 2016, but Longzhu decided to invest in Unitree Robotics eight years later, when Unitree decided to mass - produce humanoid robots.

At the end of 2023, Wang Xinyu visited the United States and went to the robotics laboratories of several universities such as Harvard, MIT, Stanford, and Berkeley. He found that there were Unitree's robotic dogs in their laboratories, and they were all very interested in Unitree's humanoid robots and wanted to buy them, even though they hadn't been officially launched yet.

"If the world's most outstanding robotics Ph.D.s are using his products for development and planning to buy them, then this must be an investment inflection point."

Changes

This year is a significant turning point for Longzhu. In addition to the project harvest, a changing trend is also emerging.

"Guming and Mixue Bingcheng were listed in February and March this year. Longzhu's previous - stage investment has entered the harvest period. We need to think more about entering the cultivation period of the next stage of consumption." Zhu Yonghua said.

In the past seven or eight years, consumer investment has gone through a process from boom to bust and then to a slow recovery. The consumer brands that have the opportunity to compete for leadership in five years are just starting to take shape now.

If we continue to completely follow the previous investment logic, we will miss many opportunities because there are fewer good projects now and the classification is more detailed. In the future, Longzhu will broaden its vision in terms of categories, and the logic of "heavy bets" will also change. "We may make some early - stage layouts and also invest tens of millions of yuan. But in the earlier stage, we definitely value the category more, and the business needs to be significant and the people need to be outstanding." Zhu Yonghua said.

In consumer investment, in the future, Longzhu will divide the market by age groups, mainly focusing on the three age groups of 18 - 30 years old, 30 - 50 years old, and 50 years old and above to explore demand.

Zhu Yonghua explained that taking the 18 - 30 age group as an example, this group of people is in a stage of high volatility in life and facing future uncertainties. They are willing to spend more money on spiritual consumption. For example, at concerts, in the past, people used to sit and listen to music, but now young people almost stand throughout the concert, singing and dancing along. This is a deep - seated emotional release, and they are no longer just spectators but participants.

The group of people aged 30 - 50 have greatly reduced their "appetite for food". They pay more attention to health and most of them will gradually become minimalists. In the future, the saving of space and improvement of efficiency in food, drinks, and daily necessities will be the themes they care most about.

For the silver - haired population over 50 years old, their needs also need to be considered as early as possible. According to official data, by the end of 2024, the elderly population aged 60 and above in China reached 310 million, accounting for 22% of the total population; by around 2035, the elderly population aged 60 and above in China will exceed 400 million, accounting for more than 30% of the total population. What kind of supply should match the needs of this group of people also requires early - stage layout to seize opportunities.

Technology investment requires identifying the essence in the face of changes and maintaining composure amidst the noise.

Source: AI - generated

Recently, someone asked Wang Xinyu if Chinese embodied - intelligence companies are too expensive. Wang Xinyu's suggestion is, first, compare them with companies in the same field in the United States and see what their valuations are. "The valuation of Figure has reached 40 billion US dollars, but there isn't a single Chinese company in the same track with a valuation of 4 billion US dollars." Second, see if Chinese and American embodied - intelligence companies are aiming for the same end - game. "If the end - game is the same and the vision is the same, then it's just a matter of the path to get there." Wang Xinyu said.

In his view, the Chinese are extremely efficient. If an American company needs 5 billion US dollars to achieve a certain result, a Chinese company can achieve the same result with one - fifth or even one - tenth of the money, which has been proven in the past. However, he believes that this should not be the case in the future because embodied intelligence is a breakthrough endeavor that leads the world and promotes human progress. So why should we spend less money than others?

"Since we have reached a consensus that embodied intelligence is correct and has a future, I think there is not too much money in this track, but too little." Wang X