The financing story of CHAGEE: Turning a losing hand into a winning one

Text by | Shi Jiaxiang

Edited by | Liu Jing

In 2022, Zhang Junjie predicted in a private setting that the domestic battle would be completed in three to four years, after which the focus would shift to the overseas market. Now, everything in the story is unfolding as pre - rehearsed.

On April 17th, North American time, Bawang Cha Ji, the first Chinese brand of fresh milk tea made from whole - leaf tea, went public on the NASDAQ. On its first trading day, its stock price soared by over 48% at the peak and closed up by over 15%, reaching $32 per share.

Before the IPO, the company submitted impressive financial data: its annual revenue in 2024 was approximately 12.4 billion yuan, 1.5 times that of the previous year, and its net profit was about 2.5 billion yuan, doubling compared to the previous year.

We once used "The Pursuit of Happyness" to describe Zhang Junjie's life experience. Now that the company's market value has exceeded $6 billion, let's rewind the story four years ago, starting from that life - changing financing round. For investors, the fundamental difference between those who invested in Bawang Cha Ji and those who missed out lies in the judgment of the person: "Who could have imagined that he would evolve to this extent."

The Biggest Winner, XVC: The Decisiveness and Delegation of a Sniper

As an early - stage VC founded in 2016, Hu Boyu, the founder of XVC, has repeatedly expressed his focus on the "sniper style," which means making large bets in the early stage. Bawang Cha Ji is the "whale" under this philosophy.

Waves has heard from multiple investors about how XVC invested in Bawang Cha Ji. Here is the common part of those stories:

The first person at XVC to discover Bawang Cha Ji was an investment manager. He had just graduated and had been at XVC for a year and a half at that time.

This investment manager started by researching the food and beverage industry, looking into fast food, marinated snacks, and barbecue. Later, he realized that only sectors with the potential for standardization, such as tea drinks, coffee, marinated snacks, and fast food, were worth his time. By then, the fruit tea market was dominated by Nayuki and HeyTea, but there was still room for new categories.

That's when Bawang Cha Ji caught his attention. This three - year - old milk tea brand had only 200 stores at that time, mainly concentrated in Yunnan, Guizhou, and Sichuan. The monthly sales of a single store were less than 200,000 yuan. What interested him was that Bawang Cha Ji was able to continuously expand its presence in the region, and the sales of existing stores were still growing. Another point was that Bawang was one of the few companies in the market that was seriously focused on tea.

Generally, a tea - drink brand prefers to open franchises nationwide to maximize market share. In the early days, this was also Bawang Cha Ji's expansion strategy. However, after Zhang Junjie recognized the problem, he closed a large number of franchise stores in southern cities and finally scaled back to Yunnan, Guizhou, and Sichuan.

In December 2020, during the shadow of the pandemic, he flew to Yunnan and talked with Zhang Junjie from evening until late at night, drinking more than a dozen cups of fresh milk tea made from whole - leaf tea. During the seven - hour conversation, Zhang Junjie answered questions fluently about the early store - opening strategies and store - expansion strategies. They also talked about the vision. Zhang Junjie said that in ten years, Bawang Cha Ji would have 15,000 stores and become an international brand.

On the flight back, the investment manager had generally decided on this brand. The rest was to conduct more in - depth verifications.

Hu Boyu once said that when he first communicated with Zhang Junjie, the latter told him that he had never been to school. His first reaction was that Zhang had never gone to college, but later he found out that Zhang "had never received basic education at all" - he was homeless from the age of 10 to 17 and couldn't read until he was 18. So, when writing on the board later, he would still write some characters in pinyin.

However, through "continuous questioning," they found that Zhang Junjie had strong self - learning abilities. He had read many audiobooks and biographies of entrepreneurs. His understanding of business models and management insights were even better than most CEOs Hu Boyu knew.

Another risk factor was that at that time, Bawang Cha Ji actually had four partners with equal shares, and there was no absolute controlling shareholder. Due to differences in the company's future direction, Zhang Junjie wanted to buy out the shares of the other partners at a valuation of over 100 million yuan. This meant that Bawang Cha Ji, which had only 200 stores, needed a valuation of hundreds of millions of yuan, and most of this investment would be used for the founder to repurchase shares.

Ultimately, the optimism about Zhang Junjie himself overcame all the unfavorable factors. According to Waves, Zhang Junjie expected a post - investment valuation of 700 million yuan. XVC didn't bargain and invested over 100 million yuan in that round, which was the largest first - round investment in its history. It only took seven days from the team's first meeting with Zhang Junjie to issuing the Term Sheet.

This seemingly crazy investment later changed Bawang's fate and brought XVC a home - run.

Fosun: Guo Guangchang Decided to Invest in 5 Minutes

Fosun invested in Bawang Cha Ji almost at the same time as XVC.

Actually, Fosun met Zhang Junjie earlier than XVC. As early as January 2020, Cong Yonggang, a global partner of Fosun and the chief investment officer of Fosun Capital, brought Zhang Junjie to Fosun's annual work conference. CEOs from dozens of countries around the world were present, which gave Zhang Junjie quite a shock and made him have a direct perception of globalization.

Regarding the meeting with Guo Guangchang, an early news report said: "Guo Guangchang decided to invest in five minutes." As we understand, they actually talked for 40 minutes during that meeting.

As a family - consumption industry group founded in 1992, Fosun's reputation also provided good brand endorsement for Bawang Cha Ji in its early days. Fosun's investment was clearly mentioned in the materials used by Bawang to attract franchisees in the early years.

Congbi Qiushi: No Preconceptions

This is a rare and somewhat unique fund that mainly invested in content e - commerce and is also an investor in Weinian.

Congbi Qiushi systematically researched the new - consumption sector around 2020 and configured projects based on the categories of tobacco, alcohol, tea, and sugar. Bawang Cha Ji, which promoted the concept of "tea latte," was among them.

By then, Bawang Cha Ji had completed its first - round financing. The number of stores had only increased by a few dozen, but the valuation had doubled compared to the previous round. However, Congbi Qiushi still decided to invest.

There were two reasons. First, there were not many options left for them. There were only brands like Cha Yan Yue Se with a valuation of 20 billion yuan, HeyTea with a valuation of 60 billion yuan, and Guming and Cha Baidao with valuations exceeding 10 billion yuan - these were "more like PE deals rather than VC deals." At the same time, they internally judged that the tea - drink market would not be monopolized by a few leading brands, and there would always be dark horses emerging.

The second and more crucial reason was the understanding of the person.

Investors of different types generally have their own comfort zones. An investor from a US - dollar fund once told us that they would never invest in a company like Bawang Cha Ji and its founder. "We simply wouldn't get to know them, and even if we did, they would be beyond our scope of investment."

Congbi Qiushi didn't have fixed opinions about specific products or founders. From 2019 to 2020, the fund internally discussed whether to invest in Pinduoduo in the secondary market.

Two Missed Opportunities and a Stroke of Good Luck

Last year, Bawang Cha Ji became a project that most consumer investors regretted missing.

According to Waves, many funds had looked into Bawang Cha Ji and had more than one chance to invest.

The first missed opportunity was around early 2020, before XVC's investment round.

Bawang Cha Ji wanted to speed up its store - opening process and conducted roadshows in Beijing, Shanghai, and Shenzhen, contacting forty or fifty capital institutions. However, just at a critical moment, the pandemic hit, and all investment institutions came to a halt.