Founded in 2013 by Will Jiang and Weiguo Zhao, N5Capital targets early stage Chinese businesses in the consumer sector and industries that utilizes content generation, mobile technology and the Internet to improve productivity and gross margins.
The firm’s investment strategy plays at the backdrop of the two largest trends driving China’s economic engine.
Firstly, by 2020, Chinese consumption will grow by USD$2.3 trillion to hit USD$6.5 Trillion (BCG). One of N5Capital’s focus has been the consumer sector, which is experiencing unprecedented growth. However, consumer behaviour is changing. For example, Gen Y and Millennials are not as brand loyal as baby boomers. In addition, N5Capital is looking for trends and opportunities in progressive digital content and formats that acquire users at zero or very low costs.
Secondly, a new McKinsey Global Institute report finds that a new approach centered on productivity could generate USD$5.6 trillion of additional GDP by 2030, compared with continuing the investment-led path. The firm’s investment approach centres on productivity improvements made through mobile tech and the Internet as infrastructure.
Examples of investments that utilize this approach include Hot & Hot, a crawfish delivery company, which acquired upper stream supply chain from Egypt at low price and high quality, and Transfereasy, an online payment and settlement solution service provider, which simplifies payment through automatic application, verification and compliance for cross-border businesses.
N5Capital currently manages two RMB funds and one USD fund, with total assets under management of $350 million USD.
FinSMEs
05/10/2017