Boqii is one of the largest pet-focused platforms in China, offering a one-stop destination for pet owners to get everything they need for their pets including pet food, accessories, toys or healthcare products. The company operates an online platform as well as an offline retail network.
September 30, Boqii was officially listed on the New York Stock Exchange. The investment community learned from the listing ceremony that the IPO price was US$10, bringing the market value of Boqii to US$900 million, or about 6.1 billion yuan.
After 12 years of business, the three founders born in the 80’s finally came to the stage of ringing the bell. At the end of 2007, Tang Yingzhi, who came out of Tencent, met the other two founders. One is Liang Hao, who is very forward-looking about products, technology, and the Internet, and the other is Chen Di, an experienced veterinarian. Although they come from different fields, the three of them have a soft spot for pets. After only one meal, they hit it off and decided to start Boqii.
“I have kept pets for more than ten years, knowing what the Internet can bring to this industry, and also knowing what a pet owner needs.” Tang Yingzhi Zeng said the original intention of starting a business.
Behind the successful IPO of Boqii, the petcare economy is on the rise. In recent years, well-known institutions including Hillhouse Capital, Fortune Financial Intelligence, GGV Jiyuan Capital, Qiming Venture Capital, Morningside Capital and other well-known institutions have made moves. Hillhouse has invested at least $1 billion in the pet industry from 2016 to 2018, invested in more than 100 pet companies, and a year ago, it teamed up with Ruipeng Group to form the first domestic pet medical “aircraft carrier” with more than 1,000 stores.
A 12-year entrepreneurial story
Tang Yingzhi first met Liang Hao and Chen Di in a threesome QQ group. At the end of 2007, Tang Yingzhi and Liang Hao had just come out of Tencent. One of them was very forward-looking in products, technology, and the Internet, and the other was experienced in finance and capital operations. Unlike them, Chen Di, a veterinarian, is already a product manager for a pet website.
After raising pets for many years, these three young people have a deep understanding of the pain points of China’s pet market and keenly discovered the huge potential that has not been tapped in this industry.
At that time, the three of them talked about their own future development, ideas and potential of the pet industry in the QQ group. The more they talked, the more speculative they were. Soon they met and had a meal together. After a meal, the three set the initial, short-term, and mid-term goals and long-term plans of Boqii.com. They also figured out exactly what kind of company Boqii.com will be and what they want to solve for users. Questions, which businesses can be used as the main source of income and so on. After reaching an agreement, the three decided to work together.
The three people’s entrepreneurial journey started from an office of only over 80 square meters. In this small office space, a team of nearly 20 people including product, development, procurement, and customer service departments are accommodated. On the second day after the website went live, Boqii received the first order.
To be an e-commerce company, it is indispensable to rent a space for storage. In order to save money, the three founders split 40 to 50 square meters in the middle of the office as a warehouse. From receiving the order to packaging, all the procedures are completed in this office. At that time, Boqii had just started, and the small number of orders was not enough to reach cooperation with the courier company. Therefore, the courier was not willing to go upstairs, so the team had to push a trolley and take the elevator to the downstairs.
“We were the first company in the industry that was determined to do e-commerce. When many pet websites were still discussing market scale, warehousing, distribution, and supply chain, we had already thought about it clearly.” Tang Yingzhi comments: “There is a saying in our team: Users will always tell you the direction, and what you need to solve is the method. The method is the problem of adaptability, which should be the strength of Chinese entrepreneurs.”
With the successful IPO of Boqii, the net worth of the three founders also increased. According to the prospectus, before the IPO, Liang Hao held 13.64%, Tang Yingzhi held 7.47%, and Chen Di held 1.04%. Based on this calculation, the three people hold 22.15% of the shares, and the accumulated net worth is as high as 1.351 billion yuan.
Looking back on the 12-year history of growth, there are many VC/PE organizations behind Boqii Pet. In January 2013, the five-year-old Boqii Pet introduced external funds from Lieliang Capital and Zhonglu Capital for the first time. After that, Boqii Pet has successively attracted the blessing of many investment institutions including Goldman Sachs, KIP China, Byrne Capital, and Dingfeng Assets.
Among them, Goldman Sachs is the organization that has participated in the most rounds of Boqii. In June 2013, Goldman Sachs participated in the investment in Boqii for the first time, and in 2014 followed up with a US$25 million Series B financing. Two years later, Boqii.com announced that the C round of financing with a total amount of US$102 million had been fully paid, led by China Merchants Bank, and the original investors Goldman Sachs and its management followed the investment. In June of this year, Boqii Pet completed more than 60 million US dollars in overseas financing, which was the last round of financing before its IPO.
As an early investor in Boqii, KIP China has accompanied its growth all the way. In 2015, although China’s pet market is not yet mature and even considered to be a small business, KIP, who has a keen sense of smell, has already seen the unlimited potential in this field, and finally invested nearly 10 million US dollars in Boqii.
Recalling the investment logic at the time, Hu Jingzhi, the managing partner of KIP China, told the investment community: “The Boqii team is from a background in Tencent and has done a solid job. After KIP investment, we have also seen Boqii’s attempts and exploration of innovative concepts. They not only have developed its own brand and expanded the new retail sector, but also established offline channels such as medical service stations that provide pet health services, gradually building a complete ecosystem, growing steadily, so I like this team very much.”
“Looking at the development of Chewy, a successful listed company in the United States, there is an urgent need to step out of such a huge pet company in China. I hope that Boqii can grow into the best domestic pet brand.” Hu Jingzhi added.
So far, Boqii Pets has realized an all-in-one Internet platform of “omni-channel supply chain + new retail + content producer”. It owns the largest domestic pet vertical online retail business and the most online pet in China. Community, and an omni-channel ecosystem covering China’s pet track.
The prospectus shows that in the 2020 fiscal year (April 2019-March 2020) of Boqii, the GMV of Porch Pet is RMB 1.56 billion and revenue is RMB 770 million. In the first quarter of fiscal 2021 (April 2020-June 2020), Boqii’s GMV was 554 million yuan, an increase of 56% over the same period last year, and revenue was 240 million yuan, an increase of approximately 30%.
Boqii Pet’s IPO in the United States opened the tip of the iceberg in China’s pet business. Frost & Sullivan predicts that from 2019 to 2024, the compound growth rate of the number of domestic pets is about 8.1%; the compound growth rate of the pet industry market is about 17%; the compound growth rate of the domestic pet food and pet supplies market is about 15.4%; The compound growth rate of the service market is approximately 19.6%.
Especially recently, New Ruipeng Pet Healthcare Group completed a strategic financing of hundreds of millions of dollars. This round of financing was led by Tencent, Country Garden Ventures and Boehringer Ingelheim strategic investment, Snow Lake Capital, OrbiMed, Aspex Management, Qing A number of first-tier institutions at home and abroad, including Lake Bleu Capital.
Aiming at pet healthcare, Xia Yao, Managing Director of Tencent Investment, said: “We are optimistic about China’s pet economy and pet healthcare for a long time. New Ruipeng Group, which is a leader in the chain pet healthcare industry, adopts the innovative model of ‘medical + service + technology’ , brings a brand new user experience to the majority of pet owners and pet lovers.”
After this round of financing is completed, New Ruipeng Pet Medical Group is valued at approximately RMB 30 billion. It is reported that New Ruipeng’s financing has attracted the attention of many domestic and foreign first-line institutions, and the exact investment intention received is more than 5 times higher than the original plan, achieving super-raising financing.
When it comes to China’s pet market prospects, Hu Jingzhi’s point of view is simple: “As China’s GDP grows, we believe that the companionship of pets is already a very important requirement, and pets will gradually become a very important role in family life. Because We can see that in all developed countries, this path has been taken; the second point is that China’s aging population and single-person households have increased, and the demand for the role of pets has also become urgent.”
The primary market has been deployed early, and the secondary market has also been launched. Since the beginning of this year, the A-share market “Pet Shuangjie” has performed quite well. Petty shares have increased by 24.17% year-to-date, and China Pet shares have increased by 57.12%. The U.S. stock market also prefers the pet industry. Chewy, the largest pet retail e-commerce company in the United States, has risen as much as 82.76% this year.
This new group is giving birth to countless new consumers and supporting a huge business.