Reporter guandui
On February 4, SES, a battery Unicorn company, was listed on the New York Stock Exchange, which is the world’s first listed supplier of hybrid lithium metal batteries.
SES, founded in 2012, is one of the earliest technology enterprises targeting lithium metal batteries in the world and the only lithium metal battery enterprise in the world that has signed a sample cooperative development agreement with automobile enterprises. In March last year, SES and GM signed the cooperation of the world’s first lithium metal battery a sample for vehicles. In May, it signed the world’s second A-Sample cooperation agreement with Hyundai. At the beginning of this year, it won the joint development agreement of Honda’s a sample.
In mid July 2021, SES announced that it had reached a final merger agreement with Ivanhoe capital acquisition company. Ivanhoe is a comprehensive mining company with sufficient reserves of nickel and copper in many regions of the world, including about 4.1 billion pounds of nickel in the platreef project in South Africa. After SES and its merger, in addition to obtaining nearly US $500 million in cash to support the follow-up R & D and commercialization of products, it can also cope with the “nickel shortage” of the battery industry in the future and consider the longer-term strategy.
In the future, SES hopes to become a vertically integrated lithium metal battery company. In the upstream, SES is looking for a suitable lithium mine for privatization, so as to ensure the stable supply of raw materials; In the downstream, a battery safety system should be established to conduct 24-hour battery safety monitoring through AI technology. Founder Hu Qichao believes that it is impossible to achieve 100% safety only by the battery itself, and the supporting software monitoring is very necessary.
The investors behind SES include Chinese foreign car companies such as GM, Hyundai, Geely and SAIC, as well as Foxconn, Tianqi Lithium Corporation(002466) , Temasek and Xiangfeng China. Xiangfeng China is the round a investor of SES, and then holds two rounds of additional shares all the way.
In the early stage of SES listing, interface venture capital exclusively interviewed Zheng Juncong, the managing partner of Xiangfeng China, and talked about the investment story behind it and the investment style of Xiangfeng China.
Xiangfeng can gain a firm foothold in the market thanks to its key investment in the fields of communication, software, electronics, semiconductors, biology and life sciences. Up to now, the key layout of Xiangfeng investment is still in the fields of science and technology, biology and life sciences.
The predecessor of Xiangfeng investment can be traced back to 1983. At that time, its task was to invest in line with the development strategy of Singapore technology group. By 1988, with the change of market situation, Singapore technology group realized that venture capital was a field with great development potential, so it established Xiangfeng investment. In May 2000, Xiangfeng set up an office in Beijing.
In the early days, Xiangfeng was a state-owned enterprise of the Singapore government. The management is generally not a financial expert, but a technical expert is the first choice. The selection criteria are also continuing. Zheng Juncong, the helmsman of Xiangfeng China, was born in an overseas Chinese family in Singapore. After graduating from Stanford University, he returned to Singapore to work. He used to be a fighter engineer and entered the VC industry in 2000. At the end of 2008, Cai Qile, CEO of Xiangfeng investment, invited Zheng Juncong with both technical background and investment experience to join. At that time, Temasek was the only LP of Xiangfeng.
When Zheng Juncong joined Xiangfeng, it was at the time of the restart of Xiangfeng brand and the preparatory stage of Xiangfeng China. At this time, the investment projects were particularly challenging. Zheng Juncong admitted that he preferred technical projects, but the first two projects actually invested had nothing to do with technology.
The first project is mobile game IgG, which was invested in 2009. Five years later, the company was listed in Hong Kong, bringing more than 10 times the return to Xiangfeng China.
The second project is 91 wireless, which is of great significance to Zheng Juncong. This is the first project he successfully quit after joining Xiangfeng. Zheng Juncong has been deeply impressed by the investment process. He and his team found that China’s smart phones are just emerging and the penetration rate is not high. They believe that in the long run, the mobile Internet is the trend, the hardware price will be reduced and the performance will be improved. The biggest difference between smart phones and traditional phones is the personalized configuration of applications, so the entrance of download is very important, and apple ignores the Chinese market. Zheng Juncong judged that there will be a team in China to do a good job in localization mobile phone entrance, sweep the Chinese market and find 91 wireless team in Fuzhou.
In 2011, Zheng Juncong led the investment in the project. Two years later, baidu acquired 91 wireless with us $1.9 billion. This transaction was the largest M & A in the history of China’s Internet at that time. Xiangfeng China obtained more than 10 times the return from 91 wireless with us $10 million.
Through these two projects, Xiangfeng China has ranked among the first echelon of VC in terms of data. Zheng Juncong has also been highly recognized by LP and officially became the helmsman of Xiangfeng China. Since 2015, Zheng Juncong has introduced more external LPS, and Temasek is no longer a single source of funds.
91 wireless project is a very typical investment methodology of Xiangfeng China. Zheng Juncong concluded that Xiangfeng China’s investment philosophy is to focus on the direction, study the changes in the world, especially the trend of new technology, and then find the investment target according to the situation of the Chinese market, and sometimes go overseas to find the investment target according to the situation of the Chinese market.
In 2013, Zheng Juncong wanted to invest Didi, but failed to invest for various reasons. After that, Zheng Juncong began to study the online car Hailing travel mode more deeply, and soon noticed grab, which started in Malaysia. One day soon after, Zheng Juncong met grab founder Chen Bingyao in Singapore. Less than a month after the meeting, Xiangfeng China completed the investment, became the first institutional investor of grab since its establishment, and added continuously in the subsequent two rounds of financing. In the project of grab, Xiangfeng China has invested more than 20 million US dollars. In addition to the funds, it also provides help in the company’s strategies such as developing Singapore business and expanding payment business.
In 2015, Zheng Juncong went to Los Angeles for the opening of the annual meeting. After the meeting, he and several colleagues saw Citibank’s public bike near the hotel, so they decided to rent a bike to play. After riding for several hours, they thought it was a good experience to ride a bike to visit the city. Therefore, he wondered whether there could be such services in China, so he looked for entrepreneurs in this field. First, I talked with ofo. Ofo only worked on campus, which didn’t meet expectations. Later, I met Wang Xiaofeng and thought that moBay was good and the car rental price was very cheap. At that time, moBay had just finished financing round B, and Xiangfeng China immediately decided to invest in it. Therefore, with moBay’s round B + financing, Xiangfeng China invested US $8 million.
Over the past 13 years, Xiangfeng China has followed this concept and invested in SES, moBay, Southeast Asia Version didi grab, Shenzhen Chipscreen Biosciences Co.Ltd(688321) and other companies. Among them, the first investment in Shenzhen Chipscreen Biosciences Co.Ltd(688321) has brought 300 times the return to Xiangfeng China.
Unlike many strong VCs, Xiangfeng China does not interfere in the daily affairs of the invested enterprises, and the real control of the enterprises is in the hands of the founders. This is also the ancient tradition of Xiangfeng. In the early days, as a government state-owned enterprise, the government only provided directional principle guidance and did not interfere in daily affairs. Zheng Juncong believes that investors should respect the role of entrepreneurs as the helmsman of the enterprise, not easily interfere with their internal management, and provide corresponding services and support from the core needs and difficulties of entrepreneurs.
The following is an exclusive interview with interface venture capital:
interface venture capital: in 2013, at the time point when you decided to invest in SES, the United States was burdened with countless famous new energy battery benchmark companies. A123 company announced bankruptcy. Everyone is very cautious about new energy battery companies. Are there any doubts about investing in SES?
Zheng Juncong: during the IC meeting, investors asked this question. I explained that the technical route of SES is different. First, due to the limitation of lithium metal processing technology, the width of self-supporting lithium film is not enough, and the battery is not large, so it can not be used in electric vehicle battery. SES breaks the width limit through its unique graphical lamination and lamination technology. The current lithium battery has an energy density of 500-400 yuan, which is far from that of the mainstream lithium battery.
The second is the electrolyte. SES uses a special solvent synthesized exclusively, and the phase transition temperature is lower, which can not only improve the thermal stability of lithium negative electrode, but also make the positive electrode have good oxidation stability under high voltage. In this way, the lithium negative battery is not flammable and its safety is greatly improved. As long as the founders can do it, there will be a market.
interface venture capital: Why did you pay attention to batteries ten years ago?
Zheng Juncong: at that time, Xiangfeng was doing a feasibility study on electric vehicles. I was born in the electronics industry. There is a saying in the electronics industry that if the method of developing electronic products is applied to the automotive industry, there may already be flying cars, but it is obvious that there are no flying cars on the market. Has the final say, the automobile industry has not been very innovative for many years. The reason behind this is that the supply chain is too fixed. The factory car has the final say of several game player, they have no motive to change, and the supply chain of petroleum is also very fixed. In addition, diesel and gasoline engines will also cause air pollution. So we began to think about how to make electric cars possible? The key is the battery.
interface venture capital: at what point in time has the battery become so concerned by capital in China?
Zheng Juncong: after the emergence of new energy vehicles, people naturally began to pay attention to new energy batteries.
interface venture capital: how to find SES?
Zheng Juncong: after we decided to invest in the battery field, we looked for companies to develop batteries. Later, a friend said that a very powerful doctor at MIT had developed a new material suitable for batteries, which had better performance than the existing batteries on the market. After hearing this news, we were very excited and flew to Boston for the first time, I met Hu Qichao there.
interface venture capital: what do you think of the two routes of solid-state lithium metal battery and hybrid lithium metal battery? Why did SES choose the latter?
Zheng Juncong: theoretically, solid-state batteries do have better performance, but the manufacturing technology is very difficult. Even if it can be realized technically, the price is very high. Hybrid lithium metal batteries are most likely to become the power center of the next generation of new energy vehicles: first, the energy density of lithium metal batteries is very high. Compared with the power solutions currently used in the new energy vehicle market, lithium metal batteries with the same volume can double the energy storage; Second, the advantage of fast charging will be conducive to the commercialization of products. Taking SES power battery as an example, it only takes 12 minutes to charge from 10% to 90%; Third, compared with the current power battery, the price has not increased much. It is a choice of high quality and low price.
interface venture capital: what do you think SES will develop into in 5-10 years?
Zheng Juncong: I believe SES will become a leading enterprise in automotive power batteries. Many electric vehicles on the road are loaded with SES batteries.
interface venture capital: what does listing mean for SES?
Zheng Juncong: first, we can raise more funds, improve R & D capability, expand business and meet the needs of more customers. Second, SES products have not been mass-produced yet. Listing can better show their technology and differentiation ability to the outside world. Third, after becoming a listed company, SES can also attract more excellent talents.
interface venture capital: what qualities do you value most about entrepreneurship?
Zheng Juncong: first, love is very important. You have to start a company out of love and change the world through the products you create. Second, all start-ups are the same. It takes a long time to start and often has to go through twists and turns. It is common to encounter troughs and difficulties. How to stabilize your mind and keep moving forward is very important.
interface venture capital: what kind of person is Hu Qichao, the founder of SES, in your eyes?
Zheng Juncong: super smart, perseverance and enthusiasm. No matter what difficulties he encountered, he was determined not to give up, and he was very confident in lithium metal batteries and would lead the company even in the face of challenges.
interface venture capital: some people think that investors should not do strategic guidance, because investors are certainly not as knowledgeable as entrepreneurs. Do you agree?
Zheng Juncong: theoretically, it’s right. Entrepreneurs must know the industry better than investors, but they may not know much about business and financing. At this time, investors should help entrepreneurs in these places.
interface venture capital: what is your greatest help to SES?
Zheng Juncong: around 2015, SES needed a new round of financing in order to strengthen R & D, but at that time, the financing was blocked, and the company was unable to pay employees’ wages. He took out his own money to subsidize the company and kept seeing investors, which left a very deep impression on me. I went to talk to LP Temasek, and then Temasek led the round.
interface venture capital: as the helmsman of Xiangfeng China, if you want to score yourself, what score will you give.
Zheng Juncong: I don’t do self-evaluation. I prefer to do real things and wait for the market or others to evaluate me.
interface venture capital: the 91 wireless you invested in was acquired by Baidu in only two years. As the beneficiary of the company acquired by a large manufacturer, what do you think of the hot discussion about the abolition of byte investment overnight? Some investors are worried that there is another lack of exit channels for enterprises.
Zheng Juncong: Internet companies or mobile Internet companies may be affected, but I think it has little impact on technology and biotechnology companies.
