Red Child Transformation Power Trader failure Investors are all pinned on sale

The IPO is hopeless, the red child Investor's hope can only rely on to sell the company wholesale.

Red children, a mother and child Electric company that once announced an IPO in 2011, have recently been spread around seeking opportunities for mergers and acquisitions. Is talking about the object, and in recent years in the electric business industry has sprung up in the Suning easy to buy.

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This week, bond fund investment strategy 39 fund companies in the first half of earnings more than 50 billion fixed income Trust Weekly (8.27-9.2) July 30, a reluctant to give the name of the industry to the "it times", said that Suning easy purchase of red children has made new progress. "Suning easy to buy the financial staff has been stationed in the red child nearly one months, the two sides of the cooperation is in the audit accounting stage, once the specific price calculation, it should be officially announced." "

"There is no precise information, whichever is the information disclosed by the listed company." "For mergers and acquisitions rumors, suning Tesco Market Management Center, Deputy director of the Min is very strict.

Multiple rounds of investment down, red child management, the only remaining founder of Xu Xianxin's stake, has been diluted to very low.

"In 2006 and 2007, the country's hottest electric dealer is not Jingdong mall or when, but red children." "A red child's senior executive told The Economist that as China's earlier involvement in the mother and infant market, the red children established in 2004 have had a very brilliant performance."

However, the differences between the founders, VC of the company's business "kidnapping", all make red children in the electricity business, and this, also let the direct mail company once had the glory in endless toss and burn. Now, the once-booming China's mother and child supplies the first brand has become a complete hold-up VC, fully embodies the differences in investment entrepreneurs and the transformation of the failure of the electrical business samples.

Success or failure direct mail

Red children started out by selling mother and child supplies. At the beginning of the establishment of a special editorial office, the production of direct mailing ads (DM) directory, put into maternal and child hospital, living community. At rush hour, the red child's direct-cast product catalogue runs up to 1.5 million copies per issue. As the catalog becomes more influential, red children start to put other brands of commercial advertising in their catalogues, which is used to bridge the costs of printing and delivery of direct-investment business.

By 2006, the "Red Child" website online, to achieve the company's entrepreneurial team "directory Direct sales + E-commerce + Traditional Logistics" concept of entrepreneurship. In 2008, Red Children's sales revenue has been close to 1 billion yuan, the same industry rivals far behind. "China's first share of children's consumer goods," said Dr Frog in September 2010 in the Hong Kong motherboard listing, its current year's revenue scale is only 630 million yuan, the market scale is far less than red children.

"From the end of 2008 to 2011, the red children themselves lost their way. "The red Child has nothing to do with the growth of China's maternal and infant supplies industry," said the senior executive. In his view, the reasons are both the pressure of the external competitive environment and the factors of the entrepreneurial team itself.

In the long period of attention to the Red child mode of E-commerce observers, the project manager of the Ruzenwang of the company, in the lost 3 years, the red child has been in the directory of direct sales and e-commerce between the two major business wandering around. "With the rise of E-commerce, coupled with a more standardized mother and child goods, direct mail role is getting smaller and lower conversion rate, convenience is getting worse." Ruzenwang said that the red child's entrepreneurial team should have been aware of the company's way out of E-commerce, but because too attached to the value of direct mail to the company, its transformation to the electricity business is not thorough.

According to the Red Children's own financial data, by 2010, it recorded a total revenue of about 1.5 billion yuan, of which the direct mail business occupies about 900 million yuan share. Until the end of 2011, with the rapid contraction of the business, red children were forced to transform into a complete E-commerce company, the direct mail division was canceled, the form of catalogs farewell to the sales function, as the old customer precision marketing channels and tools.

"2010 years later, with the rich and the cat, Beijing East, when the comprehensive class of electric dealers to join the mother and child supplies, and the red Child's business layout and a succession of mistakes, the situation has become more difficult." "Ruzenwang said.

May 2010, Jingdong Mall involved in the mother and child business. In May this year, Jingdong announced that its mother and child channel March sales breakthrough of 100 million yuan, become China's mother and infant industry first; 2011, Dangdang Focus on the development of maternal and child business, and by the founder, Chairman Yu personally responsible for this business. Last November, Dangdang CEO Guoqing (Weibo) said publicly that when the mother and child commodities monthly sales reached 30 million yuan, growth rate of more than 300%, has surpassed the red child. This June, Dangdang said its baby child platform has become Dangdang second only to the books of the category platform, the monthly sales broke 100 million yuan.

In particular, let red child executives regret that, due to the electric business giants have intervened, compared to the online business, this period of time in China's mother and child market line business day better than much.

Recently, the headquarters in Shanghai, the mother and infant old brand baby room with nearly 100 direct stores announced the application of the IPO, and red children IPO for many years, so far hopeless. In contrast, the same as the red Children originated in Beijing, another professional mother and child business friends of the baby, the child, in recent years also will develop the focus of the construction of physical stores.

VC will highlight

November 23, 2011, Li Yang, one of the founders of the Red Child, sent a simple microblog. "Do you remember today 6 years ago," said Yang, another founder of the Red Child on Weibo? We had a dinner at the Lido Hotel with two of our leaders at the time, signing up for the Red Child's investment agreement. "

On Weibo, Li Yang had already left the red Child and founded an insurance agency. Yang also after the "Long vacation" way to get out of the company's management. Meanwhile, another company founder, Ma Jianyang, has been forced to resign. Red children set up a start-up "1 (CEO) +3 (executive general manager)" management structure, so far only the chairman and CEO Xu Xianxin one person.

"VC hope that the red children can maintain a 300% annual growth rate." "The person said, but in 2008, Red Children's market base is not small, and the mother and child industry capacity is limited, to meet the growth rate of VC requirements, the company must start a diversification strategy, and Li Yang and others advocate focus on mother and child main business. This divergence has become the biggest contradiction between the founder and the investment team, and has been slow to resolve.

"Li Yang, Yang, such as the founder of the Red children have left, VC designated managers in accordance with the group company structure, accept VC control." "In Ruzenwang's view, the difference between entrepreneurs and professional managers is a direct trigger for the decline of red children."

The origins of the red Child and VC can be traced back to the November 2005, when the Arctic light and venture capital fund, NEA, made a first round of 2.5 million dollar investments to red children. Since 2006, the Northern Lights and NEA additional two rounds of investment in a total of 3 million U.S. dollars. In August 2007, Red Children introduced a third round of 25 million U.S. dollars in financing, by the new shareholder TDF (Kleiner) investment. After that, three VC again to red children made a number of rounds of additional investment. According to industry estimates, three investors have invested 120 million dollars before and after the red children.

Many rounds of investment have been diluted to the very low stakes held by the Xu Xianxin founder of the Red Child management. And some people in the industry to the Economist, in 2010, Xu Xianxin led the red Child's diversity and Web site innovation in a number of unsuccessful attempts, Xu Xianxin in the company has also been VC "overhead", the responsibilities of the vice president of the business, direct reporting of the object is already three VC agencies. "Because of the company's prospects are not optimistic, VC eager to withdraw, the founder of the unintentional also unable to reverse the situation, red children seeking to sell is inevitable." "The person said.

It's hard to unload

In Shenzhen Electric Shock Commerce Co., Ltd. founder Shangxiang, Red Children although the situation is worrying, but there is still a certain value of mergers and acquisitions. The reason is that the company in the maternal and infant supplies industry for many years, has accumulated a certain degree of visibility in the user. And, after many years of integration of maternal and infant supplies industry supply chain, as well as the accumulation of electrical business professionals, for some of the rapid rise of the comprehensive type of electrical business, are more valuable. This is also the reason that Su Ning becomes red child "gossip object".

Weimin, vice chairman of Suning Appliance, said in early July at a meeting of the open platform for Suning, "has begun to contact some vertical category of electrical goods licensing, may establish Taobao platform model, and red children is a typical vertical type of electric companies, which also let suning easy to purchase and buy red children added a bit of credibility.

But according to Shangxiang understand, because the early VC investment is too large, VC expectations too high, red children to sell when the valuation will become a headache problem.