Private equity is still a popular vocation for investment bankers in China, despite the recent trend for some to move back to the sell-side. However, there is one man who worked in private equity for five years and decided to pack it in…to start a juice business.
So you were working in private equity. Can you briefly describe how it was like?
Our projects were almost everywhere around China, so I just stayed in office for about one day a week, with the rest of the week travelling. My PE fund was set up by a state-owned bank, which has quite a conservative investment style. As a result, most of our projects were asset-heavy industrial ones, which means they were all scattered around the countryside outside some remote tier-three cities.
And we were really busy, given that we were the only PE fund of that bank, but projects were coming from branches all over China. We only had about 20 people at that time, so everyone was buried under piles of projects. Simply speaking, we had very few people, but we had to spend a lot of money, with investment return targets set by the bank. We were under huge pressure.
Is it because of this pressure that you left the PE?
Not really. Leaving PE had to do with my personal goals. I’ve always been a restless man, with an entrepreneurial spirit. During my years in private equity, I had the chance of meeting numerous entrepreneurs, all of whom were extremely passionate about their product and services. I admired their passion, and felt inspired. It made me realize that I should create something of my own, and find my own value out of it.
Did you not find value in private equity?
True, I was achieving a lot at the PE, bearing huge pressure. But that was the case for everyone in the industry. It’s not something unique to me. So when the right time came, when I’ve found a business partner, firmed up the idea, got the money and I felt it was the right time. I was not starting a business for the sake of starting it. It was just the right time.
Can you describe your business in a simple way?
I’m doing cold-pressed juice. It first started in US and Europe around 2008-2009, and was seen to replace freshly-squeezed juice eventually. I think it’s a very good idea to try out in China. The technology of making juice like this means that there is no additives, so it’s raw and organic. However, the downside is that its shelf life is very short, probably just 48 hours. You need to order a few days in advance if you want to have it. This also places a very high level of standards on us.
What’s your role in this business?
Our company is named “Juice Joyce”, and I’m now the CEO, responsible for day-to-day operations. My business partner is based in Shanghai, taking care of marketing and branding. I’m based in Wuxi because our central storage and laboratory are here.
Starting a business requires capital. How did you get your initial capital?
I was in private equity, and my business partner was a mutual fund manager. We had a discussion and agreed that we should do an equity crowdsourcing, targeting some well-known people. So we crowdsourced 40% of the stake to eight individual shareholders, including film director, socialites, venture capitalists, etc. All of them are high achievers in their own areas.
When you decide to leave the PE to start your own business, how did your friends and family react?
My mother didn’t quite understand me at the beginning. From her perspective, I was doing a very good job, both in terms of income and social status. She couldn’t understand why I would give up all this and start a business in an area I had no previous experience. It took me quite some time to convince her, explaining to her what I could gain from the venture, and how I could benefit from this experience. I could only do it slowly. In the end she was convinced. Now she fully supports my business.
As for my friends, all of them were very supportive. They all think it’s a very interesting thing to do, and offered me a lot of help with their own resources in their respective areas. I’m very touched by this. To be frank, starting a business is not entirely pleasant. It’s full of grievances. The warm support from my friends is a source of my confidence and drive now.
You were under huge pressure when you worked for the PE. How’s the pressure now that you are running your own business?
It’s also huge, but it’s a different type of pressure. The most straightforward pressure is, look at my staff in the office, I have to pay them every month! To do this, I have to have orders coming in stably, better if I can have a modest growth, and ideal if I can have a positive cash flow every month. This is the most conspicuous pressure.
I also have pressure from the investors, because I need to think hard all the time how to grow our business quickly.
You have left banking now. Can you comment on the industry, first on the upside?
I have to declare that my former PE is a bit unique, in that it belongs to a traditional state-owned bank so is a bit different from many other PEs in the market. The upside to me is that I’ve got a chance to review a large number of projects, industries and business models. The more I review, the more experience I have.
The other upside is of course the income. Our income doesn’t just come from salaries or carries. As you may know, we are allowed to invest our own money into the projects, some of which are in the process of IPO or private placements. The return could be massive once the company is listed. Sometimes the contract would even require an investment manager to put his own money into it so that the risk and returns are aligned. In general, for each of the project we work on, a certain proportion of the stake would be kept for the project team. I think it’s a type of employee benefits. The result is, after several years, my financial status is quite good, so I don’t have to worry too much about money now.
How about the downside?
Of course there are downsides. It’s true that the long hours and huge pressure are bad to your health. But I don’t think that’s too big a deal. Everyone who goes to work in front office is clearly aware of that, but it comes together with a good return.
There are people who get jealous about our benefits and extravagant spending on flights and hotels. Well, that’s largely true. We normally stay at the best hotels in the region where the project is, and we fly business class from time to time. But to be honest, we were simply too busy to enjoy such extravagance. Once on site, we work with the company during the day, and dine and wine together with them until late into night. And you can’t go to bed after that, because you need to write reports. The pace is very quick, and you don’t have much time to sleep. I felt quite excited when I first started, but gradually began to feel the pain.