How this PE Firm won big in China – It didn’t bet on tech or AI
An interview with He Yu of Black Ant Capital, the PE firm behind Popmart and Laopu's surprise success
Investing in the consumer sector may not sound as sexy as the sought-after AI or high tech, especially when consumers in China are facing the biggest economic headwinds in decades. However, some investors have managed to win big from this seemingly unglamorous area.
This year, the real 'miracle' stories in China's investment scene aren't emerging from the usual tech giants like Alibaba or Tencent. Instead, names like Laopu Gold and Popmart are the ones generating astonishing buzz. Laopu Gold (HKG: 6181, +159% YTD and 878% 1Y), an artisanal jeweler, saw its shares explode over 8-fold after its Hong Kong IPO in June 2024, while Popmart (HKG: 9992, 102.41% YTD and 416.81% 1Y), the art toy phenomenon that took the market by storm a few years prior, continues to demonstrate remarkable brand power.
These aren't your typical blue-chip or highly sought-after AI investments; but their dramatic, almost fantastical, ascent has surprised market veterans and signals that smart, and sometimes contrarian money is finding extraordinary returns by understanding the deep shifts in China's evolving consumer landscape. (Subscribers of Baiguan should've captured these opportunities, hopefully, after our multiple mentions of Popmart and Laopu since last year)
What's the common thread behind these standout triumphs? One name: Black Ant Capital, the PE investment firm that astutely backed both. Today's newsletter translates an exclusive interview by the Waves, a leading news outlet by 36Kr (NASDAQ: KRKR), with its founding partner, He Yu.
Why is this conversation so vital for you right now? The narrative of 'New Consumption' in China has been a turbulent one. Just a few years ago, 'consumption upgrade' was the dominant investor mantra. This perception swiftly pivoted towards 'consumption downgrade' as the nation navigated the impacts of COVID-19 and a significant economic slowdown, exacerbated by the bursting of the real estate bubble. A palpable sense of 'despair,' as some insiders termed it, settled over many consumer-focused investors and industry professionals. Yet, amidst this widespread gloom, Black Ant Capital was among the rare few who stood firm, resolutely continuing to identify and invest in the long-term potential of China's consumer sectors. This interview provides a crucial overview of the mindset behind this resilience, revealing why they believe profound investment opportunities persist in China's consumer sector and how they uncover them.
Furthermore, Chinese consumer values are fundamentally distinct and are evolving at lightning speed. You might have heard the old adage that 'China can manufacture anything but a luxury brand.' He Yu’s investment in Laopu Gold directly challenges this, underscoring his conviction that powerful storytelling and deeply resonant brand values are increasingly critical to capturing the Chinese consumer’s heart – and wallet. These evolving consumer preferences and the unique cultural touchpoints that drive them can often fly under the radar for international investors and business executives. This interview, therefore, offers invaluable, actionable insights into the changing psychology of Chinese consumers – a deep dive essential for anyone keen on truly understanding and succeeding in this complex but exceptionally rewarding market.
Below is the translation of the original interview by the Waves.
Waiting for Godot—Investor He Yu finally hooks two big fish in China’s consumer market
By Liu Jing
Talk of “New Consumption” in China may feel outdated today.
The last surge of investor enthusiasm was three or four years ago, followed by a long silence. And few investment firms have embodied that cycle of boom and bust quite like Black Ant Capital (BA Capital).
At the end of 2020, Black Ant made a dazzling debut with Pop Mart (9992.HK), a company that went public with a valuation exceeding ¥100 billion (approx. $14B). Soon after, the firm raised nearly ¥4 billion (approx. $550M) across both RMB and USD-denominated funds, marking the largest consumer-focused raise that year.
But the boom quickly faded. The consumer sector fell out of favor, and investment interest soon evaporated. Then, in June 2024, a forgotten narrative roared back to life. Lao Pu Gold (6181.HK) was listed on the Hong Kong Stock Exchange. Its shares surged more than 20x, briefly brushing HK$150 billion in market value. Just six months earlier, Black Ant had quietly led Lao Pu’s first—and only—funding round in its 15-year history, long before the market took notice.
For Black Ant Capital, the four years between those two IPOs were anything but smooth.
They stumbled into pitfalls, took wrong turns, celebrated milestones, and wrestled with setbacks.“But we never thought about walking away,” says He Yu, founding partner of Black Ant. “We’re just fortunate to have found our way back to the right track.”
In this candid interview with Waves, He reflects not only on Lao Pu’s breakout, but also on the fund’s quieter, more uncertain years—a rare window into the life cycle of a consumer-focused investment firm navigating its own growing pains.
Perhaps it’s precisely because of these reversals that He has developed a more grounded view of what investors can and cannot control. In an era dominated by AI hype, he openly admits: he wants to stay as far from AI as possible. He fully recognizes that tech has long overshadowed consumer investing in both hype and capital. His stance may serve as a form of self-preservation, but it also reveals a rare kind of discipline.
Part 1: Lao Pu Gold’s customers are Cartier buyers, not traditional gold shop patrons
Waves: There are so many versions of your investment story in Lao Pu Gold out there. What actually happened?
He Yu: We first heard about Lao Pu Gold back in 2019, when Michael (Zhang Peiyuan, my co-founder) met with founder Xu Gaoming. We showed investment interest at the time, but they weren’t open to taking new investors. Fast forward to the second half of 2023. Some intermediaries were introducing investors to the company. We didn’t go through them. We proactively reached out to Xu again and found out they were planning to go public in Hong Kong, and we ended up leading that round.
Waves: That was Lao Pu’s only funding round before IPO—sounds like a smooth story, but why did they choose you to lead?
He Yu: You could call it fate — we kept thinking about them, and eventually it came back around. We always believed Lao Pu Gold was a rare gem of a brand. Even when there was no opportunity to invest back in 2019, we stayed in touch, kept meeting, and talking. Xu remembered and appreciated that early engagement. By 2023, the environment was rough, and even though a few investors were circling, interest was tepid. There was no consensus view on the company — some questioned Lao Pu’s positioning, others doubted the market potential.
Waves: That lack of consensus still exists. Some say Lao Pu Gold is just a budget alternative to luxury jewelry; others say it’s no different from traditional gold shops.
He Yu: I visited their SKP Beijing store when I first heard about them. It was just a small island counter at the time, but the gold they used looked different — darker, more weighty, almost museum-like. That first impression stuck. Later, as I learned more, I saw that Lao Pu’s products, stores, and services were all built around a coherent cultural system. Walk into any store and you’ll see an instantly recognizable design language. They’ve embedded Chinese heritage into every brand touchpoint. This is a brand built around Chinese traditional culture.
Waves: But is culture alone enough? People joke that Chinese manufacturers can make anything, except a luxury brand.
He Yu: Building a high-end brand for high-net-worth individuals (HNWIs) means creating a full system — product, content, channels, service — all driven by cultural storytelling. That’s incredibly difficult, and there are few successful cases in China. Building a premium brand takes more than vision — it takes real restraint and patience. We often talk about two types of companies: those driven by efficiency and those driven by experience. The efficiency-driven ones need to scale fast to win. But for experience-driven ones, it’s the opposite — early on, it’s not about how quickly you expand, but how carefully you shape the brand. You have to go slow to go far.
Take Lao Pu, for instance — from day one, they only pursued the most premium retail locations, firmly steering clear of mid- and low-end malls. Even in a vast market like Shanghai, they operated just one store in Yuyuan for over a decade, refusing to expand until the right site emerged. That’s a rare kind of strategic patience. Also, culturally-driven brands are going to become more important in the future.
Waves: Compared to the long gestation of traditional luxury houses, Lao Pu’s rise seems fast.
He Yu: That’s the media environment today — viral moments accelerate brand building. The more Lao Pu sold, the more attention they got.
Waves: At one point, the company traded at 130x earnings. Isn’t that excessive? Even Hermès topped out at 60-something.
He Yu: I think the fundamentals are solid long-term. In the short run, it’s about delivering on performance.
Waves: Many hot consumer brands fall victim to fashion risk.
He Yu: Not Lao Pu. What never goes out of style? Maslow’s basic needs — and gold is timeless. The craftsmanship, the heritage — it’s rooted in thousands of years of Chinese tradition. Also, this is a brand driven by cultural creativity and interpretation. That’s very different from the standard consumer brand model, where everything revolves around a commoditized product. Everything we see in Lao Pu Gold today is a reflection of its brand ethos, crafted entirely by the founder himself.
I’ve visited many luxury stores — you’re scrutinized the moment you step in: Are you a real buyer? Do you have purchasing power? Even with money, the atmosphere often feels cold and judgmental. At Lao Pu, it’s a completely different experience. You can stroll in at ease, without pressure or pretense. The staff treat everyone equally, with genuine warmth, and none of them work on commission. That difference in service isn’t accidental — it’s a direct expression of the brand’s cultural philosophy.
Waves: You’ve repeatedly highlighted Lao Pu’s product and brand-building efforts. Would you say all of that inspiration comes directly from its founder, Xu Gaoming?
He Yu: Absolutely. Xu Gaoming has spent decades goldsmithing. He’s well-versed in Buddhist philosophy and art. People criticize Lao Pu for low R&D spending, but the real IP is in the founder.
Waves: With gold prices soaring recently, many buy Lao Pu Gold to hedge. What happens if prices fall?
He Yu: Sure, Lao Pu Gold absorbs some of the demand that used to go to luxury jewelry. When the economy is tight, people want something tangible, something with cultural and aesthetic value. But I don’t think hedging is the core reason consumers buy Lao Pu. It’s a secondary driver that lowers the psychological threshold.
Waves: But you called Lao Pu Gold a luxury brand, and luxury isn’t exactly thriving these days. Cartier and Van Cleef & Arpels, for example, have reported three straight quarters of sales declines in Asia.
He Yu: That’s true, but what’s changed is the growing confidence of Chinese consumers. There’s a deeper willingness now to objectively appreciate and emotionally connect with traditional Chinese culture, as long as the brand is done well.
In China, especially, the old playbook for global luxury is losing traction. These brands used to rely on monopolizing a handful of premium media outlets — high-end magazines, fashion shows, airport billboards — to build prestige and maintain exclusivity. That strategy required enormous capital and social influence, but it’s no longer as effective in a more democratized media landscape.
Waves: So fashion is a form of power?
He Yu: Exactly. Think about how vague luxury ads used to be — all mystery and aura. That mystique created worship. But the media landscape is democratized now. Who still reads Vogue? Who watches two fashion shows a year? Some, sure, but the cultural influence is fading. Creativity and philosophy now matter more than monopoly.
I think most Chinese consumers don’t resonate with Western luxury culture. As the pedestal fades, so does the brand power.
Waves: So what’s Lao Pu’s marketing secret?
He Yu: They don’t do much marketing. They believe good products and content will spread organically.
Waves: There are many established gold brands in China — including Hong Kong’s “Big Four” jewellers: Chow Tai Fook, Chow Sang Sang, Luk Fook, and TSL Jewellery. Why didn’t a story like Lao Pu’s happen to them?
He Yu: For many years, most gold buyers in China were driven either by tradition or by the desire to preserve value. That market is big enough, and I don’t think Lao Pu Gold is trying to take share away from those players. But it’s important to note: most traditional gold brands win on supply chain efficiency and trust-based reputation, not on brand premium.
Waves: They never imagined gold could be sold, not by the gram.
He Yu: Exactly — it goes against convention. But when something defies convention, there’s usually a reason. And as investors, we’re trained to notice that.
Waves: How much did you invest?
He Yu: Around RMB 170 million across USD and RMB funds (approximately USD 23.5 million). That’s a mid-to-large deal for Black Ant.
Waves: Some consumer investors have said that deals like Lao Pu Gold or Mixue Ice Cream & Tea don’t offer much of a sense of accomplishment — they’re pre-IPO rounds, and don’t really reflect an investor’s foresight or leave much room to add value.
He Yu: From an investor’s view, of course, we wish we could have gotten into Lao Pu Gold earlier. But consumer investing isn’t confined to the VC model, and Black Ant has never positioned itself as a pure VC fund.
Our investment strategy is built around the unique dynamics of the consumer sector — sometimes we enter early, sometimes later. But we stick to one principle: only back companies that create substantial long-term value and founders who are truly committed to the long game.
Part 2: How Black Ant built its name—funding struggles and staying under the radar
Waves: Lao Pu Gold seems to be your second Pop Mart. Many people first heard of Black Ant through Pop Mart. How did you initially find Wang Ning?
He Yu: That story is pretty serendipitous. I had just left ByteDance and hadn’t moved back to Shanghai yet. One day, I saw Pop Mart on the cover of Yicai Magazine. Later that day, I grabbed a shared bike from the subway and rode to the PopMart store at Beijing Financial Street Mall. It was February, freezing cold, and my hands were numb. The mall had just opened, so it was nearly empty inside—but there was already a line of young women outside Pop Mart. Watching them, I thought: this brand is onto something.
Waves: Some early investors who met Wang Ning said he lacked charisma and expression. What was your impression?
He Yu: That wasn’t the case with me. He loved using metaphors—Jay Chou, Wong Kar-wai… We joked internally that people who speak in metaphors tend to be thoughtful; they describe essence and connect ideas better. I remember he talked about how people’s time was becoming fragmented, making it harder to create blockbuster content IPs. But he believed IP companies didn’t need just one great title—they could be platforms that attract great content.
Waves: Was this line of thinking non-consensus back then?
He Yu: It was all new. We were probably lucky to meet him at a point where he’d started forming these ideas. A bit earlier, he might not have had this structured perspective. It was Sonny Angel and Molly who gave him deeper user insights and helped shape his commercial thinking.
Waves: So your logic for investing in Pop Mart was more about the founder than the business?
He Yu: Partly, yes. But we’re not a pure angel fund that just picks players. That method—backing people alone—can work, but it’s risky. Some turn into Messi, most don’t. The idea still has to be sound. In February 2016, I didn’t fully grasp everything Wang Ning was saying—but I didn’t dismiss it. That might have been our edge.
Waves: You officially invested in early 2018. What happened in between?
He Yu: The actual investment came at the end of 2017. It was right after we’d spent 18 months fundraising. Funny enough, that delay turned out to be a blessing. Those two years gave us time to observe and deeply understand companies. It made us more disciplined. The same goes for founders—those who struggle to raise early money often build stronger foundations.
Waves: Why was Wang Ning still willing to take your money after such a long wait?
He Yu: He wasn’t actually raising more capital. From our first meeting to the IPO, he never took in new funding—it was all secondary share transactions. Even our first investment was buying into someone else’s stake. I remember someone offered 1.5% of secondary shares and asked if we wanted in. I said yes immediately.
Waves: StarVC founder Fang Yuan once said Pop Mart’s fundraising journey could be a book. You invested in four rounds. How did you pull that off?
He Yu: We grabbed every opportunity to buy in. Even after the IPO, there was still no strong consensus around Pop Mart.
Waves: One investor in Pop Mart said you’re especially good at dealmaking.
He Yu: I’d say our whole Black Ant team is strong on deals. People often think deals are just about bargaining, but good deals create value. For example, we facilitated the merger between Busy Snack and Zhao Yiming—a rare case of consolidation in consumer brands.
Waves: That deal helped put Black Ant on the map.
He Yu: Definitely. It was a milestone for us. Fundraising was brutal. I left my job in 2016 and spent a year and a half raising money. That slow start gave us time to reflect, to avoid rookie mistakes. If we’d had money right away and deployed it quickly, we might not even be around today. Looking back, that hardship was a gift.
Waves: Back in 2016, you weren’t a well-known name among your peers. Where did your courage come from?
He Yu: It’s true. I was set on doing this. I quit ByteDance and just started. I’m the kind of investor who’s part entrepreneur, half rational, half emotional. I don’t wait for perfect timing.
Waves: How long did it take to raise your first fund?
He Yu: I started in February 2016. My goal was RMB 500 million. We didn’t hit that. After a year and a half, we raised RMB 380 million. For that entire time, I had zero income. But I had already built a small team with expenses to cover. I might be one of the few people in this industry who sold a house to start a fund.
Waves: How much did the house sell for?
He Yu: A few million yuan—a school-district apartment in Shanghai.
Waves: At the time, the hottest sector was internet tech. Why did you choose the consumer sector?
He Yu: Back in 2007, I was at PwC doing M&A advisory. One project involved selling a controlling stake in a Chongqing bakery chain. After that, they moved me to the consumer retail team. Over four years, I worked on many deals and realized I really liked this space. Also, after researching the U.S. and China markets, I felt there was a big opportunity to build a consumer-focused fund here.
Waves: Still, it’s a big leap from consulting to investing.
He Yu: Actually, I got into consulting as a stepping stone. In college, I didn’t even know what VC was. But I loved watching business talk shows on China Business Network (CBN). There was one called Boss Town, with guests like Xu Xin, Zhang Suyang, and Wang Ran. It made me see that this was a career that rewarded individual judgment. I even cold-emailed some VC funds. No replies. Then a friend told me the M&A team at one of the Big Four was close to venture capital. So I went that route.
Waves: So consulting was your way in. But the endgame was always investing.
He Yu: Exactly. I’ve had that goal since 2006. And that fire still burns today.
Part 3: Our biggest bet was staying in consumer when others walked away
Waves: After Pop Mart's triumphant IPO, consumer markets quickly lost momentum.
He Yu: That’s right. I’ve been in this industry for over a decade and have seen multiple cycles. But two things stood out in the past few years. First, the boom-and-bust cycle in primary market consumer investment and fundraising was unprecedented. Second, the broader macroeconomic pressure was something our generation had never encountered before.
Waves: What were some of the hard lessons Black Ant had to learn in this downturn?
He Yu: The strong start gave us confidence to tackle more ambitious ideas. Our long-term aspiration at Black Ant has always been to emulate 3G Capital, which transformed the global beer industry. So we looked into coffee. In 2021 and 2022, we studied JAB Holdings and tried our hand at integration. We assembled a team, launched a coffee brand, and opened offline stores.
Eventually, we realized it was too early for a consolidation strategy in this sector. We shut down the stores. But the experience was valuable: it helped us understand when the right time is to attempt a 3G-style playbook, and sharpened our judgment on early-stage companies.
Waves: HEYTEA was also a very zeitgeisty investment. Back then, investors believed in "consumption upgrades," but that narrative has shifted to segmentation and value.
He Yu: Since Black Ant’s inception, we’ve focused on brands that make life better. HEYTEA, Pop Mart, and our earliest investments all share that DNA. But we realized we couldn’t only focus on Tier 1 and Tier 2 markets. Take Pinduoduo, for example—it brings value to consumers by making goods more affordable. Isn’t that improving lives, too?
In 2022, we went to Indonesia to research local trends. There, Mixue Ice Cream & Tea is perceived as aspirational. That’s a consumption upgrade from the local perspective.
Waves: So why didn’t you invest in Mixue Ice Cream & Tea?
He Yu: Their funding round was in 2020. I’ll admit, at that time, we didn’t fully understand lower-tier markets. That was a turning point. In 2021, we did a systematic study of those markets and eventually invested in brands like Busy Ming and YuanJi Dumpling. As an investor, you constantly need to learn, reflect, and iterate.
Waves: With the current landscape of tea drinks, how do you think HEYTEA will evolve?
He Yu: With tightening wallets, HEYTEA will definitely be making adjustments—they already began adjusting prices in 2022. But it will always remain HEYTEA; it won't become Mixue.
Waves: After backing so many consumer startups, do you see common traits among the most successful founders?
He Yu: We actually built a founder model after interviewing about 30 consumer entrepreneurs over two years, including several long conversations with Pop Mart’s Wang Ning. The most important traits we identified: strategic thinking, courage to challenge, self-awareness, and user insight. In consumer sectors, user insight weighs especially heavily. But self-awareness determines a founder’s ceiling.
Waves: What was your most critical decision during the consumer market downturn?
He Yu: To keep investing in consumers. That was our firmest conviction. In early 2022, we saw some of our portfolio companies face performance challenges. Then came market corrections, worsening China-U.S. relations, and the halt of consumer IPOs on A-shares. But we didn’t stop. Our view was that consumer investment must continue—in fact, downturns bring the best opportunities. And we believed primary market valuations would normalize. Looking back, many of our most meaningful investments were made in 2023.
Waves: After all this, what new realizations do you have about investing in consumer?
He Yu: None of the "New Consumption" themes people were excited about were wrong. Domestic substitution, generational shifts, aesthetic upgrades—they’re all still valid. And recent performance in Hong Kong stocks reflects a renewed recognition of these consumer companies.
But the growth isn’t as fast, and it doesn’t need as much capital. Unreasonable valuations hurt both investors and founders. If every VC piles into consumer like in previous years, the sector simply can’t absorb it. Consumer brands need to build step by step.
Part 4: We used to aim for one step each year—now one every three years feels right
Waves: In an era seemingly ruled by AI, how does it feel to be a consumer-focused investor?
He Yu: Right now, I feel fine. But over the long term, AI will definitely be a major variable, not just in improving operational efficiency, but potentially in reshaping the competitive dynamics of entire industries. Much like how the internet once disrupted the consumer sector, AI could have a similar impact.
In my view, approaching consumer startups from an AI-first mindset is risky. Consumer is an industry built on traditional fundamentals, and history has shown that attempts to reinvent it through cutting-edge tech—like unmanned stores or O2O models—haven’t ended well.
As an investor, you can either lean into AI directly or focus on sectors where AI is less likely to disrupt the core sources of competitive advantage.
Waves: So, where do you stand on that spectrum?
He Yu: I clearly prefer the latter. The farther I can stay from AI, the better.
Waves: That sounds quite contrarian in today’s world.
He Yu: That’s because I believe technology’s impact on the consumer sector tends to lag behind. In the early stages of a tech revolution, if you rush to apply it to consumers, you risk drifting away from the essence of the industry—great products and authentic experiences. Over time, technology will become widely accessible, and in most cases, it won’t serve as a lasting, exclusive advantage for any one consumer brand.
That said, in recent years, tech companies globally have clearly gained ground, while consumer companies have moved more steadily, even slowly.
Waves: Since tech investing seems to have outpaced consumer investing, have you ever thought about shifting focus?
He Yu: Not once.
Waves: That’s a strong stance. Another well-known consumer investor told us something similar two years ago—then changed his tune last year.
He Yu: Some of my colleagues have brought up the idea, too—but I’ve pushed back every time.
Rationally speaking, we have no competitive advantage in tech or AI investing. But in consumer, whether it’s trading up or down, early-stage or late-stage, there’s always an opportunity. Consumer investing also comes with some of the highest long-term moats. It’s an industry that’s evolved for over a century, building deep expertise, proven business models, and a rich talent base.
The longer you stay in it, the stronger you become. I believe the edge a consumer-focused fund develops—across insight, coverage, deal-making, and value creation—is fundamentally different from that of a traditional generalist VC or PE firm. You shouldn’t stray too far from what you’re genuinely good at.
On a personal level, my interest still lies in the consumer space—maybe a little in AI—but deep tech or renewables? That’s not where my curiosity naturally takes me.
Waves: If you had the chance to invest in Nvidia at an early stage, would you still pass?
He Yu: Honestly, it wouldn’t appeal to me that much. Nvidia is undoubtedly a great company. But if I were to invest in AI, I’d rather back the consumer-facing applications—the ones truly reaching end users. That, to me, is where value connects.
Waves: So circling back to where we began—do you think your decision to focus on the consumer is more than just timing and luck? Is it also rooted in who you are?
He Yu: Back in middle school, I loved reading entrepreneur biographies. I’ve always wanted to create some kind of positive social value through my work. For me, consumer investing is the most direct and rewarding way to do that.
Waves: One fun observation: your name, He Yu, literally means “humble,” and your firm, Black Ant Capital, also sounds modest. Is that intentional?
He Yu: Actually, Black Ant is an ambitious name. First, it means small things coming together to create something powerful. Second, it reflects our belief in collaboration and shared growth. I’ve always felt that it takes a team, never just an individual, to build something truly great.
Waves: What’s the next milestone you hope to reach?
He Yu: To keep refining our investment approach—fewer bets, but sharper ones. And to keep striving for excellence in consumer investing. At the same time, I’ve learned to respect the rhythm of time. I used to think we had to level up every year. Now I’m content with taking one solid step every three years.
Waves: One final question—we ask this of everyone: what’s a song you love?
He Yu: “Free Like a Dream” by Wang Feng. I like to live life full throttle—with freedom and momentum.
