5Y News | Plant-Based Protein Drink Brand "oatoat" Raises Tens of Millions of RMB in Series A, Led by 5Y Capital

五源资本·March 28, 2021

Back to the essence of food.

Plant-based protein drink brand oatoat has raised tens of millions of RMB in a Series A round, led by 5Y Capital, with existing investors China Growth Capital and IMO Ventures participating. The new funding will primarily go toward offline channel expansion and brand building. This marks oatoat's third round of financing since launching its products in September 2020. Its angel round was led by China Growth Capital with participation from Weiyi Capital, while IMO Ventures invested in its Pre-A round.

Sue

Founder, oatoat

What was your original motivation and opportunity for starting oatoat?

Sue: I believe people of this generation deserve a healthy, guilt-free, clean everyday beverage. I want health to become something ordinary and easily accessible, not something people have to deliberately pursue.

"Make ingredients you can understand" is also our commitment. oatoat hopes to uphold the original intention and craftsmanship of food minimalism, returning to the source of food. We hope to join everyone in returning to purity and simplicity — concentrating our life, resources, and money on what we find most meaningful, starting with minimalist consumerism. oatoat wants to become that warm sanctuary in life.

What's been the hardest thing since starting out? And the most rewarding?

Sue: I often ask myself: "When the feedback loop is very long, how do I know I'm right?"

Often the difficulty doesn't come from business breakthroughs, but from the mental discipline and challenges that entrepreneurship demands. Many problems have no standard methodology or answer, and entrepreneurship requires paying a price with little room to retreat. Achieving your goals takes patience and unwavering belief — the process can be tough.

The most rewarding thing has been starting to try making complex things simple, gradually learning to turn open-ended questions into closed ones, and repeatedly working through a closed question. Though this process lacks the drama and intensity of open-ended questions, many problems start becoming solvable. Making things solvable is actually quite difficult — the key is to set a simple, feasible goal. The simpler and more focused, the better.

Recommend a work you particularly enjoy (book/TV show/film), and why?

Sue: A 1990s sci-fi film called Gattaca, known in Chinese as Qian Jun Yi Fa (A Hair's Breadth). The film tells the story of a protagonist with physical defects who pays enormous effort and sacrifice to become an astronaut, finally achieving his dream of going to space.

The story sounds simple but is deeply moving. That the director could think about genetic selectivity and superiority — issues we still discuss today — as early as the 1990s, and even connect it to the fate of humanity as a whole, is remarkable. The film also avoids clichés, using artistic means to tell the story of someone with "inferior" genes changing his fate. What moves me most is how the film fundamentally argues that mental power can overcome physical limitations, and where conviction can ultimately prevail. It sounds simple, but is incredibly hard to put into practice.

Why did you choose 5Y Capital's investment?

Sue: 5Y's deep understanding of the sector and their judgment on industry development several years beyond the current stage aligned perfectly with me and my team. More importantly, we were pleasantly surprised by 5Y's perspective on brand-building from beyond the angle of any single company team. And looking at 5Y's historical investments, despite spanning different sectors, you can clearly feel a shared texture and underlying values. That attracted us enormously — we wanted to walk this path with them.

Over several months, 5Y engaged with us frequently, exchanging and refining ideas. The trust and support from Yuan Ye and David for our occasionally wild ideas made us more determined and confident that we could become a better brand. We feel very fortunate.

David Wu

Investment Manager, 5Y Capital

Could you share your investment thesis for oatoat?

David Wu: Chinese people have consumed plant protein beverages since ancient times. Our investment in this market is based on conviction that this massive consumption habit will upgrade and iterate in the future — that beyond beans and nuts, there will be healthier products with better drinking experiences and more versatile scenarios to serve consumers.

oatoat is just the team's first exploration in a niche category. Just as the founder named the company "Zhi Ben Le" (Plant-Based Joy), we look forward to the team leveraging advances in food and beverage industry technology to bring more natural, healthy plant proteins that create happier, more enjoyable drinking experiences.

What has most impressed you about the oatoat founder and team since you began engaging with them?

David Wu: Honestly, Sue is not the most experienced or best-connected person in the beverage industry. But oat milk is a new species in the Chinese market, and we believe her perspective on this new species is user-demand-driven, unburdened by muscle memory — such entrepreneurs have the opportunity to define an entirely new product and business model.

Sue and the team are extremely focused and hardworking. On one hand, they're obsessed with supply chain and product iteration, consistently insisting on "only making ingredient lists you can understand." On the other, they've invested enormous energy in building offline channels and operating with precision. From day one, the team has shown exceptional ability to create new tools to solve problems.

How do you understand oatoat's brand philosophy?

David Wu: My own understanding is that it's a kind of return. The advance of food and beverage industry technology has brought more industrial additives, greatly lowering the barrier to product R&D and production. But in the longer term, what industrialization should truly enable is breaking the constraints of time and space, allowing people to freely enjoy the original flavor and nutrition of ingredients.

Oat enzymatic hydrolysis technology is a good example — no additives, no burden, minimal ingredients. This brand philosophy reminds me of what The Catcher in the Rye wrote: "I'd just be the catcher in the rye and all."

oatoat was founded in May 2020, positioned as a mid-to-high-end product with a clean ingredient list, priced at 8.5 RMB for 280ml. The brand launched in September 2020 with the slogan "Only make ingredient lists you can understand" — containing only water, oats, vegetable oil, and salt. oatoat is committed to providing consumers with a guilt-free drinking experience, hoping consumers can obtain health from the source of food and reawaken trust in good products. While convenience store placement logic typically emphasizes shelf presence, oatoat adopted a big-SKU strategy: with limited early funding, it focused exclusively on one category and one flavor, aiming to make that single item a hit before replicating the channel approach for other products.

Oat milk was an emerging category in China in 2020. According to ECdataway data, from January to April 2020, OATLY's sales on Tmall and Taobao grew 115.4% and 2305.7% year-over-year respectively. In May 2020, the Swedish brand OATLY partnered with Starbucks to bring oat milk lattes to thousands of stores nationwide, beginning to broaden category awareness.

Founder Sue noted that oat milk's market recognition is still expanding. Led by OATLY, a wave of emerging brands has emerged — and she had seen this category's potential during an earlier trip to Sweden, beginning preparations before OATLY broke into the mainstream.

oatoat founding team

Sue stated that oat milk needs to break through via both channels and functionality. Highlighting functionality depends on seeding content. The team analyzed data collected from Tmall and found that users associated the concept of "intestinal cleansing" with "being slim," and being slim is a widespread pain point among young users. Therefore, the oatoat team focused on promoting the product's intestinal cleansing benefit.

oatoat launched on Tmall in September 2020, reaching one million RMB in sales within two months and achieving the top domestic oat milk brand during Double 11. By March 2021, it had completed nearly two million RMB in sales.

Unlike a "Buddhist-style" online marketing approach, going all-in on offline channels is currently oatoat's core strategy. Within five months of launch, oatoat had established presence across 8,000 points including FamilyMart, Bianlifeng, Hongqi Chain, and Tous Les Jours, deeply integrating into channels and operating according to product characteristics. It ran breakfast day campaigns at FamilyMart convenience stores and emphasized breakfast scenarios at Tous Les Jours bakery locations.

On the B2B side, oatoat co-developed oat milk lattes with specialty coffee shops and achieved breakthroughs in tea beverage channels, co-developing oat milk tea with a plant-based milk tea brand. oatoat formed a strategic partnership with specialty coffee brand Fish Eye Coffee, launching co-branded gift boxes online and developing creative beverages — Pomelo Oat Latte and Pomelo Oat Iced Milk Tea series — at offline stores, surpassing 1,000 cups on the first day.

Oat milk is a category whose maturation depends on technological breakthroughs. oatoat emphasizes R&D and intellectual property, building its own product development team with guidance and advice from patent developer and Jiangnan University professor Zhang Hui on the R&D backend. The team recently completed protein optimization for its oat plant protein drink; the company entity holds the patent copyright, and an upcoming new exterior design has also been filed for independent copyright.

oatoat focuses on optimizing its own supply chain product lines, believing that deep supply chain cultivation is foundational. In recent months, oatoat has completed supply chain upgrades including packaging optimization, sustainability improvements, and more than a dozen other modifications.

Sue believes that the continuous influx of oat milk brands validates oatoat's original market expectations — a phenomenon that players in the plant milk industry welcome. The expansion of category usage scenarios still holds enormous imaginative potential.

5Y Capital (formerly Morningside Venture Capital) currently manages approximately three billion USD across USD and RMB dual-currency funds. We believe that if the you whom others see as crazy starts to be believed in, the world becomes a better place.

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