How Young Consumers Powered This Year's 618 Shopping Festival: A Look at Source Code Capital's New Consumption Bets

源码资本源码资本··1·2

Seeking founders who pursue product excellence

Source: 36Kr

In the just-concluded "Tmall 618" shopping festival, this generation of young consumers proved their formidable spending power. They propelled 459 new consumer brands to the top spot in their respective Tmall 618 subcategories — up from just 360 during the previous year's Double Eleven.

Numerous niche yet compelling new brands captured young people's hearts. Tmall rankings for the first half of June alone show: Cloud Whale claimed first place in robot vacuums; Wang Xiaolu topped the chicken snack category; WANGBAOBAO led in mixed beverages; PMPM and RockingZoo emerged as big winners in beauty and personal care respectively; moody took the crown in colored contact lenses...

Behind this lies the rapid rise of a new wave of consumer brands that has been surging since 2020. Amid economic transformation and evolving consumption patterns, these brands have garnered massive attention through extreme product focus, meticulous service, and deep consumer insight. And every one of these brands shares a common backer: Source Code Capital.

Source Code Capital projects a strong tech sensibility to outsiders. But a survey of its portfolio reveals that its investment map in areas closely tied to daily life was laid out long ago.

Born in the great VC 2.0 fission era, this investment firm has spent seven years backing standouts across information, food, housing, and mobility: ByteDance, Meituan, KE Holdings, Li Auto, RELX. Related domains include housing players like Ziroom, Julive, and Qingzhu; chain retail with Pagoda and Linji Convenience Store; food and beverage with ChaYanYueSe, Chen Xiang Gui, WANGBAOBAO, Daily Black, Hey Yang Yang, Wang Xiaolu, and WonderLab; beauty and personal care with PMPM, moody, Lan, Blank ME, RockingZoo, and Pwubeauty; and consumer hard tech with Cloud Whale, Blokees, Woan Robotics, and NIU Technologies. Examining its concentrated deployments and underlying investment logic may offer glimpses into the future landscape of new consumer sectors.

01 Founders Who Can Sit With Their Products

In early 2019, just after the Lunar New Year, Source Code Capital director Chang Kaisi couldn't wait to fly to Changsha. At the time, everyone was talking about proxy purchasing services for ChaYanYueSe milk tea. Source Code had been tracking the new-style tea赛道 for some time without making a move — until Chang stood in Changsha's Wuyi Square. "I'd never seen a retail format with such density, where every single store still had lines out the door. Of every ten women I saw drinking milk tea, six held ChaYanYueSe."

He spent a month on due diligence, averaging six or seven cups daily to check consistency across locations. "The milk-to-tea ratio was excellent, and the mouthfeel was genuinely distinctive."

Standing on Changsha's streets, Chang spoke multiple times with ChaYanYueSe founder Xiaocong (Lyu Liang). A serial entrepreneur who'd run an ad agency, opened a braised goods shop, and franchised a milk tea store, Lyu embodied what Chang observed: "Often, a consumer company's product is simply the externalization of its founder. The creative yet practical DNA, the pursuit of perfection — these were already baked into ChaYanYueSe's bones."

Back in Beijing, Chang quickly issued a term sheet. In August 2019, ChaYanYueSe announced its Series A with Source Code Capital's participation. The company wouldn't open another funding round for two years.

Source Code maintains a complete internal framework for evaluating deals. In terms of selection preference, they emphasize extreme product focus as an investment discipline — especially for early-stage companies, where product capability occupies an overriding position.

At the same time, Source Code believes in technology's power. "Product capability, channel capability, and marketing capability are all critical for consumer brands, but technological progress enables massive leaps in infrastructure and distribution platforms — good products can break through much more easily," Chang told 36Kr.

Cloud Whale exemplifies this. When Chang first flew to Dongguan's Songshan Lake in 2018 to meet the team, he never expected they'd already spent three years in closed-door R&D on a single product. Founded in 2016 as a home robotics company, Cloud Whale didn't launch its first product until late 2019 — "extremely patient." What impressed Chang most was the team's hands-on engineering strength. "They built their own mini-ERP using an open-source solution, and developed their own laser radar testing apparatus."

Cloud Whale's 31-year-old founder Zhang Junbin studied under HKUST "super professor" Zexiang Li. The core founding team comprises young academics, with key leaders and R&D staff largely from Tsinghua, Shanghai Jiao Tong, Huazhong University of Science and Technology, Harbin Institute of Technology, Zhejiang University, HKUST, and National University of Singapore, with prior experience at DJI, Huawei, Microsoft, and Emerson. One telling detail: Zhang has severe "product OCD." When one design used circular mop pads that left a gap when mopping, he scrapped it entirely for triangular pads — a微小 change that delayed launch by three months.

To this day, Cloud Whale maintains only one core product, the Narwal — a stark contrast to the "sea of models" approach common among robot vacuum competitors. They prefer to go deep on a single item, building leading advantages and technological/IP moats.

This tech fervor has led Source Code to increasingly like-minded founders, such as Blokees founder and CEO Weisong Zhu.

Toys are an indispensable consumption category throughout human development, and building blocks represent the most classic form — one with exceptional innovation value and imaginative space. "Through independent R&D, Blokees has achieved outstanding product innovation in this traditional category, redefining building blocks. Today Blokees has accumulated over 400 patents."

What excited Chang more was Blokees' potential for massive scale through partnerships with China's top IP. "Compared to Lego, a breakthrough point for domestic block brands lies in Chinese IP." This shared industry understanding resonated with the founder, making Source Code Blokees' first institutional shareholder.

The preference for patient founders aligns closely with Source Code's longstanding investment character: fewer bets, heavier conviction, greater precision. "We don't want to make too many decisions, to invest in too many things, a little bit in each. Because we believe that in any given sector, very few companies will ultimately emerge victorious. We want to concentrate our energy on the models and companies we truly believe in."

Chang acknowledges that Source Code maintains its own rhythm according to established criteria. "Don't let your form slip, because investing is itself an art of regret." Meanwhile, they increase single-project investment weight — Source Code consistently follows on in most of its portfolio companies.

"You need to analyze whether a sub-track could potentially converge, then identify what you believe will be the leading company." This rational, disciplined restraint also enabled Source Code to anchor certain projects earlier, becoming their first institutional investor and adding across multiple rounds: Cloud Whale, Blokees, WANGBAOBAO, PMPM, moody, and others.

When skincare brand PMPM was founded in October 2019, Source Code investor Dandan Chen connected with founder Shanshuo, a former Procter & Gamble brand director. "About 15 minutes into our conversation, I knew this person had to be backed." At the time, the company had no products, and the core team consisted of just the founder and co-founder. "I remember after closing, having hot pot with the founding team — we couldn't even fill one table," Chen told 36Kr. In November 2019, Source Code decisively invested in PMPM's angel round as the sole external shareholder.

Many investors were looking at color cosmetics then; skincare wasn't particularly hot. But through research, Chen concluded skincare was the superior category — stronger user repurchase intent, higher brand loyalty, and higher barriers to entry for new brands. It required traffic fluency and marketing savvy like color cosmetics, but also the ability to convey emotion and tell stories to consumers. Additionally, many beauty brands face fashion risk from creative output concentrated in too few people, while PMPM effectively combined sharp consumer insight with data analytics through an X+Y+Z formula that deconstructed product creativity into something like a命题作文, ensuring pipeline consistency while reducing creative difficulty for the team.

Four months later, PMPM quietly launched. In its first year, 10 of 25 SKUs became hits, with three individual products reaching #1 in Tmall subcategories. Within 13 months of launch, the company achieved 600 million RMB in GMV across all channels, with over 100 million RMB in 618 sales, becoming Tmall's officially certified #1 new beauty brand among 2020 new store openings. During this period, PMPM completed three additional funding rounds, with Source Code adding to its position each time.

"Investing in consumer brands, product is an indispensable component. Before PMF [product-market fit] is established, you rely more on sensitivity and intuition about the founder. The best window is when there's a product, but the market remains in a non-consensus state." Chen captured this window precisely with moody and Daily Black — just as their products were emerging.

Source Code pays close attention to the "nature" of consumer sectors and categories. "Category nature determines endgame; it's generally very difficult to change," Chen explained. "Categories like colored contacts and chocolate are both good categories. Colored contacts combine medical and consumer attributes — enjoying the low-penetration, high-growth dividends of beauty while having even higher repurchase rates than skincare, with natural brand loyalty and high switching costs. Chocolate is an addictive category that delivers pleasure and emotional value, where large companies emerge. Ciran and Ethan are similarly founders extremely focused on product details. In their companies' early days, both went to great lengths to make truly good products. moody chose to partner with Taiwan's largest colored contact supply chain factory, which only works with Asia's top brands. Daily Black's chocolate co-manufacturer belongs to Switzerland's second-largest retail group and generally doesn't take external partnerships. For startups, such partnerships don't come easily — they reflect founders' commitment to product. And坚守好产品 will certainly win consumer recognition: moody reached Tmall's #1 colored contact brand within a year of launch, while Daily Black quickly entered hundreds of thousands of offline supermarkets and CVS retail terminals."

02 A Slow-Burn Marathon

"Consumption is close to everyone — we all have some intuition about it, so the barrier to entry seems not that high for investors. So consumer investors feel some confusion every New Year — this 'field' was plowed last year, what now? But stretched over time, I think we can be more从容," Chang said.

From Source Code's perspective, China is already the world's largest consumer market; it has the most developed, maturely配套 supply chain system globally; and it has the most novelty-receptive consumers. The叠加 of these three factors will inevitably generate new trends and major waves.

In fact, from its founding, Source Code mapped out a "three horizontals, nine verticals" investment map: "Three horizontals" representing three great waves — "Internet+," "Intelligence+," and "Global+"; "nine verticals" representing nine industries — media and entertainment, communications and search, retail, travel and tourism, dining, housing, government/education/culture/health, finance, and enterprise. They believe these vertical industries will undergo profound and dramatic transformation driven by these three market tides.

Specifically in consumption, Source Code has a "three horizontals, five verticals" map — a "3×5" matrix: from typical product forms — channels, brands, services; from consumer needs — food, housing, mobility, beauty, entertainment. With infrastructure including trading platforms, logistics, and supply chains becoming increasingly完善, plus maturing distribution and marketing platforms, Source Code's consumer investment map updates in real time.

Nevertheless, Source Code's pace and rhythm in new consumer investment remains cautious. Their attitude: "Walking slowly now is for walking steadily later; walking steadily is for walking fast later."

Thus, consumption represents an ultra-long runway for Source Code — like a marathon. Behind this judgment lies another crucial reason: platform opportunities are increasingly scarce, while platforms have substantial appetite for new content and good products. "Overall, there aren't that many good products in China — there's still massive room. Several years in, this has largely validated our major 2017 judgment," Chang said.

According to Chang, Source Code has assembled a nearly 10-person consumer investment team embedded across consumer domains — channels, brands, services — staying close to consumers, tracking Chinese young people's changing habits, while staying close to entrepreneurs and瞄准 good products in each细分领域.

03 Becoming the Company's Co-founder

For Source Code, even having captured numerous consumer brands, some now unicorns in their niches, a sense of "fear of missing out" anxiety still haunts every investor — because Source Code faces a rapidly iterating market where most investors have gone all-in on consumption.

Capital turnover in consumer markets is隐秘 and swift. Consumer brands offer investors very little to judge in early stages before brand recognition; but once past break-even, brands become less thirsty for financing. Chen felt this acutely with Wang Xiaolu.

When Chen first approached Wang Xiaolu founder Wang Xiong, he'd just completed a tens-of-millions Series A and had no near-term plans for another round. "I genuinely missed the A round — didn't connect with the company earlier enough," Chen said frankly.

Adopting a "friends first" mentality, she spent the following half-year building trust with the founder. "Including discussing business and strategy with him, inviting him to experience Source Code's post-investment services, trying to help him recruit, and inviting him to closed expert sessions — this patient approach was worthwhile. Through these relatively从容 interactions, we wanted the founder to truly understand what kind of institution Source Code is, while I myself learned a great deal about brand positioning theory from founder Wang Xiong," Chen told 36Kr.

When Wang Xiaolu opened its next round, Wang Xiong thought of Source Code first. "The whole process was very fast — we signed a term sheet in about a week, then went into due diligence." This rapid response owed far more to prolonged mutual understanding and trust.

The secret to becoming a company's partner: professionalism, sincerity, helpfulness without intrusion. "The best state for an investor is to become what the company considers a Co-founder — that's your position in the company's mind, and it's human nature. Entrepreneurs are actually an extremely lonely group." Having been an entrepreneur herself, Chen deeply understands founders' states and enjoys being in their circle. "I hope to be the first investor entrepreneurs think of when they need help. Being with entrepreneurs gives me a feeling of constantly starting businesses — that's my greatest joy and drive in investing."

Post-investment service is a major Source Code differentiator, systematically and productively delivering on the Co-founder promise and ensuring constant communication with entrepreneurs. According to Chang, post-investment staff comprise one-third of total headcount. They help companies recruit for key positions, interview alongside CEOs, resolve consumer brand trademark crises, and bring CEOs Code Brain expert courses for enriched perspective. "When entrepreneurs need special support, our post-investment team will even embed dedicated staff on-site, truly becoming part of the company."

Co-founder, friend, comrade, elder brother — these are the words Source Code portfolio founders mention most. moody founder Ciran works closely with Source Code's post-investment team; moody's current HR head was recruited through Source Code's help. "When moody was expanding its team, we'd see daily talent and government relations analyses — these are things a partner would do," Ciran said.

In Cloud Whale founder Zhang Junbin's eyes, Source Code is more than an investment institution — it plays a co-founder role. "Source Code not only provides financial support, but helps us enormously with organization, processes, systems, and external collaboration. Most importantly, Source Code doesn't ask me to abandon the principles, mission, and vision I've always坚守 just because of short-term market fluctuations."

Source Code's坚守 and conviction toward entrepreneurs stems from understanding them: the best founders are often "pragmatic yet romantic." Source Code Capital founding partner Yi Cao once described his ideal founder profile in a public speech: "They're typically a collection of multiple contradictions, capable of fusing these contradictory elements to极致发挥." In Cao's view, "Excellent entrepreneurs can both attack from the highest heavens and defend from the deepest earth; they're infinitely outward yet infinitely inward; both感性 and理性." Source Code respects these entrepreneurs "because what they do through entrepreneurship creates enormous value — making clients more successful, users' lives better, employees better people, society a better society. These entrepreneurs also represent many luminous aspects of human nature: courage, integrity, resilience, sacrifice, great love, dedication." This understanding, respect, and admiration for founders has become embedded in Source Code's DNA, forming their distinctive character.