Roland Berger consultant Zihao Xu moves over to Octopus Ventures

09 November 2016 Consultancy.uk

Roland Berger consultant Zihao Xu has moved over to Octopus Ventures, a London and New York-based venture capital investor. Xu spent nearly six years in Roland Berger’s London office. 

Zihao Xu joined Roland Berger (at the time Roland Berger Strategy Consultants, prior to its rebranding) in March 2011, after gaining his Bachelor of Arts in Economics and Management from the University of Oxford. At the consulting firm, Xu contributed to several strategic, operational and commercial due diligence engagements across a wide range of sectors, including Aerospace & Defence, Automotive, Industrials, Energy and Private Equity. Although he was based in London, Xu’s project experience spanned Europe, North America and Asia. 

After six years in the consulting industry Xu recently decided to embark on a new adventure, and per the 1st of August he has joined Octopus Ventures, a venture capitalist best known for backing the likes of Secret Escapes, eve Sleep, SwiftKey and Zoopla Property Group. Octopus Ventures, the venture capital arm of the Octopus Group, an investment management company with more than £6 billion of assets under management, typically invests from £250,000 up to £25 million in first or second rounds of funding. 

The startup scene is not new for Xu – he is also an entrepreneur himself as the founder of a sunglasses and lifestyle brand Canopy Sunglasses. Founded in 2014, Xu holds responsibility for every aspect of the business including strategy, sourcing, branding and web development. Canopy Sunglasses has so far been sold in 14 countries across Europe, Asia, North America and Oceania, mainly through online retail and re-sellers. 

Zihao Xu, Alex Macpherson

Xu joins Octopus Ventures’ investment team as an Investment Associate. In the role, he will work with investment managers to identify promising startups across the UK and Europe, as well as play a role in advising enterprises already part of Octopus Ventures’ portfolio.

Globally, venture capital funding into startups is on a high, hitting a record $128 billion in 2015, although the scene has been losing some steam throughout 2016 on the back of uncertain valuations and a drop in economic sentiment. Octopus Ventures is a fast growing player in the market – the company recently raised an additional £100 million to invest into early stage European businesses. 

Commenting on the appointment, Alex Macpherson from Octopus Ventures says: “Zihao’s experience in having run a business himself as well as assessing markets and delivering top line strategic advice to global businesses makes him a great addition to the team”.

Xu says that he is delighted with the move, stating, “There’s a huge amount of entrepreneurial talent coming out of the UK and Europe. I’m super excited to be joining Octopus in helping to support and serve this community. Coming from a background in advising large corporates, I’m looking forward to getting stuck in at the other end of the spectrum. Given the track record of Octopus Ventures, particularly the year they have had so far in 2016, in my opinion there is no better place to work with unusually talented entrepreneurs.”

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Consumer goods start-ups grow interest from venture capital

23 April 2019 Consultancy.uk

Funding the latest consumer goods start-up has been a real money-spinner for venture capitalist firms, with a number of $1 billion companies – or unicorns – having emerged in the space in recent years. New analysis has explored the resulting corporate consumer products activity in the acquisitions space.

Consumer products have enjoyed years of strong growth as new markets opened in developing Asia. China in particular has enjoyed strong growth across a range of consumer good types as the country’s middle class expanded. Private equity firms have been keen to pick up targets in the space as they expand their portfolios to include additional local capacity as well as customers in new markets.

As a result, a study from Bain & Company has found that interest from PE firms in the consumer product space grew sharply in 2018, hitting 6.1% of all invested capital for the year, and making it the third most sought-after category. It is now only behind financial services (23.9%) and advanced manufacturing and services (13.9%).

Corporate venture capital investment

The ‘M&A in Disruption: 2018 in Review’ research found that growth in the segment reflects key changes in the segment as a whole. This is particularly true of insurgent brands, which often leverage local expertise in order to take on international giants in domestic markets.

Short change

The market changes have led to shifts in motivations for consumer goods company investments from PE firms. The number of strategic investments stood at 50% in 2015 compared to deals that increased scope. This has shifted significantly, with 34% of deals focused on strategic outcomes in 2018 compared to 66% for scope. The move towards scope reflects companies seeking out fast-growing products that enable stronger revenue growth streams.

Acceleration in scope-oriented M&A in consumer products

However, there were other motivations for deal activity in the space. Activist investors have put pressure on companies to expand their portfolios in recent years, with the trend expanding from just US targets to Europe.

Further trends

The other key shift in the space regards outbound deal activity. The study found that outbound deal activity has increased significantly in the Americas (up 363%) with total deal volume up only slightly (15%). Key deals included Coca-Cola and Costa, Procter & Gamble and Merck’s consumer health unit, and PepsiCo and SodaStream. In the Asia-Pacific region, outbound deal activity rose 195% while total deal activity fell sharply, by -36%. The EMEA region saw both a sharp decline in outbound deal activity, at -68%, as well as lower overall deal activity, which fell by 32%.

Cross-regional deal making

Deal-making in the current environment is increasingly fraught with uncertainties, as business models change on the back of new technologies, new consumer sentiments and wider market changes from new entrants. As such, acquisitions are increasingly useful as possible hedges on changes in market direction. As such, companies are increasingly pressed to take a future-back position, making sure to incorporate a vision of how the company needs to look in five years into acquisition strategy.

The firm notes that certain acquisitions which enhance a remembrance of a nobler mission, revive a sense of entrepreneurialism and engage directly with consumers may be necessary qualities in acquisitions that transform a company to fit market expectations in the coming decade. While going forward, focus on innovation, partnering with retail winners, reducing cost base and constantly reallocating scare resources will be necessary to protect market share in areas where insurgent local and strategic competitors are active.

Related: Private equity asset growth top priority for 2018.