Lei teaches you how to pick a startup project

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On the ten criteria for evaluation of entrepreneurial projects

December 8, I took part in the 2008 venture capital annual meeting, VANCL founder of the year selected entrepreneurial figures, UCWeb Yu selected annual potential entrepreneurial figures, congratulations to them two! I also borrowed their light to be the best angel investor of the year, thank you.

This is my theme for the meeting, how to pick a startup project

Google angel investors earn tens of thousands of times, angel Investment sound is the world's most lucrative business, but the world does not have a free lunch, and high return accompanied by a high risk must be. How to control the risk, improve the success rate, each family has the best of all, I try to use a rational way to find the law.

I'm just an amateur in the field of investment, and it's not a long time to invest, not much money. The reason why I dare to talk about investment here is that there must be someone to talk about this topic, and it will help the entrepreneur to start a business better. As for the three key issues of investment, I would like to throw out my point of view, please advise the experts.

One, cast or project

Every venture capitalist will say that projects and people are indispensable.

But always encounter the following two kinds of situations: the first situation, the person is very good, the project is also good, but not good enough, cast or not to vote? The second situation, the project is very good, people are good, but not strong enough to vote or not to vote? In between the project and the person, still need to make the final choice, how to do? Finally, Most venture capitalists in China will choose to invest in the project.

And I will not hesitate to choose to vote for people! Because people are internal, people and projects, people are the decisive factor. Several of my practices have also validated my thinking.

For example, after he left the Amazon in April 2005, Vancl said, "Whatever you do, I will support it." The first time he founded me to have a net, I invested, October 2007 again founded VANCL, I continue to invest. VANCL, I cast is the old man! Here also thank IDG Partner Lin Pillars, he is also two consecutive investment in aging.

For example, UCWeb Yu, he was in Lenovo investment work, I have said, "If you want to start a business, I will certainly support." Then he decided to join the UCWeb venture, and I did not hesitate to invest (of course ucweb is a very good project). There are Lakala Suntaujan, Duowan Lee Colling, etc.

I'm a bit confused: why don't most organizations do that? Pondering for a long time, I think the fund's business model does not support such an investment model, because the investment agencies to raise investors money, have a clear exit period, if the project is not good enough, at least a few years, the agency can not afford. And angel investors are investing their own money, there is no external pressure, there is enough time to cast people! There is also a very important reason that in China, highly qualified experienced people are scarce, this is not the same as the United States.

So, my judgment is to cast people's Cheng higher!

Ii. How to assess people?

Evaluating people is the most complicated thing in the world! I don't think I have a gift for seeing people. I heard fortune-teller is very effective, but I have not learned. I am just in the long-term management process to constantly summarize and improve the ability to identify people.

The most important thing for people to evaluate is integrity, which is the prerequisite for all evaluations.

Angel investors to invest less money, generally do not hire professional institutions do due diligence, is easy to be deceived, so the integrity of people requirements are very high. China is still in the early stages of a market economy and has not yet established a truly honest business climate. In such an environment assessment of people, I am most concerned about this person's values, business ethics, such as the bottom line, only grasp these things, can really grasp the credibility.

Angel investors and entrepreneurs have deep trust, this is a successful start.

I have six criteria for evaluating the team in the ten criteria for Evaluating Entrepreneurship: (1) insight into the needs of users, the market is extremely sensitive, (2) lofty and down-to-earth, (3) It is best to have two or three complementary people to start a business together, (4) must have technical skills, and can bring the team of technical leaders (Internet Project ;(5) Rapid expansion under low cost conditions; (6) A person with a good resume is preferred, such as someone who has a successful experience in entrepreneurship and so on will add points.

I think (2) (3) (4) (6) This four is easier to grasp, the hardest is (1) and (5), I start speaking (1) and (5).

Article (1): To gain insight into the needs of users, the market is extremely sensitive. This is a very high ability!

People have heard the story of selling shoes to Africa, some people think that Africa has no market, and some people feel that the African market is very large. This is a classic example of insight, that people in Africa's shoe market see the nature of things through appearances. Shi Yuzhu to the brain platinum such health care products accurate positioning in the gift, originated in Wuhan and a group of elderly people after the exchange of the market demand found.

1996 Jinshan under the pressure of Microsoft and piracy almost closed, this time I reflect the most is why we do not sell products. I stood for 90 days storefront, daily and user face-to-face communication, finally found some feeling. 1997 Jinshan began to restart business, did the word PA, poison pa, online games, and so on, are relatively smooth, the most important reason is to have a certain grasp of the user's ability to demand.

Article (5): rapid expansion capability under low cost conditions. This sentence has two keywords, "low cost" and "rapid growth", here I talk about cost control.

It is the economic winter and we are all talking about the problem of winter. I don't think startups have been in the winter until they continue to make a profit. Entrepreneurship must have the ability to spend less or not spend money and do things beautifully. Small companies will have no chance if they spend money on their affairs.

A few months ago, a Beijing entrepreneurial team came to me and I asked a question, what if you can't find an investment? They said they had pooled some money and spent a year enough. In Beijing, a team of eight people with a strong ability to spend a year, including computers, offices, servers and marketing, guess how much they plan to spend? Just 200,000!?

I'm particularly concerned about how they do it. They said, "We do not take wages, in Tongzhou rent a 200 square meters of house, every month as long as one thousand or two thousand yuan, and then spend two thousand or three thousand yuan to ask an aunt to buy food cooking, office, eat and live all solved, the server bandwidth to borrow friends, the rest of the money to buy a computer enough." Do this for a year, go all out to achieve the ultimate product, only by the user's Word-of-mouth can do a considerable scale ... "I believe that entrepreneurs have the determination and self-confidence, entrepreneurship will be successful."

If the above six standards to achieve the entrepreneurial team, as long as there is a dream, adhere to, will be successful.

Iii. How to evaluate the project?

The entrepreneurial team must find the right entrepreneurial direction before they can truly succeed. How can you tell if the project is worth doing?

I have summed up four criteria to select the project: (7) make the most fat market, choose the largest market that you can do, (8) Choose the right time point, (9) Focus, focus and focus; (10) The business is validated on a small scale and has the opportunity to be one of the top positions in a vertical market. One word to say is: do one thing right at the right time, and do it one by one.

First of all, to do the right thing at the right time, this is a strategic issue, very critical. If things are clearly not feasible, but also do not regret, such people are doomed to failure. It is relatively easy to do the right thing, it is difficult to grasp the point of time. For example, 1998 years of joint venture to do chess game is very successful, if that time they choose to do online games, the results will be? I believe they are more likely to fail, and the time is not ripe. Grand September 2001 started the Korean game "legend" very successful, very important reason is the time point grasp is better, the Internet café has arisen, broadband has begun to popularize, the market needs good online games.

Second, choose the biggest market you can do. Be sure to settled the market size, and think clearly before you do it. Once I start to do it, I get stuck in it, which is my personal biggest experience. Back to Jinshan 1996, we choose the breakthrough if it is poison PA, we will be more successful. Because the market size of the drug tyrant is too big. At the end of 2000 again, a bit late, the cost is relatively high.

Go on, focus. Focus is the most important weapon for the entrepreneurial team, and everyone is focused on one issue and solving the problem very quickly. For a variety of reasons, it is easy for entrepreneurs to enter one battlefield after another, the last thing can not do.

In the end, is it possible to be one of the best? In general, the second name is less than half the value of the first, and the value after the third is very low. You have what kind of core ability, what kind of skill, must think clearly.

Does entrepreneurship really need such high standards?

My answer is simple: no need!

All roads lead to Rome, many successful entrepreneurs are starting from small things, from a single point of breakthrough, and then step up the steps. For example, Li Ka-shing from selling plastic flowers began, Liu founder Lenovo sold roller skates and so on.

The most important element of entrepreneurial success is "dream" plus "persistence"!

The top ten assessment criteria I write apply only to entrepreneurs who want to rely on the rapid development of venture capital.

When I wrote this article, I found Google researcher Wu's article "behind-the-scenes hero: Venture capital", which refers to the Sequoia's requirements for projects and people, and I mentioned the ten standards have similar, reprinted for everyone to see.

There are some basic requirements for the new venture companies looking to invest:

1. The company's business to be able to speak a few words clearly. (Standard 9)

2. If the company's business is not a 1 billion-dollar business, there is no need to come. (Standard 8)

3. The benefits of the company's projects to customers must be at a glance. (Standard 1)

4. Have a skill. (Standard 10)

5. The company's business is to spend a small sum of money can make big business. (Standard 5)

For the founders, Sequoia VCs have some basic requirements

1. Open minded, flexible brain, can prove that he is stronger than the opponent. (Standard 1)

2. Companies and founders have a better gene. A company's genes formed in the three months of its inception, excellent founders can attract good team, good team to lay a good foundation for the company. (Standard 2)

3. Fast, because only this will be possible to defeat the existing large companies. Just starting a small company and multinational competition is tantamount to fighting babies and giants, to win must be quick and flexible. (Standard 5)