Qian Tu-Forget venture capital?

Lin Yongqing, founder of Value China Network

Du Feng is my colleague at Intel China and an old friend of many years. She has been engaged in venture capital for nearly ten years. As early as the "New Era of Zhang Shuxin" on the Internet, I have seen her sitting in the investor's banquet on many forums. This is a "veteran" in the Chinese venture capital industry. I am honored to have written some personal views for Qian tu.
Qian Tu is a book written by investors to entrepreneurs. My comments are profound, relevant, comprehensive, and operable. This article is what I wrote to entrepreneurs as an entrepreneur, my comments are: sincere, authentic, and useful. Please do not rush to judge whether I speak modestly. This is not the point. The point is: knowledge-based authenticity is more important than expression-based modesty. Du Feng and some of my personal experiences and lessons both originate from our practice and are obtained after a great deal of time and money. When I started my business for the second time, I warned myself: "others' success and failure are my capital. Learning with others' time and money is a required course for entrepreneurs ."

What do entrepreneurs need most?
As an introduction, we should first talk about entrepreneurship before talking about financing. If you do not understand what a startup is, you cannot talk about financing. At many seminars on entrepreneurship, many entrepreneurial "Candidates" asked in different forms: "What do entrepreneurs need most ?" My answer is: "If you still don't know how to answer this question, don't rush to start a business or be qualified to start a business, let alone raise funds ." Obviously, my answer is just a matter of fact. The answer to the affirmative answer is actually a definition of the bason College, which was the first to study Entrepreneurship and entrepreneurship in the United States: "entrepreneurship is to create a career from scratch."
"It's hard to start a business, and it's not the way that normal people should choose. The qualities of success that entrepreneurs need most are mission, integrity, persistence, knowledge, tolerance, and detail.
Mission
All success is the success of your sense of mission and value, which means great sacrifices and efforts. The Mission word is mission in English and is the same as the missionary. Some missionaries in Europe and Arabia did not hesitate to launch war in order to promote their own teachings. Sun Zhengyi, founder of Softbank, also said, "If my career is unsuccessful, I will never die ." Therefore, the so-called "mission" means you must "take your life for it ". Before starting a business, you should first think about whether the task is worth your "life. This is the premise of all undertakings.
Integrity

"No one is stupid." Only honest and honest entrepreneurs can achieve long-term achievements. Both shameless (fraudulent) and boring (hyping) can only succeed for a while. "The incredible difference between entrepreneurs and madmen is that the former has many followers." Others follow you mainly because you are honest and honest.
Persistence
"Success at night" is not to say that someone is a "success", but that someone is always late. Napoleon once laughed at the old French Dynasties: "The 'success' of ordinary people lies in successfully tuning down their goals." a high standard of persistence requires a huge, long period of effort. In his book "The revolution of wealth", tofler wrote: "wealth is a function of time ." The meaning of this sentence is rich, and "persistence" is one of the meanings. "All success comes from a lack of enthusiasm. The next thing is persistence !" (Sun Zhengyi)
Knowledge
Innovation and competitiveness are exchanged with the continuous learning and knowledge of entrepreneurs. Especially in this rapidly developing knowledge economy era, knowledge may be your only startup resource and strategy. If, to this day, some people think that knowledge is irrelevant, they must be dizzy or ignorant. Business models, competitive strategies, talent cultivation, executive power, and even values and beliefs, all support knowledge. For example, in reality, many cases show that many entrepreneurs are "Scared to death" for failure, and there are many reasons for fear. The main reason is ignorance.
Tolerance
Even if entrepreneurs have worked very hard, they will also face all misunderstandings and even human obstacles. Suffering is your wealth and luck. You must learn to treat things, tolerate people, and learn to be grateful. The Buddhist family believes that people come to this world to reward themselves: parents, teachers, friends, and so on. We do not argue whether life is reincarnation or karma or retribution, but the success of anyone cannot be achieved without the help of others. This is a basic fact of human beings, tolerance and generosity are also a basic attitude on which all cooperative resources and team building depend.
Details
The details are the Devil, the executive power, and the strategy without execution is nothing. Strategy is not a "higher" level than execution. They are two sides of the same thing. It is a basic skill for entrepreneurs to learn how to think about problems in a specific, very specific, and very specific manner and put them into practice. Strategy is abstract, while execution is specific. "specific details" often contain truth. Therefore, Marx said, "we need to go from abstraction to concrete ."
Finally, another important super force factor is luck, which is often more powerful than all of the above. "Persistence may not succeed, but it may fail" (Liu Xiang). "persistence" will increase the probability of good luck. Entrepreneurs, do you really want to know? Entrepreneurship is certainly not a fashion, nor is it financing for entrepreneurship.
Meaning of Qian TU
Back to Qian tu, let's talk about the title first. The title of any book should best reflect the subject of the work. I think "Qian tu" has two meanings: one is related to "capital" and the other is a financing attitude and method with a "future. After reading the book, I fully agree that Qian tu can indeed provide some promising "mentality" and "means" for Financing entrepreneurs ". (Coincidentally, the name of my first Internet project was "Qian Xian", which also had several meanings: first, the website was related to financial services, the second is to advertise a "front-line" concept, and the third is to name it "line" as a fashion when the Internet was in its infancy more than a decade ago .)
Inspiration
Next, let's talk about some important empirical content that I think Qian tu involves.
Angel investors F4
In the early days, there were only four most likely investment channels for enterprises. Du feng used a very vivid and executive induction and referred to them as F4. The founders and friends) family and fools ). Just like "Xi Shi in the eyes of lovers", when the most money is needed, the investment is F4. The first fund in the early days of an enterprise usually comes from its savings or from friends and family members. In the early stages of development, the risks are huge. Only people like friends, family members, or "Fools" may be moved by your project. Friends and family members can only be regarded as angels of entrepreneurs. Strictly speaking, they cannot be regarded as angel investors. The best Angel should be a "fool"-most people will not invest in early start-up enterprises, because of the high risk, it is difficult to see its development prospects, in the eyes of others, investing in such an enterprise is like a fool. However, when such enterprises are on the fly, most people are feeling that these people have a unique eye, and investing money to others has no eyes (that is, I am talking about "Knowledge") to see their prospects. The fact is that these so-called dummies are actually people who have experience in a certain field, or who have their own success stories. They really see the bright spot in that simple idea, they are truly angel investors.
In my experience, "dummies" are the most difficult to find, because it is difficult for first-time entrepreneurs to persuade industry veterans who have been honed for years in a certain field in experience and business models ". Another point is also very important, that is, for the first time entrepreneurs, the "personality charm" is not strong enough. In the eyes of industry veterans, the first time entrepreneurs are naive in all aspects, it is difficult to make up your mind to be your angel. I have seen many hot-blooded young people or hot-blooded middle-aged people from large enterprises. Frankly speaking, they have only experience as white-collar workers in large enterprises, but have no experience as a small enterprise from scratch, not to mention the courage, patience, and character of starting from scratch as a small business-many people can't put down their "bodies ". Of course, you can also cultivate your character, "first change your mind and character, and then change your destiny" (Lin Yongqing ).
My second Internet project found an angel investment. The main reason for my review today is that I have known each other for many years with investors (Mr. Zhang jiexian, founder of chinacili.com). At the same time, I have been honest with some of my personal experiences. In addition, I dared to give up my "Golden Collar" career opportunities that were not superior.
Don't rush for money, or simply don't take the initiative to find money

After an entrepreneur builds a company, the first thing is to identify a large enough market with good growth and organize a good team for this market. In addition, you need to study this market to find out its uniqueness: in terms of technology, business model, or comprehensiveness. The market does not promise that you will survive, so you must create "unequal competitive advantages" and be innovative. Innovation is not a dazzling trend, and "innovation is a force to compete ". Many markets are very mature. Without innovation, you can neither compete with the existing members in the market, nor compete with a large number of "same-looking" little guys.
After thinking about this, you 'd better do it yourself, how much you can do, make the product or service look like a model, and then go out for money to seek institutional investors. Develop your own company based on your own resources and capabilities. Although the time to find money may be later than expected, the company's value will be higher, it is also highly likely to be invested by risky investors. Xu Xin, a famous Venture Investor, said to an entrepreneur: "You should do this for two years. If you are still alive for two years, come and talk to me again ." Yes, all venture capitalists want to turn their projects into "risk-free investments ".
Investors look at 4 m, see in priority
Let's talk about F4. Du Feng correctly asserted in his book that there are 4 m investors determining the importance of a project: Market, management, and model) and money ). The most critical factor for venture capital investment is market, management, model, and money ). From the perspective of venture capitalists, the more important it is to be considered as a non-human factor, that is, whether it depends on the strength of the enterprise or the power of capital, it is difficult to change. The latter factors are "factors that can work hard" and can be influenced or changed by the power of companies or venture capitalists.
Based on my experience, investors usually increase the expectations of non-human factors to reduce the expectations of effort factors. As an entrepreneur, apart from being "tolerant", there seems to be no better way to solve this problem.
Resource and execution are more important than business models
Do not be afraid of so-called "plagiarism ". Many people always worry about the question of whether their ideas will be plagiarized when looking for investment? Du Feng also mentioned in his book that some investors use small investments to plagiarize entrepreneurial business ideas. In fact, many projects that are easy to be cheated or think they are cheated are mostly projects that only exist in "ideas. Even if you have a unique idea and even the product system has been completed, but you have not implemented it, nor have you implemented the team for it, then the value of your "project" is very limited, and the risk is high. Even if you develop a project, but if your project is easily replicated by others, it is not worthwhile to invest in projects that are easy to replicate and have low entry barriers.
My approach is: first, I don't really care about whether to sign a "confidentiality agreement" with investors. Second, if naive investors (actually fund managers) only care about the "business model ", if we don't care about the uniqueness of our "people" and "resources", I will start to talk about it and "class" for investors ".
A good project is not just a creative idea. People who really have a good project and can put resources in their hands will surely be able to build a certain industry entry threshold, instead of worrying about being cheated by investment companies ". The example of the plagiarism idea mentioned in the book is because the investor is also a leader in the relevant field of the industry, and he can use his own resources to replicate similar ideas, entrepreneurs were not able to launch their own products and services in a shorter time than they did, so they were promoted first.
How to estimate your company
Enterprise financial management is my weakness. I have not talked much about this part. From du Feng's Career background, we can find that financial management is her strength. Therefore, we recommend that you carefully read the company's valuation in the book several times, which is definitely a big gain.
Theoretically, there are multiple methods for valuation. Any financial management textbook will list at least five or six different methods, such as price-to-earnings comparison, price/sales, discounted cash flow, and industry comparison. This book is not about the company's financial tutorials, but just an overview of various valuation methods, so that entrepreneurs have a basic dialog framework to reserve when negotiating with investors.
Some investors are used to a valuation model, while others are used to the average of several valuation models. Each family has different habits, but they all have theoretical basis and experience basis. On the other hand, it is not enough to estimate the company's valuation and the amount of investment it invests in. It is more dependent on experience and intuition. Due to the long-term nature of venture capital, market uncertainty, and the differences in the company's development stage, especially for early projects, no matter how smart people, how perfect the model is, the above multiple uncertainties have led to all predictions over the past three years. In addition, there are not many mature enterprises in venture capital projects. I'm afraid it's just an assessment in the next year. The market is constantly changing, opportunities are constantly changing, and business plans are constantly changing. Therefore, financial forecasts are constantly changing. Finally, the company's valuation is also the result of both sides's negotiation. It is the result of a comprehensive contest or integration of both sides's emotional intelligence and IQ.
Conclusion: promising and inaction
In terms of methodology, forget about venture capital and do what you should do first: Market, management team, business model, customer, etc. Venture capital must be a by-product after hard and accurate operation. When you have nothing but money, the money will come to your door. "If you don't want to plant flowers, you don't have to worry about it." It's not unexpected, it's about "promising and Inaction", and it's shared with entrepreneurs.