Soft exchange-high Internet valuation and Bubbles?

Nowadays, internet finance, mobile Internet, offline o2o, big data, and social and life-friendly applications have become the investment targets of many venture capital institutions, once it becomes the target of investment funds or venture capital, the bargaining power will be greatly enhanced, and the market valuation will multiply. Perhaps, in recent years, no industry has had the Internet so fast, and the richest seat in China has also gone from traditional manufacturing to real estate, to today's Internet industry.

Why does the Internet have such a high valuation theorem? What is different from traditional industries is that most of the successes of Internet products use free product services to obtain users and traffic, after a platform is established, users can negotiate with venture capital institutions, because no matter whether a platform is profitable in the short term or not, the customer inventory or traffic on the platform is sufficient to become a powerful tool for Internet products.

Why is such a high valuation theorem generated? This is not unrelated to the current domestic capital market environment and investment environment. Among them, with the gradual stabilization of the stock market, the gold and other precious metal markets remain at a low level, and the real estate market is also under control, this leaves a great space for imagination about the investment destination of the society. In this case, due to the low profits of the industrial economy, there is a threshold for the financial industry. A majority of these funds are connected to private equity and venture capital through various direct or indirect channels, investment in the Internet field, and the Internet industry's high valuation practices have been ongoing.

Since the beginning of this year, the internet finance industry and related products that have swept through the investment market have become another wave of representatives in the Internet field with high valuation. As of July 24, there were 38 investment and financing events in the internet finance field in China. The minimum amount was also RMB 1 million, and the maximum amount was USD January 9 this year announced by Renren loan in 0.13 billion. The leading investor of this investment is xin capital.

As an Internet Financial Industry investment analyst from a venture capital company said:

"Now I am looking for some start-up Internet companies to talk about capital investment. Entrepreneurs have very high valuation for themselves. A small company of three to five people may require tens of millions of yuan in the first round of financing. The reason for asking him why his valuation is so high is that who is closer to my model and who is more integrated than me, this is a typical bubble mentality. His offer is not based on his own value."

This is closely related to the success or failure of the domestic Internet industry with regard to valuation, and the logic of the return of the above municipal theories. For many Internet products, the first consideration is not how to continue to improve the product services, but how to continue to improve the product and user experience to the extreme, and make the product operational in a life-oriented and commercial scenario. Instead, it gets the favor of users for free and use of products, and then attracts venture capital. In the end, it is a powerful opportunity to transfer or buy mainstream Internet platforms. The benefits of such high valuation and capital investment can certainly become the original intention of most Internet products, but once the product investment fails, the bubble brought about by high valuation will also emerge.

Perhaps for most people, the Internet bubble burst in 2000 was really thrilling. The NASDAQ index plunged from its peak at in 5132.52 in 5 trillion, and the IT industry's market value evaporated by $ in the next two years. Of course, today's internet environment is already quite different from that of the 2000 s. in the 2000 s, both advertising, broadband, and logistics were in an extremely imperfect stage, and there was a lack of sustainable profit-making business models. Nowadays, Internet companies have a clearer profit model than ever before, such as games, advertisements, and e-commerce. Each Internet company that gathers popularity has a way to earn profits.

Therefore, there is no trend or possibility of a full-industry bubble spreading in the Internet industry in China, on the one hand, it has formed a mainstream consumption and Profit Model in e-commerce, social networking, search, security, video, and other industries. The main Internet platforms have basically achieved strong profitability; in addition, the domestic Internet industry's consumer and investment markets are also becoming more and more mature, the user scale is growing, and the demand for Internet products is also growing.

There is no industry-wide high valuation and bubble, but in terms of structure, there are still serious excess investment and bubbles in some subdivided industries, such as group buying websites that have been on fire in the past few years, at that time, there were thousands of platforms throughout the country, but the last few platforms survived were just a few large ones. Most of the platforms were highly valued at the beginning, however, the sustained cost-burning and cost-free investment will eventually drag investors and users down, and the burst of the bubble will become inevitable.

Soft exchange-high Internet valuation and Bubbles?