America's largest angel investment platform K4: Operating model China won't work.

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Ye Huiyin

"K4 initially wanted to move the American mature Angel investment operation model, but it proved unworkable." "We are adjusting our strategy," said Wang Wanlong, president of the Shanghai Division of K4 Angel Investment Group (Keiretsu Forum, K4), the largest angel investment platform in the United States on July 13. ”

Over the past decade, K4 has financed around $290 million trillion in more than 280 projects worldwide, and in the five years it has landed in China, it has helped invest only 4-5 projects, with a total of 4 million to 5 million dollars, which are still far from being listed.

And now domestic PE, VC in the capital market multifaceted situation is different, angel investment is always tepid, slow development.

K4 Group was founded in September 2000 in Silicon Valley, is the world's largest Angel investment alliance organization. Unlike the General Angel Fund, K4 a membership system that brings together individual investors and a handful of institutional investors to share investment and financing services and to find suitable projects for members around the world.

In Silicon Valley alone, K4 investors have more than $2.8 billion trillion in capital holdings. Silicon Valley's membership accounts for One-third of its total.

At present, K4 has more than 850 qualified investors, and is distributed in more than 20 branches in North America, Europe and China. In 2006, it set up a branch in Beijing, and last May set up a branch in Shanghai International Automobile City.

However, K4 's situation at home has not been opened. Ouyanghong, vice president of Shanghai Branch, told reporters that Angel investment success rate is not high, the U.S. model in China is more difficult to operate. As a platform for investment and financing, there is no intermediary organization such as K4, which gathers various angel investors. In the United States, K4 's profits are mainly through annual fees paid by members and roadshow speech fees paid by the project party. Since members are from different fields and can share resources during the due diligence phase, they are willing to pay an annual fee of about 3000 dollars a year.

"That's not going to work in China," he said. Wang Wanlong said, "China's individual investors are small, but also do not have the habit of buying professional services, usually direct money to VC." ”

It is reported that K4 members of the United States are 80% of individual investors, they are the average age of 50-60 years old doctors, lawyers and other professional areas of the middle class. And K4 in the domestic development for more than five years, the current absorption of qualified investors only dozens of members, mainly institutional investors, ordinary members of the annual fee is 2800 yuan.

While international investors are interested in Chinese projects, they still have concerns. Wang Wanlong said that the first is the high cost of multinational investment operations, and second, China's listed companies in the United States frequent financial fraud increased the cost of trust.

In addition, the domestic search for financing channels of the project party is not willing to do upfront investment. K4 Shanghai Branch is located in Jiading International Automobile City, with the surrounding office has many domestic institutional investors. There are many High-tech projects in the domestic auto industry and the new energy industry, and K4 is not here to find the right target.

"Domestic enterprises would rather pay us about 5% of the amount of the financing, rather than pay a speech fee, do not want to do upfront investment." "Wang Wanlong said.

Puvida, deputy director of Shanghai International Automobile City Talent Training Institute, senior Overseas Talents Innovation Service Center, said that the things that K4 do, in some degree by the government departments to operate, enterprises are accustomed to public services, the investment and financing market thoroughly commercial operation has not fully adapted.

However, Wang Wanlong also said that there is another reason for the current trend of angel investment in domestic business: "Now and a decade ago when the dotcom bubble is completely different, the time has passed when we can find money with ideas." ”

Angel investment is still targeted at seed-age companies in global capital markets, but the demand for project companies has become higher, he says, "Ideally, the company has been operating for a period of 300,000 to 500,000 dollars in advance." If it is a technical class, the product prototype is to be come out and proven to be feasible in the market. This is the two most basic condition. ”