Capital Winter Vientiane: The Golden Age of entrepreneurs

Domain Name City (domain.cn) November 7 News, days even, a gray boundless. The oncoming man, with a hurried footstep, wore a mask, and did not wear it. 22-Year-old Celia is any protective measures do not do that, she stood on the side of the road, looking at the busy, silent, smoking smoke.

A cigarette burns out, she writes these words in the circle of friends: Haze days, smoking seems to begin to feel at ease. In late October, the CEO of the Eaves team said the budget was tight and half the salary was halved, and she quietly accepted the reality, encouraging herself that this was the norm of entrepreneurship, and that the investment and financing environment was now so good.

And after a week, the company because not to melt money, no thought, the team dissolved. This is the first time she started a business. She thought of her new venture, filled with blood, in the circle of friends said: "Entrepreneurship, do the right." Did not know, perhaps the project will die tomorrow, do not do is doomed to even live the possibility of being killed. Who cares and so what. ”

Never thought, a word into prophecy. A week ago, she told Sina technology that if the one-month period is not enough, the team will die. In the end, the deadline is sharply shortened to one week. Next, just graduated from her, intends to join other mobile internet start-up team, because this is the heart of the.

In the past two years, the creation circle in full swing, the media circle also helped, entrepreneurial team springing up. Once investors have said that a lot of hot money, unlike in the past is the team in the change, today is the money to find a team. And in the Jingwei Chong cast a ladle of cold water splashed, public opinion-oriented reflection.

Good investment and financing environment, the cold winter is going to? Should entrepreneurs worry about how to prepare?

The capital undercurrent behind entrepreneurial mania

The Celia wandering in the street, has now handled a good exit procedures, only because the eaves of the product has not been on the line will die, melted the seeds but not melting angel. Before the team officially dissolved, she sat down with her partner and talked about why she had failed.

"In fact, the development of our team does not and need to keep up, we are to do the rental and do this project, not from the heart of the identity of this matter." This is not the most interesting area, nor is it our forte. "At the same time, CEOs are responsible and not good at Celia investors," he said. ”

Like Celia, 35 young hit, one foot in the ivory tower, the other foot has entered the society of the melting pot, for their own and the great environment is very little known, fanatical into the entrepreneurial field, before surfing in the sand stranded in the team, countless.

"We see a lot of young teams who do not know capital and adopt an attitude of hope for capital recognition." But this is wrong, do not do things for financing. Entrepreneurs have a lot of temptations to do when they start a business, but focus on doing it in one place. "The origins of the seed and Angel phase project," said Shili, capital partner.

Confused or greedy. Many entrepreneurs in the initial moment, the direction of a clear concept, but at a certain stage of development will be frequently converted direction, in this process, the team's resources will be depleted. There are also entrepreneurs who will look at two different directions, keep pace with each other, but often do neither.

Entrepreneurial enthusiasm and blindness, not only reflected in the direction of the constant conversion, but also reflected in a person and more than one job, everywhere equity participation but do not ask the company. An investor who declined to be named said that there are now many in the traditional industry as the middle-tier, holding a certain amount of resources, and then in many companies to participate in, become the co-founder of some companies, but do not work.

This is the human nature, perhaps not the full grasp of entrepreneurship, perhaps it is difficult to abandon the existing stability, always to stay behind. But as investors, they want entrepreneurs to be able to put their heart and soul into it, and it's hard to keep going in the business circle once the entrepreneur is exposed.

In addition, more entrepreneurs are relatively impetuous mentality, too optimistic about the financing environment. The investors said many of the projects were in the early stages of idea when making seeds and angel investments, but many were lion.

More crazy is, there are some simply do not work, simply to cheat entrepreneurs to deceive investors. Weibo netizen "Cosmic most Meng Zombie powder" friend encountered such a situation: a Shanghai artificial intelligence company Recruitment Common Lisp technical Director, finally found that the division does not exist, entrepreneurial project is to create "rule" and "destruction" of all mankind's super AI, only partners to invest 1 million to cooperate.

Sounds ironic, but behind the mentality, let a person "think very fear". Behind this madness, essentially because hot money is too much to cultivate the fertile soil for entrepreneurship, and the endless number of angel investors/institutions and business incubators, as well as the stock-raising alliance has become a big environmental organic fertilizer.

In such a hot land, there will inevitably be entrepreneurs and investors mixed with the phenomenon. In addition to the unreliable entrepreneurs, there are also disgraceful investors/institutions and incubators, as well as immature public equity financing model.

In angel investors/institutions, there is a controversy: investment money is not much, but because the early provision of valuable strategic advice, combined with a larger voice, it will occupy a large stake, which left a big potential for the future. In the incubator, a lot of early is to use the new concept of entrepreneurship to the enclosure, the nature of the behavior of the real estate, not help entrepreneurs. And the stock-raising mode, there are large and small shareholders dispersed, the entrepreneur is a kind of energy pull and so on.

Overvalued: Know who is swimming naked after low tide

In fact, early this year, the debate about the recurrence of the technology bubble has begun. In March this year, the Nasdaq index soared to 4,000 points, near the peak of the dotcom bubble that was about to burst in 2000.

After all, the Nasdaq has fallen from 5,132 points to the bottom of the cliff, as if it is far away. However, in the past five years, the Nasdaq index has soared by 3,000 points, and the two-tier market has given an extremely high valuation to Internet companies and related technology stocks. The level of market heat, from the domestic proliferation of incubators and entrepreneurial cafes, as well as countless angels around, can be seen.

After a lapse of 14 years, the market today is different from the day, will it be repeated yesterday?

Different VC and entrepreneur, different saying. Presumably, there is a recurring point of view: The winter may come next year, but the bubble is not so big, after reaching the peak, may quickly turn cold may also cushion the correction, even if the cold winter, it will not be too long.

Have to admit, Zhang Ying internal letter, or a stone stirred the thousand layers of waves. Some entrepreneurs say this is a bubble for investors, not theirs. And investors also stand up to express their views on the cold winter. Then, Zhang Ying, at the Wise Congress, insisted on his own views, but the previous sharp statement was adjusted to no longer mention the bubble, but said the winter.

Interestingly, when domestic investors start putting out the fire, foreign venture capitalists are still alarm for entrepreneurs. Marc Andreessen, America's leading venture capitalist, recently expressed his concern for two consecutive months: the market is overvalued for startups, but the question is whether these companies are already on the fast track.

Recently, the domestic video social application blink valuation billion, the latest round of financing nearly 20 million U.S. dollars, Sequoia Capital, T.H and innovation factory to participate in this round of investment. Xu, a former innovation workshop investment director familiar with the round of financing, said it was a company that grew to tens of billions, not a ceiling of billions of, which was determined by product direction attributes, while the founding team was a continuous entrepreneur with high execution capability.

In fact, in the design of financing structures, including investment routes, the choice of investors, the establishment of the Board, and how to do high valuations, these need game. Blink 100 million valuation article one out, pingwest Ai Yi immediately shouted, "This is not a bubble."

In any case, investors are willing to gamble on the social product of the other, because once the bet is right, it means holding the cash-for-use tool of the future high frequency. The energy that the market anticipates is here, cannot be neglected. Only now, investors and entrepreneurs do not know the changeable, after 00 what kind of social products, which function can be a hit. And Blink is still groping.

The Advisory Body CB Insights report showed that 600 startups raised 55 billion dollars in IPOs, averaging nearly 100 million per home. 47 startups backed by VCs are valued at more than 100 million yuan, including Pinterest, Box, Spotify and Square.

And in the country, before the investment and financing of a big heat signal, no matter how the team, the product, startups have to compete for numbers, shouting high valuations. An angel investor who did not want to be named told Sina Technology, now many inexperienced entrepreneurs, on the open valuation also on the billion, feeling very impetuous. Those excessive market expectations are like blown bubbles, when the cold winter comes, a poke is broken.

Winter will come: investors are tightening

Many investors believe that when Alibaba listed, the two-tier market to a peak, after this node, the two-tier market will be relatively quiet for some time.

In the market from hot to cold, VC/PE to the start-up company's product model and financial requirements, the unreliable projects will accelerate the demise. In the frenzy phase, the original project assumed to be a VC to give up, but to find other VC investment is highly likely. When the two-tier market narrowed and people began to panic, the financing environment was not as ideal as the entrepreneur imagined.

For example, the Eaves project, Morningside Capital, an investment manager of Sina Technology, said: "We have seen this project, a lot of problems." Cao Liang, an investment management consultant, said: "It still depends on a single item and there is no pressure if everything is good." However, O2O field, although the direction of the future, but now the model is not mature, see most of the projects are not reliable. ”

The eaves ' seed investment comes from an internet finance company, about 300,000 yuan, accounting for 30%, and a group of blood transfusions through its peer-to-peer products, which require a lot of money to get a house. It is understood that the team and investors signed the agreement on gambling, housing turnover reached a certain amount before the concession shares.

The gambling agreement is the latent rule of VC/PE, it is to protect the interests of investors, there is a big controversy. In the case of the eaves, the investor provides the office space for the team, hoping that the team will realize the non financial performance commitment within the agreed period, including the number of users, KPI, transaction volume, etc. In Celia's description, investors often complained that their product development was too slow and did not actively finance it.

In the current market, I do not know when it will turn cold. Xu said that in the cold winter time, when the heavy asset project once one link capital chain break, the whole project will easily collapse, compared with the light assets, will evaporate faster. Therefore, as a rental of such a heavy-investment products, investors will naturally be cautious, whether the demand for betting or cautious choice of such projects.

GGV Capital (GGV) Jenny Jenny believes that the entrepreneurial team should not rely on VC money to survive, to grasp the rules of the market, must both hit the user needs, but also has a well-functioning leading machine.

Close to the cold winter, investors will be more from the source of funds and management of the return of the point of view. Jenny said that VC must ensure that in the cold winter time, their investment in the optimistic company once the need for funds, such as the C round B round, if not found outside, must support her through the cold.

At least the winter has not come, the investment and financing environment is still hot, but some investors have begun to tighten. According to the Jingwei venture partner, Zhang Ying, there are more and more investors or institutions in the signing of the term sheet after the reverse, the proportion of the regret significantly increased.

Because of overheating caused by VC competition, all want to bet on the second Baba, so they hurried to sign the bridge loan, but in the construction of the VIE structure of 3-5 months, VC began to carefully look at the data, if found to have a large fluctuation and downward trend, will consider whether to decide some impulse, valuation may be wrong, So it creates a breach of promise. For the entrepreneur, has rejected the other VC, not too many investment options, can only bite teeth to accept.

Cao Liang said that the current investment is not reduced, and after the year, the VC line may be significantly tightened. Continuous entrepreneur Wang Light believes that the current tightening of VC is because of excessive investment, and the next round of funds are not in place, so the movement slowed down, the other is VC to achieve a tacit understanding, to reduce the value of entrepreneurs expectations.

Prepare for winter: start-up companies accelerate financing

From the buffer period, the eaves from the lack of funds to evaporate before and after less than one weeks of the case, for the not yet financing and financing of the start-up companies, provided a negative example-when the money, should think of the day without money, the sooner financing the better. Whether it's winter or warm spring, ample cash reserves are necessary.

At present, many companies are aware of the need to speed up the pace of financing, and began frequent contact with the media, hoping to new concepts to impress investors in order to obtain funds, comfort through the winter, the next is such an example.

The ambiguous, was playing "about Cannon artifact" label "Mo" will be listed in Singles Day. But the days of strangers ' proximity ' are not so good. It was originally a software that called a stranger by the head. Social networking is a big bottleneck, and it's a group of strangers who like to call.

In the discovery, the user growth no longer rapid growth, can see the bottleneck of the moment, the neighbor decided to change, do not want to do small and beautiful, but to do a life class platform, but also intend to explore the "spiritual" commodity business model. It's a big transition from a neighbor's point of view, but I don't know if investors will pay.

In addition to entering the development period but the bottleneck of the start-up companies, there is also a kind of early development is too slow, in test water and trial and error found not to finance may be unsustainable in the winter of early projects, such as the private car platform "fast carpool"-online one year, the team only 6 people, CEO with multiple jobs, app just submitted to the application store, is about to enter the development track and start seeking financing.

Fast carpool has been through the micro-letter public number test water, based on lbs to provide users with carpool services. But the founder, Wang, found that investors were beginning to weaken their interest, realizing it was too late to raise the pace. "We found the market in operation very large, but the product experience is not good enough at the moment, and the overall progress is too slow." ”

Wang said: "Recently only contacted four or five VC, recently many VC began to hold a wait-and-see attitude, until now has not determined the financing intention." And earlier, VC on the company's concern for us is very high. ”

In addition to intensifying the pace of financing start-ups, and some companies have realized that the money is not enough to rely on VC, to quickly let their projects into the commercialization phase to increase revenue to stabilize the company, "where to go shopping" is such an example.

Wang, a continuous entrepreneur, said: "Because only income can support themselves." The only way to get through the winter is to run the machine first. Even if the investment and financing environment is not good, we cannot look for investments everywhere. ”

At present, his products are still in the push stage, the recent access to the South gongs and Drums Lane, and many other merchants. Although the company has been investing millions of angels this June, he still believes it is necessary to speed up commercialization.

In any case, startups now have plenty of cash flow, including many of the founders who say they've already made enough money to support at least 18 months. But even if enough money doesn't mean it's going to be a smooth winter, burning money will only make the company go to the Jedi, and more startups are moving steadily and spending money carefully.

Cloud services company Leancloud recently completed tens of millions of dollars in financing, but is still keeping a low profile, whether it is the amount of money hidden, or uncharacteristically not in the media. For Leancloud, more willing to work quietly in the noisy park environment, steady development.

As for how to spend the winter, founder Jianghong said: "We plan the pace of financing according to our business development phase." Startups all need to control burn rate according to their actual situation, for example, we have been through half a year of budget tightening since we came from AVOs Independent to a round close, which is what startups need to endure. Of course, getting into the healthy development phase as soon as possible is the best way. ”

Focus on the work of social "tenderness" recently also completed tens of millions of dollars in financing, had been heavily in the subway ads, but recently also gradually tended to low-key. Founder Lin says the company now has enough cash flow to sustain it for three years. Even if there is a winter, we are ready for the winter. ”

For the pace of financing he thinks that start-up companies in the exploration period do not take too much money, small steps to support the company to survive; development period to take a sum of money, to promote the company's growth; mature to see the competitive environment, if more competitors than resources, competitors less financing, as soon as possible break-even. "Overall, as Lei said, it is ideal to melt into the money that is not spent." ”

The Golden Age: a cold winter mentality, long term trend

All along, investors and entrepreneurs have lamented that we grow up in a natural market with unlimited potential, facing the world's largest internet community. Every time they inspire themselves and others, it gives a wonderful illusion that the Chinese market will lift a huge wave when anyone throws a stone into the lake.

The craziest illusion is that many people later believed that the mobile Internet was omnipotent, capable of subverting traditional industries and changing the world. The opening Celia have also naively thought, do rent O2O as long as the line products can go to subvert, but later found no line to push, nothing can do.

Those dreams and expectations are no different from the crazy obsession of. com in the 2000. Only two times, the conceivable space, the possibility of realization and the market potential are different. In that bubble, startups were more of a puzzle, and the companies that were listed today were more of a trading type, with higher valuations.

And entrepreneurs can not expect the environment is always good, after all, this is contrary to the capital market law, a better attitude should be the time to maintain a fear of entrepreneurship. As GGV Capital GGV partner Jenny said: "Entrepreneurs should have a power-if the idea of a subversive industry to start a business, rather than because the money to take VC good cheat to start a business." Whether there is no winter, entrepreneurs in the entrepreneurial time, they should think that they are in the cold winter.

Even if the capital is cold, it is still the golden age of entrepreneurs in the eyes of most investors.

From a first-tier market, the amount of investment that flowed into the Chinese market in 2014 was about $5 billion trillion, with only half of TMT investment. And in the two tier market, according to the Qing statistics, from 2011 to the third quarter of 2014, there are 37 companies listed in the United States, including VC/PE-backed Chinese enterprises a total of 29, and Internet companies have 18, accounting for more than 62%,it and telecom and value-added services have 3, accounting for 10%.

From a first-tier market, investment director Xu believes that in the age of PC Internet, the degree of integration between the virtual world and the real world is limited, while the mobile internet era, the virtual world and the real world, the coupling is higher. Whether it's getting high valuations or hot money coming in, the big trend is no problem.

From the level two market, Shilizhi, the capital partner of origin, believes that there is a 35-year cycle of volatility in the capital market, and that winter has a greater impact on IPO projects because the window may be closed. But early-stage projects have less impact on first-tier markets because they only want investors to start doing things based on start-up funds and finding the right investors.

At the same time, he said there is a recent view that the U.S. dollar Fund is about to withdraw from China, the future of the dollar financing environment may be relatively close. At the beginning of the year, China's market flowed into $5 billion trillion funds. This has not been confirmed, but to some extent the market panic, prompting investors to adopt a tightening strategy.

But Zeng Yingjie, the capital investment director, said the dollar fund would not be withdrawn for the time being, and might not move until next year. Now there is plenty of money for venture capital, and there is no need to panic. More new renminbi funds are also emerging that will make a difference.

Ran, chief executive of Ecapital Capital, said: "The valuation level of US stock market stocks is in a reasonable range, so even a technical correction will not last long." "So even if the winter comes, it won't last too long," he said.

From the transformation and layout of venture capital institutions, in the VC have been from the early projects to get the benefit of the N times, PE encountered the IPO lake situation, but also began to sit on the transition, into the early stage. In addition to the overall layout of VC/PE, domestic investment banks have also begun to make internal restructuring.

Ecapital Capital will be broken into a network structure from the group architecture, the industry group is subdivided from O2O, social and community, software and hardware large data cloud to Internet financial medical consumption. In Ran's view, early private financing transactions have begun to mediate, resulting in many new business models, the future of the financial industry chain will be reconstructed. This kind of asset management layout is based on the ecological system thinking.

One investor, who declined to be named, said the more financial crisis should start, the more it would be in the winter, but only instantaneously. The quality of the company will always be there, for us, is to find her. In essence, now has entered the era of large asset management, an organization may be both incubator, VC and PE funds, but also to do the two-tier market.

From the macro point of view, large asset management institutions springing up, they are in various forms of expression. With the adjustment of industrial structure, people's real estate investment is blocked, but everyone has to invest in financial needs, this time entrepreneurship is very popular. From this point of view, this is everyone's opportunity, but also our golden age.

In such a golden age, valuations are also based on foreign companies, unlike many years ago when Chinese start-ups copied the Silicon Valley model. Today, the gap between domestic and foreign giants is shrinking, and more startups have a lot of innovative models and play, and that is something that Silicon Valley has never had.