China's internet entrepreneurial boom encounters capital cold: Who will be the survivor

The intermediary transaction SEO diagnoses Taobao guest stationmaster buys the Cloud host technology Hall

The great storm of the Internet

Not so long ago, optimists believed that the new wave of Internet was just beginning.

On the surface it seems so. Since the second half of last year, the surge in liquidity after the economic crisis has led to a rapid warming of the capital markets, and in October 2010, Macaulay Rose 56.9% on the Nasdaq listing. Macaulay's listing has opened up 7 months of Chinese concept stocks to the United States listing big screen. The 7 months to the capital market continued to warm up, the end of the video site Youku, E-commerce site when and mobile internet company Skye successfully listed. March 2011 Qihoo 360 landed in the NYSE, the beginning of May, everyone, the Network Qin, Century Jia Yuan successively listed successfully to the peak of this wave.

The madness of the capital market for the Chinese concept has also rapidly affected the entrepreneurial market, with a large number of startups getting investment. The most crazy group buy, for example, the United States to get 20 million U.S. dollars in the end of the 2010 Sequoia Investment, handle the end of the completion of up to 50 million of the second round of financing, a few months after the financing of 110 million U.S. dollars, the public comments network in early 2011 financing of 100 million U.S. dollars. The Kai-UK network, which took on social concepts, also received 15 million dollars in early 2011, while the E-commerce giant, which started with 3C products, financed 1.5 billion dollars. Startups appear almost every day in the emerging Mobile world, with a single business plan to get the angel investment, and some angel investors even fill the suitcase with cash to see the entrepreneur.

However, after the high tide of the IPO in early May, Chinese concept stocks plummeted from their peaks as some US investment firms deliberately shorted and a series of fraud scandals. All but 360 of all other Chinese concept stocks listed in 2011 have all been break. And the original listing plan in addition to Rice successfully landed New York, Thunderbolt, Shanda literature have postponed the listing plan, almost overnight, the door to the U.S. listing closed tightly.

No one expected the golden window of the capital market to be so short. There is widespread optimism that the wave will last for one or two years, even though capital market valuations have been sky-high, but the most talked about is just how much the dotcom boom's bubble costs.

The real crisis is coming quickly. Time into the August, the European and American economic volatility, financial crisis two of the risk of the bottom of the moment to become a reality, the possibility of expansion of liquidity is not large, the capital market fear quickly rise. People will not forget that, when the financial crisis broke out in 2008, the venture capital of Sequoia gave the tombstone warning of the "Golden Age of Rest" for all investment objects.

But just as many people deny that this is an internet bubble, the hottest internet industry, such as e-commerce, social networking, mobile Internet, has a huge user base that is not the same as the castles in the castle 10 years ago. But if the crisis worsens further, the heavily capitalised Internet industries, such as E-commerce and video, will suffer, and venture capitalists will again call for cost-cutting by start-up companies.

The false boom fuelled by capital will be dashed. "When the capital market is hot, investors think," I hit 10 million, and then 50 million came in. When capital markets are good, [investors] don't worry about how much money is behind them. But when the capital market cools, if investors need to hit 10 million but are not sure there is a second round, he may not vote. Investors are realistic. They will be cautious when they do not see the next round. "Chenhao, CEO of Touch Technology, who joined the mobile internet venture, told global entrepreneur."

Is the Internet winter coming?

Silicon Valley Puzzle

Investors once thought the US internet boom would continue into Facebook, but it now looks overly optimistic.

As the world's most innovative region, the United States is the global Internet innovation and investment vane. It's hard to say when this wave of Internet entrepreneurship started in the US, but 2009 was definitely a key year, and the hot spots for group buying, social networking, mobile Internet, and so on, were in the year ahead.

This is an excellent year for Internet innovation companies. Groupon, which was set up at the end of 2008, has grown recklessly in adolescence, laying the groundwork for a 3-year valuation of billions of dollars, with the new-rising Twitter users less than 4 million in early 2009, up 10 times to 40 million by the end of Jaiku, Plurk and other competitors; the social-platform war was a year in which Facebook overtook MySpace to become a social leader, and the social-game giant Zynga also made its move in 2009, with more than 60 million active users by year-end; The 1 billionth and No. 2 billion downloads of Apple's App Store in 2008, the first to use the Android operating system in 2009, have sparked an unprecedented upsurge in the mobile internet.

This year's venture capital also ushered in a new round of feast. Foursquare, a popular company based in Location-based Services (LBS), received its first investment in 2009; Groupon won its first $30 million trillion in 2009, and the Russian investment company DST began investing in Silicon Valley in 2009, and has invested in Facebook and zynga--as a typical late-stage investment firm. DST's shots also point to a number of internet companies that have the conditions to go public, just hoping for a better time.

With the outbreak of Silicon Valley innovation, the Internet popular model also began to set off a frenzy in China. The first benefit is happy net, stealing vegetables and other applications of hot let happy net quickly occupied white-collar SNS market, and in the mobile Internet field suddenly emerged a large number of lbs companies, LBS has become the preferred mode of mobile internet entrepreneurship.

Then the turn to buy and micro-Bo Hot debut, both immediately became nearly one year in China's Internet hottest innovative applications. As the business model of group buying is relatively clear, investors are betting that there will soon be thousands of group buying sites in a frenzy of war, and market leaders ' valuations are soaring. Unlike the "thousand-Regiment Wars", the micro-broad war is almost an upgraded version of the Portal war, Sina, Tencent, Sohu, NetEase and other portals are exerting force on Weibo, especially Sina to make full efforts to transform micro-blogging business, and by holding high hit strategy to quickly create another heavyweight Internet portal, Sina's market value has been doubled several times.

Mobile Internet, the App Store has attracted Chinese developers, and the opening of Android has also allowed big domestic handset makers to launch their own Android handsets and feed a handful of Chinese Android apps. Chinese entrepreneurs also benefit directly from platform-level innovation in the United States, such as a large number of Chinese social-game developers on Facebook's open platform, and a large number of iOS and Android developers in China, whose success has benefited from US internet innovation.

But will Chinese entrepreneurs continue to draw more nutrients from American internet innovation?

This expectation is or has been difficult. On the one hand, Facebook has entered the platform period, it is difficult to repeat the outbreak of growth, in some countries, the penetration rate of more than 50%, the number of global user growth has begun to slow down, on the other hand, Both Groupon and Zynga, with the exception of Facebook, have submitted prospectuses that, once listed, are likely to herald the culmination of the Internet innovation boom.

At home, Renren has been listed, and there is no short-term product with more investment value in traditional social networking sites. Tencent's traditional social layout has also raised the barriers to competition in social networking sites, and the entrepreneurial team will hardly ever choose to start a business in traditional social networking.

Groupon and Zynga's listing plans have a big impact on the Chinese market than Facebook's future listings. Domestic group buying sites are coming out of the listing plan, but there is no real action. Groupon is about to be listed before the query, the joint will make domestic group buying websites will be more difficult to go on the road, and the current domestic those who get huge financing of the purchase site if the listing is blocked, will inevitably have a great impact on investors. As the group buys into the bottleneck and integration period, nearly one of China's most crazy internet entrepreneurial model will usher in the ebb of time.

As the biggest social gaming company on Facebook, Zynga's success has been hard to replicate. Zynga's IPO means that the future of social gaming is a foregone conclusion, and that it is unlikely that social gaming companies will be able to give investors more space in the capital markets than Zynga in the short term. There is no social platform as mature and healthy as Facebook, although Tencent's open platform also has a monthly income of tens of millions of social games, but Tencent will not lose the ability to control the platform, the company attached to Tencent platform is also difficult to truly become another giant, the attraction of capital markets is very limited.

Compared to the impact of facebook,twitter on the domestic internet is much smaller, domestic micro-blog has been out of the Twitter model. But Twitter itself faces a lot of problems, especially the search for profit patterns has not been too good, which is also the challenge of domestic microblogs.

The big worry is that Silicon Valley has no other disruptive innovation companies outside Facebook, Twitter, Groupon and Zynga. Now that the most wind-water companies in Silicon Valley are founded before 2009, and after that, there have been a lot of outstanding start-up companies, but few companies can drive a big wave, and even some of the early bright new models are quickly showing signs of weakness, For example, the social new favorite question website Quora has seen a sign of the decline of independent visitors after a lively discussion.

The puzzle for Silicon Valley is: where is the next big event? Yahoo was founded in 1994, the 1996 listing, once became the benchmark of innovation; after Yahoo, the most heavyweight company was founded in 1998 and 2004; Google Challenger Facebook was founded in 2004, Twitter was founded in 2006, and MySpace was a great time, and after Facebook and Twitter, Zynga and Groupon were born in 2007 and 2008, but then there appeared to be a dating period for Silicon Valley innovation.

Everyone knows that the next disruptive innovation will be in the mobile Internet, where the most mobile-internet star is the Foursquare that was set up in 2009, but there are only 10 million registered users and a small revenue scale. In June this year, Foursquare completed a round of $50 million trillion in financing, the first time the valuation of a breakthrough of 1 billion U.S. dollars, but it clearly lacks the temperament to become the next king.

Although the two years of Silicon Valley in the mobile Internet in the field of innovation, but most of the products are still in the acquisition phase, and do not have a clear and scalable business model. such as picture sharing application Instagram,path and so on, the number of users and Word-of-mouth is good, but these applications locate the characteristics of market segments, making it difficult to become the next platform-level giants. Color in the huge financing after the problem of team division is exposed to a new round of start-up companies too impetuous defects.

While the business model of social gaming is clear, social platforms are still dominant, making it difficult to produce giants like Zynga and disruptive innovations. On the other hand, the traditional game giants still have strong power, PopCap by EA Acquisition is the best example.

The lack of innovation is the real crisis of the Internet.

Almost synchronized with the US internet, China's internet entrepreneurship boom also started in 2009. The most iconic event is Kai-Fu Lee from Google China to set up a pioneering project incubation agency innovation Workshop. The establishment of innovation factory soon hatched a number of mobile internet projects, becoming one of the main movers of China Mobile Internet development.

But now, the Chinese Internet, which likes to replicate the American model, has also begun to suffer from a lack of innovation.

According to the public Information, Innovation factory in the first year of the establishment, they have invested 14 companies, but by 2011 years, the investment rate of innovation factory slowed markedly, the first 6 months only 3 investment projects released, respectively, imitate Tumblr light blog site dot com, Imitate Quora's question and answer website and a team of online games. Some of the projects at the innovation Workshop are also being integrated or sold, according to people familiar with the matter. #p # subtitle #e#

The founders who were once inspired by their dreams are becoming tired. Full network before the public relations director Jiang joined the full network when the group purchase site was the capital Crazy Chase, but also is the fastest expansion of group purchase site, each major group buying sites have started a large area of advertising. Jiang In addition to responsible for the full network of public relations is also responsible for full network marketing work, although he is very familiar with the advertising industry, but the internet start-up company's work intensity so that the original has been in the traditional industry he was quite tired.

"I used to work 80% of the time, but in full, I took 150% of the energy." Jiang told global entrepreneur. He had been involved in the work of creating a silver-branded pirate ship, and it took four years to build the pirate ship's brand, "but only a year on the Internet, the pace of the Internet is three or four times times that of other industries".

High-intensity work also made Jiang suffer from occupational diseases, he often had lunch at 4 o'clock in the afternoon, while the dinner was often after midnight 12 o'clock. "I used to go to the gym two times a week and go out for a trip every quarter, not once after the full, without a tour," he said. The only time to participate in team building activities was decided to leave. "Jiang said. After he left the internet industry, he joined the drama Academy line play Xiao Tang as vice president.

Jiang is not a special case, although it is not a lot of people to leave the Internet start-up companies, but the people who join the Internet business has changed.

"I think the people who came in last year came here to take the chance, and this year's are already thinking clearly about coming in." "The era of lone play has already passed," Shanhu, a former president of Kirin, told the global entrepreneur. He hinted that the era of mobile internet entrepreneurship by a brilliant idea was over, and that if you chose to start a business, you had to have the money or resources to guarantee it.

As a veteran of the traditional online gaming industry, Shanhu is very clear that the growth of traditional PC games has reached its limit. The traditional terminal game market has actually entered the platform era, less opportunities, more and more fierce competition, by a single game to win a field, or want to do a public company has been very difficult. His entrepreneurial orientation is the online game of the iOS platform, and his first start-up money comes mostly from the traditional gaming industry bosses.

For Shanhu, money is not a barrier to entrepreneurship, but he is still considering financing. At present his company Locojoy has about 20 employees, he hopes to expand the team to 50 people, financing is also to be more secure in the fund. According to his idea, financing 3 million dollars already enough company 1.5 of development.

The 50-person team is already on a larger scale in mobile internet start-ups, and the scale of the team is squeezing the smaller team's living space. Locojoy's first game will be online, although Shanhu admits this is a team for the purpose of the work, but the game is still done very beautifully, "can do the function has done."

The recent hot game from the iOS platform also shows that the iOS platform's online gaming is eroding the single player's casual gaming market. The World War II era, which occupies China's ipad apps for several weeks, is a classic iOS game. Compared to single game, the net swims to the team's research and development ability request higher, simultaneously the research and development and the operation cost is also higher, virtually also raises the entrepreneur the entry threshold. "Today you're looking at the top 50 of the iphone and ipad apps in China, and there's almost no start-up team in the United States for six months." Chenhao said his touch technology was the developer of the first game of "Fishing Man" in China's App Store, which runs the country's largest iOS developer community Cocoachina. At present, China's iOS platform ranked first application revenue is 3 times times earlier than six months--the increase in revenue is also more mature team began to enter the iOS platform, and as the number of iOS devices increased, the Giants are eyeing the emerging market.

Like Tencent. The Chinese internet giant has launched a variety of apps on iOS and is also starting to promote applications that need to be networked, such as instant messaging for mobile phones. Although the micro-letter is not the first iOS platform for this type of application, but after the push of Tencent, other types of applications have been difficult to parry. The only thing that might be able to contend with is millet technology's rice chat, but millet technology is not a simple entrepreneurial team, in the implementation of the strategy is to hold high playing strategy. There was a time last year when a number of startups focused on the Android platform, but none of them really became a leader in the industry like Millet technology, because making money on Android was a difficult problem, In the 2011, there were few start-ups in the new Android platform.

In fact, this wave of internet entrepreneurship has left the time window for truly self-made entrepreneurs quietly closed in 2011. Whether it's the traditional Internet or mobile internet, when entrepreneurs are still trying to make mistakes, the Giants have made use of resources, capital, and other advantages to complete the new layout and become the dominant force of the new platform or completely control the new platform.

But in the most promising mobile internet arena for entrepreneurs, the toughest competition has yet to come and even a smaller group is still trying. "There will be new markets, and there must be a blank market," he said. In 3 years there are opportunities for ' Mongolia ', 3 years after the brand may be, and some companies have users, and then there are two Zynga, two Gameloft, ' Meng ' era passed. By then, many gaming companies would have become content providers if they had not yet established their own barriers to competition. "Shanhu points out.

Period

China's Internet entrepreneurship has been modeled on the success of the United States tradition, portals, search, E-commerce without exception. But what's different about this entrepreneurial boom is that in the past, Chinese Internet entrepreneurs have tended to mimic the business model that has been proven, and now more so as long as Silicon Valley has a new model to hype, China quickly appears imitators. from lbs to lightweight blogs to mobile instant messaging applications to mobile-side photo-sharing apps, no exception.

Despite the simple imitation, these entrepreneurial projects are still easy to get investment in the boom, and some projects are highly valued. Zhu Yuhu, a partner of the Jinshajiang venture, thinks that nearly a year of mobile internet is like five years ago when everyone looked at E-commerce, and the investors who had missed E-commerce are now regretting it, so now they will do whatever it takes to catch up with the opportunity to move the Internet.

"The key to see the team, investment direction, if good, we are very willing to vote." Early projects are still key to seeing teams and projects. We are looking at the early projects 5 years later, 5 years and now the big situation has no relationship. "Zhu Yuhu said. They don't care about whether the product is profitable or the business model is clear when they invest.

But the madness of the mobile internet began to wind up in 2011, and investors began to become more realistic and not blindly cast nets.

"In 2010 as long as you are doing mobile Internet, as long as you can prove that you have the resources, theoretically you can get the money, and this year investors have become very realistic." The first 6 months of this year are obviously, if you're doing mobile internet, you do the Android Market or do service products, if you don't have income, but your business model must be predictable; if you do an ipad or an iphone game, you can be small, but you have to have income, and there is a noticeable increase in revenue. Chenhao said.

That is true. In the first half of 2011, all the mobile Internet projects that completed large financing had two conditions, one was user-scale and the other was income.

2011 's first big mobile internet financing is the Android gaming platform Papaya Mobile in April completed 18 million financing, when the users of Papaya Mobile has been tens of millions of dollars in the overall profit of the Android platform in the next month, the income can be about 500,000 dollar. After the completion of large financing of the rock interaction and the world of Mocha, are both income and users of the company.

Chenhao a complete experience of China Mobile Internet from madness to rational process. He formally participated in the operation of Cocoachina in January 2010, officially registered in April, and received the first round of financing in October. In April this year they launched their first iOS game, "Catch people," now download more than 9 million, is the Chinese version of the iOS game is the most downloaded. But now even he has a successful product team has also felt the Internet investment environment changes.

This June, the investor who had never asked any business of the company to take the initiative to call Chenhao Zhi, hope they complete the second round of financing as soon as possible, investors said because their business status is good, this is a hot industry, early settlement and late resolution No difference, should be resolved early.

"From the end of his sentence to our 2nd round of financing the formal signing of two weeks." Chenhao said. Despite the success of the Catch-man, they also need to prove to investors that they are capable of continuing to succeed in the second round of financing.

Chenhao is lucky, since by July, financing has become a lot harder. One of his friends talked about financing two weeks later than he did, and found that investors ' enthusiasm, wait-and-see sentiment, and the view of the amount of money, all have very obvious changes.

Investors ' caution stems from the cooling of the capital market, the June Thunder and Shanda literature have not been successfully listed, the capital market for the Chinese concept of the pursuit of rapid decline. The first wave of affected nature is investment institutions, which in turn affect start-ups and aspiring entrepreneurs.

The most popular of the 2010, except mobile Internet, is electronic commerce. In the first half of this year, a large number of E-commerce sites completed a huge amount of financing, Amoy, Beijing and east have won hundreds of billions of dollars in financing, and Tencent began to actively in the field of E-commerce layout, 60 million of dollars invested in Amoy competitors good buy.

"China's Internet over the past decade is very obvious three waves, the first wave is the portal, the second wave is the game, the third wave is E-commerce." If this wave of e-commerce is clear in the case of these funds if they do not have the power of the project, they are very panic, ta a wave of market that is doomed, it is very lethal to the fund. Zhu Yuhu told global entrepreneur.

Jinsha Venture investment 5 million U.S. dollars last year to invest in a Web site can be seen as the beginning of this round of electricity business investment war prologue, in addition, they are in the field of E-commerce investment portfolio and to do the foreign trade of the Orchid Pavilion set potential, to do the dream of Bazaar clothing business and do discount sales luxury Jiapin network. Zhu Yuhu that the valuation of the electricity dealers in the previous 10 months was unreasonable, followed by a normalization of e-commerce valuations. "Now we are obviously seeing the pressure and the open market is going down so much." When the market capitalisation is now 7.8 billion, how can private companies value so much? The open market clearly has a lot of pressure on the private equity market, and valuations are too high to go out. "he said.

Handle Nets competitors full network and the United States network in 6 July this year completed a round of large financing, and the United States Network CEO Wang in the financing completed immediately after the start of the third round of financing preparation. Wang Huiwen, vice president of the United States network, said he did feel the cautious attitude of investors and that investors would have done more research before investing. "For companies that have entered an upward trajectory, investors are still bullish and financing will not be a big problem," he said. But for startups that just started, it's going to be a lot harder. ”

Full network CEO Feng revealed that not only the group buying industry, almost all the entrepreneurs around them are complaining about the difficulties of financing. "The purpose of financing is to hope to be able to do business as soon as possible, and then give investors return." But when the market tends to calm, the capital will return to the rational state, will be more serious to see your company's professional team, operating mode. The market can get the investment will have more than 10, but not necessarily these more than 10 can do very well, if can have 三、五家 listed this market already very big, can have 10 companies to go public the possibility is very small. ”

History has proved countless times that the internet industry is the norm. The winter may not be conducive to the outbreak of innovation, but in this period is suited to run too fast before the company deep into the market to practise hard. The winter of the internet is a tough time for the weak, but for the strong enough, winter is a great opportunity to swallow up competitors and grow into real giants. This is the worst of times and the best of times.

But after all, the entire internet and mobile internet industry is still in its historic ascent – China's internet users are still less than half the population, and global smartphone sales could overtake PCs in 2013, since there is such a market base After a short winter, there is bound to be a new wave of innovative models.

"The intensive listing of Chinese Internet companies over the past year is only the value of the last round of internet entrepreneurship," he said. In fact, the next wave of internet innovation is now just beginning. "Qihoo 360 investor, Highland Capital partner Thor said.