Editor Zhang Ying: If the bubble, what is the strategy?

Yesterday, the founding management partner of Jingwei Venture, Zhang Ying, made the theme of "How to deal with a bubble when it comes" in the seven beef three anniversary celebration. The following is an excerpt from Zhang Ying, the content of the text reproduced from the Jingwei to create a micro-letter public account:

The Best of times

We still firmly believe that this is the best era, China from exports to production to consumption + service transformation, we are extremely optimistic about the transformation of China's economy, emerging industries have great opportunities;

Emerging technology companies such as wireless internet and the Internet will have an increasing share of GDP in China, and the exit of 5 billion to 10 billion U.S. dollars will be the norm.

I do not think that mobile Internet is an extension of the Internet, but subversion, it is the mobile internet through the mobile phone to become like an organ, resulting in the opportunity to subvert any traditional industry, if any company does not embrace mobile internet may be dead;

From the wireless internet, the United States is a pioneer, but it must be in China, I firmly believe that the future--in the near future, the mobile Internet more innovation will be originated in China, now we have a business model innovation, and I think will also see the mobile Internet more technology innovation, This innovation will lead the United States and Japan;

More and more mobile internet companies will be listed domestically. I think in the next 5-7 years, our Jingwei exit, or Jingwei in the mobile internet exit, more than 50% will come from the A-share market, so we increase the investment in renminbi, I think there will be a series of high-quality mobile internet companies listed in a A-share;

Good entrepreneurs will get more systematic and complete help, the brand gap between investment institutions will increase, more quality projects and quality entrepreneurs will be closer to the front-line investment institutions. The first line of investment agencies, the brand of investment institutions are about 12, the brand Foundation because of their successful exit, they do, they give entrepreneurs help, and other funds to pull away.

Second, the so-called "bubble"

The so-called bubble, is the financing of the bubble, the past two or three years, the U.S. capital market, coupled with Ali, Beijing-east and other heavyweight withdrawal, so that the capital to pay more attention to the first-tier market. LP has made a lot of money from the rewards of emerging industries such as technology. LP Investment VC and PE ratio is generally fixed, 5% to 15%, for example, LP has 100 dollars, originally is to put in the Fund, VC and PE is 10 dollars, because two or three years their own size from 100 to 300, doomed them in VC and PE investment to increase 3 times times, At that time they want to accelerate the investment in VC, PE.

But we have our own financing structure, three years or 3.5 times, our financing speed is the same, the fund is not big, so that they want to invest in some new funds, or often urge us, is not to become faster. The influx of money into the fund is bound to speed up, leading to a fierce competition in the first tier of markets. In the last 12 months, the valuation of premium project financing in the private equity market has almost exploded in the first tier, with little effort being wasted by entrepreneurs. All the money wants to focus on the quality of the company, the quality of the company's valuation will rise very high, average valuation from the ABC wheel, compared with the previous average normal should be about 3 times times higher.

Iii. Coping Strategies

First, pay attention to sales Director, if this person is wrong, one into a waste is a year, this year in the cold winter words to the company is very important things. In general, many wireless internet companies are product oriented, founder or product and technology, there is not much experience in sales, but the start-up companies recruit this sales talent, to spend all the energy to feel that he is not suitable for this company, because you recruit him, you have to believe that he recruit the team, About half a year or so to see how the implementation of this person, execution is not good to kill him, a group of people will leave, at least one year, or even 1.5;

Second, efficient and accurate grasp of the financing structure, if it is conditional, many people interested in you, you have to do a very rigorous due diligence to investors, asking for a bridge loan. Jingwei cast 190 companies, to some extent, we like a large data platform, any time, I can be acutely aware of each VC company's internal style changes, and investment strategy changes, their credibility to strengthen or reduce. I don't mention names here, but there are some VC promises to bridge loans, through the structure of the Vie, about 3-5 months time to observe the data, as their core competitiveness, what do you mean? He will be very easy to agree with you to sign the terms, to give you a bridge loan, look at your data, the data is not good three or four months, if there are other people vote, to pay the money, others do not vote this money as a convertible loan, or hanging on the account.

There are some funds this way to win some companies, you have to be careful, especially the choice of companies to be careful, how to be careful, this is the communication with your previous investors, because not only can take the bridge loan, at the same time can require some provisions to strengthen their own protection;

Third, the most conservative financial calculations, the most radical cost, look at how long you have developed. I am optimistic about China's wireless internet, I think is the best era, does not mean that there is no ups and downs, if one day the arrival of the financing of the winter, many entrepreneurs get the probability of money will be low, the process will be more painful, I just said you have to be prepared. has been a lot of money, but every month the amount of money than the larger companies should be particularly cautious. In the ice and snow inside the high-speed driving, if the brakes slow down need a distance, it is likely to slip and drift.

This year we have nearly 12 companies to melt the money is more than 100 million U.S. dollars, not listed is private placement. There are a lot of companies in the monthly cost of 35 million dollars, are in the market, Rob users. I often remind them CEO, I say this is the Internet thinking, Internet play, I do, but be a little more careful. If the winter really comes, you have to put on the brakes, originally one months to spend 3 million dollars, if the brakes, the staff to the bottom of the elimination, let a person go, the month's cost may jump to 5 million or 6 million U.S. dollars, because the staff to dismiss costs, so spend money to be cautious, especially with a lot of money to be careful. Because braking takes time;

Consolidate board seats and defend the right to vote. If there is a winter coming, an entrepreneur still needs to be more autocratic and can control the direction of the company's development. Maybe as an investor, it's kind of weird. I have just made it very clear, I think that any success of a start-up company, 95% by the entrepreneurial team, 5% are investors, we just bet on the people to sit a downwind, the middle stage to help key busy, such as financing, capital operation, key personnel recruitment advice, Government PR ... But again, or to see the entrepreneurial team, I still recommend all the entrepreneurial team, whether it is winter, there is no winter, to do everything possible to consolidate their own board seats, seize the right to vote, any objections, the company can be completely in accordance with the founder, entrepreneurial team direction of thinking and development;

Five, make sure the company is well aware of what the company will do if one day adversity strikes. CEO talk to be particularly careful about what to do, if one day this winter came, I am not a person, but then went back to it, people after you all things confidence will collapse, want to know what they say, to do. Any company, including our company, the investment company, needs to be eliminated, which is a very healthy system, and it can be very natural to prepare for a healthy staff structure in the event of a cold winter. Any company requires a 10% to 15% elimination. Cold winter is not a bad thing, if the market position better companies, if met the financing of the winter, you can consider the status of their own market, their hands on the cash to do some integration, do some mergers, can let themselves go faster. I think this may not be suitable for a lot of start-up companies, but it is suitable for this to get money, the development of excellent companies;

Six, a lot of people say I just melted money, now there are investors to find me, what should I do? My simplest way is to say you think about it, a year later, your own expectations of the valuation is how much, I give a specific example, with the number may be simpler, this round of melting is 2000 U.S. dollars in the valuation, the account is about 5 million dollars, enough for you to develop a period of time, but there are VC keep looking for you, this is a minority , but also to say, it is likely that startups are very good quality, that should not take their money. I will ask about a year after I expect the valuation is how much, calculate is 60 million dollars, I say, if that time you expect 60 million dollars, suppose your data can do, if there is VC to find you, You will be 60 million dollars by 0.7, if someone give you 40 million dollars can take, and is not toss VC, a little more money, a slightly diluted shares can be in the harsh environment of war when more aggressive.