Electricity trader's capital struggles after burning money

July 18, Jingdong Mall board chairman Liu again threw out his price war manifesto, he thought, "the third to fourth quarter of this year will set off the largest, most tragic, the most comprehensive price war in China's history of electricity!" Taobao Mall Cat side is generous, said it will start from the end of July to launch a number of large-scale marketing activities, by the cat's own money to subsidize 1 billion yuan.





the noisy electric dealer price war still failed to fade away with the upsurge, and in the recent resurgence of the trend, especially since June, the price war has reached its peak, including Jingdong Mall, Gome Mall, Suning easy to buy, such as the cat, and other major electric enterprises are involved, if according to the public saying rough statistics, These electric business enterprises have invested billions of yuan in the supply of this round of price war.





since the local electric business began to develop rapidly, the price war between the electric business has not subsided; however, the price war is only a microcosm of the electricity dealers burning money, please star endorsement, smashing ads, buying traffic and other means are the way electricity dealers burn money. Wealthy electric dealers behind the various kinds of capital, they provide a lot of "ammunition" for the price war, but also in fact become the real wrestler behind the electric business war.





but chess to the game, has already seen the electric dealer's model of burning money to hold a lot of VC/PE, but also let investors start to debate and reflect on the past that round of crazy electricity business investment fever.





the capital struggle behind the electric dealer





"Jingdong Mall is now indeed suspended IPO, but did not close the door to private financing." A person familiar with the matter told reporters.





Jingdong Mall chairman Liu not long ago, the foreign said, Jingdong is still lying on the account of 6 billion yuan in cash, which is about to set off the price of the East Beijing prepared.





Although the power industry is no longer as beautiful and generous as it was last year, but such as this kind of price war still has appeared, let the electricity trader have this emboldened VC/PE capital support, as Jingdong Mall general, although still not realize profit, but after several rounds of huge financing, it took the "ammunition".





Although not in front of the direct competition, but in the electric business crazy PK Behind the show is the will of VC/PE capital.





Beijing east has obtained 10 billion yuan of "ammunition" from the private equity fund, according to the data of the Qing branch, since 2007, Jingdong Mall's four rounds of financing from today's capital, Tiger Fund, DST, Sequoia Capital and several wind investment institutions have received sufficient financial support. In the first half of last year's D-round financing, and even raised 1.5 billion of billions of dollars of huge investment, for its subsequent expansion to save enough "ammunition."





Jing Dong's "Sky-high financing" story is only last year that electric business investment feast in a microcosm, platform-type electric dealers, vertical electric dealers, group purchase sites and other types of electric network have access to a large amount of wind investment capital injection.





According to the China E-commerce Research Center released data shows: 2011 has been disclosed in China's E-commerce investment incident occurred 95, a year-on-year increase of more than 50%; in 2011, the total number of domestic e-commerce market investment and financing for the first more than 20 billion yuan. Whether it is the number of investment events, the threshold of investment, or the total investment has reached a new year high, the capital market activity is also much more than the previous year level.





Worth noting is that many of the big cards behind a VC/PE figure. There is a tiger fund behind the goods, IDG Capital, Temasek, its, Citic yield ye fund, such as more than 10 investment institutions, the northern Lights, Sequoia Capital, DCM, June Lian Capital, Ding-hui and other traditional internet industry investment giant is the vertical type of electricity dealers frequently appear in investors.





has enough money to do "ammunition", burning money lower price route is often a lot of platform-like electric dealers to choose the expansion of the road.





"Low price is the main factor to attract the current network consumers, whether it is the performance of Taobao holiday promotional activities, or the company's listed companies Macquarie's earnings show that the impact of the promotion on consumers is very direct and efficient." "Some companies want to compete for market share through price wars, some want to ensure revenue growth, and others want to raise the industry threshold," said Feng Lin, an analyst at China's E-commerce Research Center.





investment in different electric dealers, in fact, reflects the different mentality of investors and the identification of different business models. "At the time of the Beijing-East financing, Jingdong will tell investors that it is to continue the price war, first to do a large scale to consider profitability, financing can reduce financial costs, so that the price war more flexible, it is necessary to invest it must first identify with its model." "A person familiar with DST's stake in the BoE deal last year said.





As the earliest investors in Jingdong Mall, today's capital Xu said that the Internet is a winner-take-all industry, it must be done to the scale, to be able to melt money, internet companies take money is very important, light on their own slowly do, can not do it.





but another big fan of the electricity business is another view.





invested in all the goods of the Sai Fu Yan clearly opposed to the electricity dealers burn money not profit expansion model investors. He had bluntly, the current electricity dealers generally have the situation of burning money, investors will soon be consumed money, to a certain extent, e-commerce in the main business does not make money, it earns is VC, PE money. Citis that this model is not sustainable, and that the current E-commerce "mainly fooled."




At the beginning of the 2012,
: "Every guest in the second half of the year to achieve the goal of long-term profitability, rather than the never-ending burning of money." Its had a capital injection of all the passengers, choose every guest also to a certain extent represents the its ideas.





as another fan of the goods of investors, qiming founding partner Shiping is clear that does not believe that every customer is burning money. He also believes that there is a need for electricity dealers to burn money, but should "see if the company provides a unique service, product, value", rather than just a single channel service.





, director general of Northern Aurora Jiang Haotien also lamented, from the capital point of view, "the electric business site nearly two years to get too much capital, basically is holding the money of investors fighting." Northern Aurora has also invested in a number of vertical electric dealers.





VC/PE Quilt cover





at the same time, the capital wrestling is still continuing, and the next indisputable fact is that a lot of VC/PE capital trapped in the mire of the electricity business, short-term profits from the electricity dealers out of the basic hopeless.





electric business to burn money into a general state, electric dealers burn money madness, from last year, the advertisement can be seen, the big group of Buy website please star endorsement, a large amount of advertising on the fire of the media and other channels.





In fact, the effect is not ideal, so that investors are beginning to feel dissatisfied. Jiang Hao Day said that the domestic electricity industry competition is too fierce, the major electric power site to reduce their own position to not make money to compete with rivals. The cost of Internet traffic has risen very badly in these two years, which also makes the electronic business enterprise encounter huge market promotion cost pressure. Because the electricity trader makes the price war to be more convenient than the line, the consumer sees where is cheaper to switch to which website, the electricity merchant anticipated "to be beneficial to stick the consumer" to become empty talk.





is still a generous investor in VC/PE capital. Group buying industry is also by the VC/PE capital to pay the typical representative, group buying in last year was considered to be the most crazy financing industry, by the major VC, PE frantically for China's group buying site to pay, and to this year's current low ebb, also many well-known institutions pull down the water.





by the end of December last year, the industry disclosed more than 20 group buying financing cases. IDG Capital, Sequoia Capital, Ding-hui ventures and other well-known institutions have invested at least two sites, the Jinsha River, Kai Peng, is in a single group purchase site on the heavy note, the former involved in the handle network of the three-wheeled financing, the industry has been "Jinsha partner Zhu Yuhu hand pull pull nets" argument, However, the pull net recently withdrew its IPO, and the recent news that the handles had stopped advertising on the navigation websites and laid off workers, which foreshadowed the bleak outlook, brought significant pressure to investors. "We were divided on the investment in the group buying network." Now it's good that we still have a long time to tolerate and we can wait for them to change. "In his opinion, as long as the portfolio" has 30% losses, 40% is flat and 30% makes money ", it is in line with industry practice, said one VC insider who has invested two groups of group buying nets.





VC Industry on the investment prospects of group buying has been controversial, and even the entire local business development model has different voices.





Plateau Capital partner Thor clearly said: "The situation of the electrical business we do not understand, can not understand we do not vote." ”





Yan is also a dark irony some are the electric dealers kidnapped investors, not concentrate on looking for profit model as soon as possible to make money from the investors to get a steady stream of money.





In fact, such a pattern has always been the "bible" in which China's electricity dealers survive, financing, expanding, refinancing, and expanding ... This leads to frequent financing and expansion of the cycle, the ideal situation is through the final listing of the investors who have previously entered the body and retreat. Here, companies and venture capitalists are also playing games, and companies are expanding to make more attractive numbers to attract new investors, and the way is to throw money for data.





"As investors see this situation, but also very uncomfortable." Now the Internet is to create the investment is ' not to pay, you die to see. "Xu has said. The treasure net, which had been in the limelight by Groupon's entry into China at the end of April, entered a period of rumours of bankruptcy, due to the failure of the financing announcement. This at least proves that investors are finally starting to lesson wit.





let VC/PE the present extremely awkward reality is, the investment electricity Trader's VC/PE capital has not been able to retreat from the whole body, but is a tiger, but continues to enter the electricity business domain the capital to continue unceasingly.





based on the prospects of E-commerce industry, Hong-Yi Capital has also formally through the issuance of the way to invest in Suning appliances (002024, shares bar) 1.2 billion yuan, Jindong I also invested more than 3 billion yuan, these funds will become the new electric business soon after the war of the solid backing of Suning easy to buy.