Entrepreneurs must read: VC investment in a company's process is this

When I meet with entrepreneurs, they often ask about the insider of the venture. For example, how much investment transactions do we focus on? How many meetings will be held? How often do we do a thorough research? How many companies will we invest in the start-up companies that apply for investment?

I think that if VCs can provide some transparency, it may be helpful to startups, from the initial meeting to the final successful investment, this article will outline the relevant situation.

If 10 investment transactions are to be completed, the general Venture company will review about 1200 companies.

Investment leads: These 1200 companies come from many sources, such as contacts, investment conferences, in-house research, positive attempts, portfolio referrals, seed investors, and so on. In these 1200 companies, we will find about 500 companies, and then we will arrange for the relevant personnel within the investment team to meet with them face-to-face.

What we value most in our meetings is the background of the founder of the http://www.aliyun.com/zixun/aggregation/5707.html > company. We will judge whether they have the experience and the ability to seize the opportunity they are pursuing.

Of course, roadshow is also very important. We will be concerned about whether the roadshow is concise and attractive.

In addition, the absolute part of VC companies in the investment of a company, will consider whether the company and its own portfolio of companies will have competition.

Personally, if I don't want to meet some startups, the main reason is that the entrepreneur is not popular with people I trust.

Investment conference: Each year, the general VC will carry out 500 face-to-face investment meeting, at this stage, about 10% of the start-up company will enter the next round. So what should startups do to make VCs willing to go further and take the time to be cautious about themselves?

First, most of the early venture companies are looking for companies that have an ideal fit for their products and markets, when a company meets this requirement, we also want to confirm whether the company can solve a real problem, a practical problem that does not usually have much to do with Silicon Valley, because in the Bay area of Silicon Valley, the customer is not very much, And many founders are good friends, that is, in Silicon Valley it is impossible to verify whether a product actually owns the market.

In addition, at the investment conference, there is a reason for poor communication, as is often the case: a start-up team will say they can earn 50 million dollars in five years, but it is hard to elaborate on how they will get their first $1 million dollar "first bucket of gold".

Deep research: In this 500-and-a-year meeting, a medium-sized VC company will probably carry out in-depth research on 50 of them in more than two years.

In-depth research involves a lot of work, such as product review, customer referrals, executive team referrals, financial modeling, market analysis, and competitive analysis, and so on. At this stage, if there are some customers with high frequency of interactive products, the effect will be better.

In the past few years, VCs have focused on companies whose annual income growth rate is at least 100%. However, in the course of the preliminary meeting, many companies do not meet such standards, so VCs will lose their confidence in their investment.

VC companies will be very concerned about the loss of a company's customers and the relationship between the company and its customers.

Investment: A typical medium-scale VC company will invest in 10 companies in 50 of its own in-depth research. Why are these companies able to stand out in the end? Some of these elements are important, such as effective customer access, or the company has a very attractive CEO who is willing to follow him. If a company's employees are unwilling to follow the CEO, the company's investment could be at a red light.

In addition, the market size is also very important, as far as we are concerned, we hope that the company can provide a more reasonable way to tell VCs that they are capable of earning 100 million of dollars in annual income. If it's a business that focuses on delivering solutions, then you'd better have a market size of 300 million dollars, because once the company becomes the industry benchmark, then they get 30% to 50% of the market share. And for a cross-sectoral solution, they can solve cross-industry pain points, then the company may need 1 billion of dollars in market size, because in different industries, each market leader may have only 5% to 10% of the market share.

In reality, perhaps only 1% of the founders of startups have finally got venture capital, and the content described in this article may help entrepreneurs to optimize their own investment strategies. If the first meeting is fruitless, good VCs will provide some special feedback to startups. The vast majority of VCs will keep in touch with the founders they have met, and it would be heartening if the future "failed" start-ups changed or become more competitive.