How the VC should choose B2C:VC and the business of the Business-to-consumer

These few months have several companies have received a small amount of venture capital, there are a lot of VC let me help introduce the potential of the Business-to-consumer. During this period, heard a lot of things, including the ironic case:

1. In the early years, a company in Beijing received a few (millions of knives) of venture capital, and immediately invited several very expensive VP. The money is not much, not in the commodity/market/logistics/technology, but used in a pile of expensive people to support the scene. The company took the money when the 2 line station, now the development of the 3 line is not counted.

2. A VC in Beijing a few years ago to vote for a certain direction of the company, Beijing, Shanghai each has a take shape. The VC comparison, feel that Shanghai's far away from the control, so the investment in Beijing's Business-to-consumer. And Beijing This company is a good foundation, there is a good team, but because of the character stubborn more powerful, do not listen to other people's opinions, the final management team have run away, business development is also heading downhill. In a few times VC want to intervene in the case, VC finally withdrew capital, leading to the company, and the business of Shanghai, but the development of a good, day into the bucket gold.

3. BEIJING, a large enterprise executives created by the company, come up very high-profile, shouting loudly, the pomp of a very big, up on the rental office, nearly hundred people's team, management all from large companies, also got more than one investment. A year later there is no sound, the site is placed there, the transformation of other directions. Before the site had my friends and also boasted to me "our Logistics director from XX", I glanced at their distribution instructions, time and long freight and expensive, but also the whole of a few warehouses, he returned a sentence "No matter how NB you this ye, I can only say he does not understand the logistics." ”

4. A VC in Beijing to see a project, VC side of the project leader and the founder of the contact is very congenial to become friends, in the internal desperately recommend this project, the final investment millions of knives. The founder itself is very reliable, the ability of virtue is good, but the choice of the direction of a problem, the market size may be limited. Maybe VC is a person is not a project, but spend millions of knives to buy a friend, it is a bit expensive.

5. A VC in Beijing to find a already have a certain size and rapid development of the Black Horse, the people's operation and the core figures asked a time, then no news. It was not long before the company found that some of the established competitors mastered their own internal situation, the VC and competitors there is a good relationship between the founder, did a business spy. This matter in the VC circle and the business circle soon spread open, we this circle is not big, you do so, there is any other company to find you, you find who really interested, who dare to talk to you.

6. A VC in Beijing is very want to cast a vertical field of the business, but also really found a good looking, a little bit well-known scale still a little profit. Did not expect other VC also stared, so the two sides mutually bidding, finally the VC succeeded, but the valuation of the odd high, than the vertical field of the first business of a round of high. One is that this is not worth so much money, the second is in its case, making money, but the scale will not be particularly large, such a high valuation, scale and not go, the future is difficult to unload.

7. Shanghai has a reputation for a short period of time, the scale of rapid growth, the internal core indicators are not good-looking, this is because the quality of goods decided to scale but difficult to profit. A circle of VC saw the same after the same as not too dare to vote, seemingly deadlocked. It turns out that the founder sold the high price to a large enterprise for success. No derogatory saying, no matter whether others will do the company, at least others can sell the company.

8. A VC in Beijing to find me to help recommend good to the Business-to-consumer, the conditions are: expansion period, the annual net profit of 3 million knives, financing amount of 5 million knives. I returned two words: No. The expansion period of the Business-to-consumer are desperately impulse, the recruitment of ads to do logistics to improve the system, the loss of a little bit is good, but also want to profit? Even if every year there are 3 million knives net profit of the Business-to-consumer, the days are nourishing, but also your 5 million knives? There is also the profitability of the growth of the business-to-consumer will certainly not be explosive, either slow or downhill.

9. There is a VC in Beijing to help their own investment in the company to find the project, let me help you find top executives, and I'll tell him that there's no need for you at this stage at all to find someone who does it, for a couple of reasons: 1. This is the phase of start up, which is too expensive for people to use top, 2. Top people's ability and experience, is suitable for thousands of daily business, in your now Bai single stage, completely useless; 3. You don't have the resources you need to work with top people. You are at this stage, from hundreds of thousands of single two or three-line to find someone can, and then to waste and chicken ribs.

The above cases of VC mostly did not understand did not see clearly think clearly, at least is not cautious. Of course, there are more rigorous VC, such as I know the two Beijing VC, often and I discuss the company, they also constantly see the company, find someone to chat, participate in various industry meetings, Yinianbanzai down, also to the industry has a more in-depth understanding. Later, the relationship is good, I also introduced them to some I think also can be the same, they always find I did not find the problem of consciousness. A deep understanding of the industry to see the project is much more reliable. There is also a well-known VC, before the investment of a company, through a professional consulting firm to do a large number of investigation interviews, through with the people inside the enterprise, upstream and downstream partners, competitors contact, formed a complete comprehensive and reliable investigation report, this is a rigorous attitude.

VC in looking at the project, pay attention to the following points:

1. Commodity categories in the online shopping market mature countries have a successful precedent, at least a reference. Of course, can not fully refer to the mature country, according to national conditions. For example, the top company in the United States has several Home office supplies, which in China is not tenable, at least for now. That is because the U.S. corporate office supplies procurement is mostly through the network, to avoid gray things, this is user habits. In China, it is clearly not realistic to let corporate procurement executives abandon familiar suppliers and grey income to choose online purchases.

2. Whether the commodity category is enough for the public/repeat purchase rate is high enough, if it does not meet the conditions, the higher profits for VC also meaningless. I also have a good relationship with VC introduced some of the high margin of the business, and finally the market is not big enough. I also asked different VC, there is no possibility to go to the annual profits of enterprises, the answer is VC on the listing or sale of profits, rather than every year to point to the profit. Of course there is a scale of profit best, but the scale is certainly in front of the profit to consider.

3. Gross margin/enterprise operating cost/commodity price below offline Advantage/customer unit/aftermarket/No lead competitor etc Gross margin is too thin, it is difficult to support the cost (3C), the last can only become a scale; , and the high sales rate will also eat up the gross margin.

4. Whether the team both understand "electronic" and have knowledge of "business" people, that is, the Internet background + traditional background. Just get the investment of good buy is such a typical team, Li Shubin Internet experience plus luming's traditional experience. There is also resources, the team Internet resources and sourcing at least the same. After all, the consumer is the network retail, both the Internet and the characteristics of the retail.

5. Understand the enterprise and DM Enterprises, we must find out whether a company is mainly the main or DM. Although the same is a non-physical access to retail, but in the audience/cost/access scale/timeliness, and so there are a lot of differences. DM's timeliness capacity is far less than that of the business-to-consumer, and DM costs (data cost/design production cost/material cost/cost of delivery) and call center costs are always there, DM a stop to order immediately fell, because DM is the only medium to connect users, and DM return rate is much higher than the consumer, because two points: 1. DM on a picture and simple introduction is not intuitive enough, the cost of 2.DM determines the requirements of high margin, the commodity "packaging" is more exaggerated, 3.DM users of the impulse consumption, the above 3 points to the user after receiving the goods and expectations do not match. Of course not that DM enterprises can not vote, but valuations and expectations are certainly different from the enterprise.

The final summary: Chinese business-to-consumer is not only a big pie, but also a big trap, there is a risk, see the shot.

PS:

1. The above cases have a lot of parties complained, there are some ways to listen to the illustrations, after all, people outside is impossible to fully understand the things inside. The above cases include VC/PE/FA, collectively, VC, please do not take a seat, know my friend don't ask me, kill also don't say, mmm.

2.SHOPEX and Eric will be held in Beijing on December 17 2009 China e-Commerce Innovation Development Summit Forum (http://www.shopex.cn/1217/), to help Li Jongwei and Pei students busy, I also found some VC and friends to attend the conference, Everyone is interested to see, the meeting is still material, mmm.

3. This month, the site: Guo Hongjing West Street Online, Guo is always my predecessor is Big Brother, from the search easy to get Shopex to their own entrepreneurial West Street network. I believe that those who have experienced success and have failed have always been more reliable than those who have only experienced success or experienced failure.