Large-scale VC transformation three miniature: Fortune Investment Silicon Valley Paradise Xiang Investment Venture

"50 VC (venture capital) Fund team, management of 5 billion-6 billion funds, if the single investment only 50 million, they can easily cope with more than 100 project management?" "Invest hundreds of billions of dollars on 20 multiples to a company that is uncertain about an IPO, and see now that the gem has fallen from 70 times to about 30 times, and how much profit space can be dug up?" I can't get the principal back. "" Don't look at the more and more easily billions of management scale VC now scenery, if the outstanding investment projects are less and fewer, coupled with the slow pace of IPO IPOs, they are more likely to make mistakes in the risk of PE shuffle the first injured.　　"In September, in the 2011 China venture capital and private Equity Investment Summit Forum," VC fund how "big but not down", was hotly discussed.　　Most of the domestic VC fund management scale is quietly over tens of billions of yuan mark-only, with the new issue of the pace of release and PE shuffle tide, who can ensure that these large and large venture capital funds "big but not down"?　　But the VC market is not lack of fortune-despite the investment, Silicon Valley Paradise and Hunan investment venture capital, such as large-scale VC funds "winter" transformation road, not necessarily smooth sailing.　　Fortune: Project length and Variation October, Fortune Venture investment 3.5 billion of Hengtai fund surplus of about 70% will continue to account, so that Fortune venture capital management scale to break through the billion mark.　　However, being among the tens of billions of VC clubs has not made Fortune chairman Liu Day feel comfortable--and how to ensure the safety of capital investments is an answer he desperately needs to find, given the slowing pace of new offerings. "For the current venture capital fund, the future faces the problem is not investment projects, but investment projects can not make money."　　Liu Day to the reporter stressed that.　　The data show that in August, 15 VC/PE-backed Chinese companies in the domestic market IPO achieved a total of 35 VC/PE exit, with an average book return of 4.67 Times times, but had fallen sharply compared with the average 10-fold return over the same period last year.　　In response, the 6-month-early-morning venture-Capital investment committee approved a 80%-90% approval rate, which has now fallen to 60% to 70%. "There are 10-15 alternative projects to be approved by the Investment Committee on a monthly basis, but 2/3 of them are eliminated in the risk assessment process, even if the remaining 3-5 items are not now approved."　　"said one of the people in the morning. Reporter from the Fortune Culture Industry Fund, a August meeting of the minutes found that, including happy net, Mango media, such as a large number of well-known media companies are included in the moratorium on investment subjects, "as long as it is not understand the business model, or high investment prices of alternative projects, it is difficult to pass the examination and approval," said Fortune,　　Today, the average valuation of fortune investment projects is maintained at 8-12 multiples, while many peers are still bidding on multiples of more than 15 times times. "MainIs that we reduce the proportion of investment in the middle and late projects.　　"He explained that Fortune has an investment rule that a project that will take at least 2 years to be listed is considered" a long term "and that the project to be listed for about 1 years is considered" in the late stages ". Liu Day said that the current Fortune venture IPO project to reduce to 20%, the early project about 8%, medium-term projects accounted for 62%-72%, "if the next two years IPO issuance rhythm is slowed, increase investment in the early projects will be able to reserve more outstanding projects to wait for the market to rebound."　　"However, fortune to slow down the pace of investment, to win many of the one-time pursuit of IPO short-term high return VC fund investors Understanding, is not easy." Fortune Investment Hengtai fund through Noah Wealth issue a PE fund products, successfully raised about 2.4 billion yuan, of which some of the wealth of Noah's high-end customers optimistic about Fortune venture has 19 single project IPO exit performance and decided to contribute, but now fortune slow investment rhythm, can meet the investor eager project early IPO requirements,　　The same is unknown. Today, fortune, in addition to holding two LP meetings a year to explain to investors the latest investment strategy and project exit progress, will also be signed investment projects, regular reporting to them.　　and Fortune Venture Investment Hengtai Fund Management team also invited the largest contribution of the 5 investors to launch the establishment of the Investment Advisory Committee, when the Fund needs to make an investment decision on a major investment project with "a single investment exceeding 20% of the total fund", the Investment Advisory Board has the right to publish an investment opinion and to use veto power. "After all, VC fund size rapidly growing, can not rely on their own strength, sometimes need to rely on external forces, and the key to successful cooperation, is the two sides should establish a good relationship of mutual trust."　　Liu said.　　Within the Fortune venture, each option has two opportunities to enter the investment committee approval process, and the option is likely to be abandoned once the two entries fail. "But sometimes the investment decision Committee will rethink and we will not miss very good investment projects." Liu Day admits, fortune or will launch a reward mechanism, if a company that is "not bullish" on an investment decision committee is finally going to make an IPO, it should reward the investment manager who had the eye for it, "but what needs to be done now is how the fund management team manages more than 100 projects that have been invested." "The reporter learned that at the end of the morning, or will set up a special post management department, to make up for the rapid expansion of the fund management and investment project surge left behind the post management service capacity."　　[Page] Silicon Valley Paradise: Turn Asset Management when the scale of asset management of the Silicon Valley Paradise Asset management group broke through tens of billions of dollars, CEO Bao thought the most, but how to "no longer rely". "In the past few years, the two-tier market has earned a high return on its high price-to-earnings ratio, and it is now a high-stakes gem for the IPO project, but this approach relies on the opportunity to make money in the capital market itself, like a coin bet on the opposite side., if the first two are thrown in front, who can guarantee that the next one will not be thrown to the reverse?　　Bao's thought of this has led to a quiet reliance on equity investment in Silicon Valley paradise.　　After all, it is uncertain whether the "rely" approach will remain in place in the next 3-5 years, when the Valley of Heaven strives to manage assets over 30 billion yuan.　　Last year, Silicon Valley Paradise venture Capital Limited changed its name to Silicon Valley Paradise Asset Management. Over the past year, the Silicon Valley paradise has lowered the PE investment ratio of the issued equity funds to about 30% per cent, the new issue fund is clear PE investment proportion drops below 25%, at the same time, enlarges to the early stage project and the Merger and acquisition reorganization (including the directional additional) investment dynamics, forms the early stage investment, the PE investment and the merger reorganization "troika"　　Business chain. "Today, our mergers and acquisitions account for more than 50% of the size of the company's managed assets. "Bao said.　　In March this year, the Silicon Valley paradise spent about 160 million yuan invested in Hunan Shen Axe Civil explosion Group Co., Ltd., originally intended as a strategic investor to promote the former listed, but September nanling people explosion but announced that will be with God axe people to carry out absorption reorganization. "But our investment in mergers and acquisitions is not cheap.　　He revealed that since 2006 the number of mergers and acquisitions has been more than 30, the annual rate of return of about 30%. Reporter learned that VC funds to increase mergers and acquisitions business or the proportion of early investment, also has realistic considerations. With many of the leading enterprises in the domestic subdivision industry to complete the gem or SME IPO, other companies in the same industry to apply for IPOs, will face competition in the competitiveness of the weak IPO approval embarrassment, will indirectly reduce the success rate of the project IPO, so some large VC funds to carry out mergers and acquisitions business,　　The investment project through the listed company merger or the directional additional method realization exits.　　However, the "troika" of the Silicon Valley Paradise Coexists, once by the market as a hidden "interest conveyor chain"-for example, a project by the Silicon Valley early Investment fund investment, and then resell to its PE funds, if unable to meet the IPO, then let the acquisition fund to take over, and then look for listed companies through directional additional implementation exit. "So the valley of Heaven through linked transactions allows most of the funds to receive high returns, and the risk is concentrated on several large buy-out funds."　　"The head of a domestic VC agency believes that the Silicon Valley Heaven Asset Management company manages nearly 60 sub-funds, and lets them hide the benefits of different funds from buying and selling the operating space." Bao that within the Valley of Heaven, the expected return on investment is set in different sub-fund projects, and the project is allowed to exit once the expected gains are made, "the investment committees of each sub-fund operate independently, focusing only on whether the investment projects will achieve the expected return on investment and not on who has invested in the project　　"However, as the Silicon Valley paradise in the past few years the size of asset management and the rapid growth of the number of sub-fund, different fund investors competing for good corporate projects, the distribution of benefits of conflict, the same surface." "We first do the fund management team does not compete with LP for profit." ”Bao revealed. Since 2009, when the Silicon Valley Heaven decided to transform into an asset management company, the company's management team launched a fund with its own capital contribution of 5% to 10%, instead of the original Silicon Valley Paradise company direct Investment model.　　Once the company participates in direct investment with its own funds, it will mistakenly assume that the company management team chooses the project selectively. "As regards the allocation of projects for different funds, the investment Committee's investment views are mainly seen." "he said. At present, Silicon Valley Heaven is based on the industry to set up different investment committees, and invite senior industry experts or listed companies as a extended team, to participate in project investment decision-making and determine the investment subject (by which funds investment), and the chairman of the company can exercise a veto, check the investment decision-making process is compliance,　　There is no unfair distribution of project investment benefits. "Moreover, the sub-fund single investment is strictly limited."　　Bao said that this year, Paradise Silicon Valley spent 130 million of investment in Jiangxi and about 158 million investment in Hunan Shen Axe Civil explosion Group Co., Ltd., has reached the fund single Project equity investment of the highest limit.　　Reporter learned that at a very small amount of billions of Yuan Asset Management VC Fund, the so-called partner accountability system is in vogue, whereby a partner leads the team into the fund raising-project investment-management-exit-investment dividend process and enters into a profit-sharing agreement with the fund management company to keep the eggs in one basket. "But who can guarantee that a partner will always make the right investment?" Bao points out. The current investment decision-making process in the Silicon Valley is focused on team collaboration.　　[Page] Hunan state-owned venture investment: The difficult road of market transition in 2011 China venture capital and private Equity investment forum Gap, the Hunan investment high-tech Venture Capital Co., Ltd. (hereinafter referred to as "Xiang Investment venture capital") general manager Shei and reporters joked that it is necessary to resign from the part of the investment enterprise part-time director position?　　Xiang Investment venture investment experienced more than 10 years of development, the total amount of investment capital has exceeded 3 billion yuan, of which more than 2 billion yuan for investment profits, now Shei has been the director of nearly 30 investment companies.　　Today, it will also usher in new strategic investors about 800 million-1.5 billion yuan new capital injection, and plans in the next five years to become management assets up to 10 billion yuan of venture capital group.　　The reporter learned that Hunan Sasac and holding company Hunan Investment Holding Group has agreed to Hunan investment venture capital to increase the share application, but the prerequisite is to meet the proportion of state-owned shareholding to more than 51%. "For a state-owned venture capital company, the introduction of private enterprise strategic investment, only to open the market-oriented operation of a door, but in the rapid expansion of asset investment, to achieve investment decision-making and project withdrawal of the market operation efficiency, it is difficult to imagine."　　"An Eastern province state-owned venture capital company Head said that the state-owned venture to deal with VC large-scale wind control challenge is still far more difficult than the private VC peers. People familiar with the matter said that the Hunan investment venture capital strategic investors, including a listed company and South Central University and Hunan high-speed publicLU Group's investment company, a joint shareholding of about 30%, but the state-controlled identity, still let it cannot evade "the investment enterprise IPO will need to transfer 10% state-owned shares to the Social Security Fund." "This still constitutes a certain constraint on our investment in our projects, and we can only hold as many shares as possible in the project investment."　　"A venture investor in Xiang Investment said at present, only 30% of the company's investment projects in accordance with the transfer of Social Security Fund exemption conditions, it was transferred to the Social Security Fund Boyun new materials due to the exemption conditions, can apply for a 10% equity return, but from the application to the completion of the return, still need to wait for approval from the Ministry of Finance　　Annual performance assessment requirements are also increasingly refined. A state-owned venture capital company in Hunan Province, said the current state-owned investment company performance assessment standards include whether to invest 70% of new High-tech Enterprises, early investment is not less than 30%, and the various projects of the net profit growth rate to meet the original investments set when the income forecast.　　However, the assessment requirements in previous years were slightly extensive, that is, the annual net profit growth of about 12%.　　In order to meet the annual performance assessment requirements, 2004 Hunan Investment venture capital to 24 million yuan agreement to transfer 31 heavy industry 3 million shares (to achieve 8 times times the return), no one would like 6 years after 3 million shares have been worth about 1.8 billion yuan, and this year 31 heavy industry chairman Wengen to 9.3 billion U.S. dollars to stay in the Forbes China rich top richest.　　However, in the above-mentioned Hunan Province, the head of the state-owned VC companies, through the introduction of private capital as a strategic investor, not only the investment scale growth, and investment decision-making trend of market-oriented operation.　　Investment decisions are now being voted on by 4 senior executives of the company's investment committee and 1 (Xiangjiang Holding Group) representatives, which require approval from Xiang Investment holding group and local SASAC, compared to the previous years of investment in Xiang investment.　　However, while the rapid expansion of asset size and investment significantly increased, the original envisaged in the introduction of strategic investors at the same time transition fund management company arrangements, or will encounter regulatory approval resistance. "Transformation Fund management company, on the one hand, let the company management team share in the fund management company part of the equity, the formation of risk sharing and benefits of the mechanism, on the other hand, the formation of incentive mechanisms to encourage state-owned venture capital companies to better retain PE talent." "Xiang investment venture capitalists said in the past, when Xiang Investment venture capital invested in a major project, sometimes the management team would consider the investment, let the regulatory department" see "the company's management team is willing to share the risk with state-owned funds, through the construction of fund management company model, the fund management team to bear the corresponding investment responsibility, The same can achieve the management team and the project investment risk of mutual binding effect, "but now the regulator is inclined to increase the share of capital and Transition fund management companies, can be in their respective conditions mature operation."　　"In the view of the head of the state-owned venture company in the eastern Province, the approval intervention by the state regulatory authorities has not been effectively eased. "Once the IPO slows, most investment projects can only be transferred through the property exchange, but the approval process for several months of state-owned assets, it is often the loss of state-owned assets that the investment company's equity shares have shrunk due to lower market valuations. He said the state-owned regulators need to think about the regulatory role of state-owned VC companies, as the operating norms of state-owned VC companies to oversee the venture's large and not falling, or the interests of the Community to cooperate to assist.