Nine rules for venture capitalists to know

Rule one: The original VC also said that the level of the capital market itself is multi-level, investment institutions and the position of the enterprise is entirely separate. 　　In wisdom there is no inevitable difference between a big fund and a small fund, just as a truck driver is not necessarily as skilled as a sports car driver. The difference is first reflected in the size of the fund. Big project private equity is already considerable, the IPO is more involved in billions of of the stock underwriting. Next is the cost, the different level fund operation cost has the difference. The investment gains from the heavyweight projects cannot cover the cost of the large fund at all. 　　Large investment institutions have Morgan, Carlyle, SoftBank, medium-sized Lenovo investment, such as mainland China, Hong Kong and Taiwan, and just enter the Chinese water test overseas funds, small funds from overseas securities institutions or Chinese-sponsored, the industry's focus on higher. 　　Therefore, enterprises should choose the right level of their own investment institutions do not say. 　　Rule two: The more expensive the more expensive the first in the domestic "test water" stage investment projects generally only hundreds of thousands of, 1 million is very rare. With the Chinese concept in the international capital market reputation, investment in China's VC (venture capital) to raise the amount of increasing. For VC, the investment 2 million dollar project and 20 million dollar project spends the same time basically. 　　So in general, the VC presents more and more expensive, the more expensive the phenomenon of investment. 　　But the investment agency also has the concept of diversification risk, the plan will be invested in China's IT industry 100 million of dollars dispersed into 50 than focus on 5 risk less, for this venture to vote generally choose to travel together. Another incentive is to hitch a ride. One agency spends its energy examining projects, and other agencies follow them directly. Instead of being uncongenial, the hitchhiking organization sees it as a lever of four or two. 　　For example, after the completion of the project review investment of 10 million yuan, the other 3 agencies follow up 10 million yuan, for the lead agency is equal to 1 dollars led to 4 dollars, leverage ratio of 1:4. Rule number three: a business plan that pays attention to connections by email, over 80% will be rejected within 5 minutes. Venture investment industry's rules and regulations are less, although there is a rule, but not to vote often in weakness. And in the case of the risk of all over the situation to give a friend to introduce the enterprise than to the total not to the enterprise of a better. Investment banking institutions, professional intermediaries, financial media and invested enterprises constitute a number of cross-cutting "circles". 　　Looking back, more than 90% of the companies who have successfully invested have benefited from the insider's recommendation. Another important reason is that venture capital attaches great importance to the human being of the entrepreneur. 　　Therefore, from the familiar and trusted people to get the information of the enterprise will be a great deal of attention to the VC. Rule four: Near-geo Beijing and Shanghai are the most popular places for venture capital funds and venture capitalists. and overseas experience, such as in Silicon Valley, the general venture capitalists only invest in a radius of about 30 kilometers in the range of companies. 　　If you want to get the money from the venture capitalist, the best way is to move closer. ReasonIn fact, it is not difficult to understand, because venture capital itself is how to establish a company, if the venture capitalists every 3 months to visit the company once, with the management of electricity to communicate, then certainly inefficient. You have to have very close contact with other directors, or with the company's top management, visit once a week to discuss business development and so on. 　　Therefore, the general venture capital enterprises are inclined to cast in his office near some enterprises. Rule five: VC is the most expensive way to finance financing is essentially a kind of institutional arrangement between enterprises and investors on risk sharing and income distribution. Companies are aware of the Fund's own valuation, but the fund has its own valuation. 　　This price is the expected rate of return, i.e. the internal rate of return obtained from the successful exit of the invested enterprise is multiplied by the probability that the successful exit will be achieved. In fact, because of the strength of China's economy and the excellent performance of its enterprises, the return of venture capital from successful listed companies is much higher than 300%. 　　It can be seen that the admission of VCs is the most expensive way of financing in the world. Rule six: VC miss is a common VC may be assessed to have 40% probability of the enterprise investment. 　　Because once the enterprise success, will give VC 500% return, the project expected return of 300%. So seemingly brave to pursue the risk of VC, essentially the pursuit of high returns, risks and benefits as long as the match will be someone. 　　If the investment success rate of the fund is higher than 95%, the total internal rate of return will be less than 10% in the period of liquidation, and the investment success rate should be reduced to 80%, and the overall internal rate of return may exceed 30%. Judging from the total performance of the previous venture, each of them invested 10 projects with two or three losses, three or four flat, and only two or three becoming stars. So the success of a venture capitalist is to see how high the total yield of his star projects and funds is, not whether he has had a failed investment. In order to pursue high success rate too much to reject the investment application, the rejected will inevitably have Ctrip, the "good seedling". 　　And successful VC experts never self-styled "never miss", that will only recruit expert jokes. Rule seven: Enthusiasm bag for Ann investors believe: a bird in the hand is better than 10 birds in the bush. Moreover, the vast majority of venture capital institutions rely on the establishment of a limited partnership company, the survival period of 5-10 years. A limited partner who only provides funds and does not participate in the operation is liable only to the extent of their contribution, and the venture capital expert is the general partner. Fast forward is their ideal, only the withdrawal of cash, venture capital can flow, cycle. In layman's parlance, if the invested enterprise is a cash cow, VCs try to sell the tree at a high price. 　　It is not the real VCs who shake the tree in person. The development stage of the invested enterprise can be roughly divided into: seed period, creation period, expansion period and maturity. Wind investment in the four phase of the enterprise distribution is roughly 12:22:42:24. When there are many investment targets, venture capital tends to beMature Enterprise. If there are opportunities in the investment process, such as high premium private placement, initial public offering (IPO), VC will generally set a sum far more than the initial input of funds, and then retain more or less as a share of the equity, in order to continue sharing the growth of enterprises. 　　The wind is competing in the fall bag for Ann's orientation accelerates the enterprise development, the expansion, the public offering process, but also to a considerable extent to promote the investment enterprise impetuous. Rule eight: Do not give up the right limit for VC not for VC and VC. Now a lot of industry parties, the theme is how to cheat VC. So many entrepreneurs are busy, money can not say, also put their own money into. 　　Industry's impetuous, so that the industry's success standards have retreated a big step, the original is listed before success, now the concept of success is to get VC even. The management of some overseas funds is more formal, but they are too far away from the Chinese market, in order to adapt to the market, usually in the local recruitment of VC operations management experience, will also look for some people with Internet experience to cooperate. 　　But these collaborators often seek to make money for themselves, privately asking for their own shares, or asking them to buy a company. A lot of companies get VC, have to buy some companies, or to give investors some shares. 　　Through these investor irregularities, the result is that the start-up company has no money, or money can not spend the blade up. Still some VC plagiarism entrepreneur's creativity, will others ' creative copy to other project. 　　And some VC, in fact, is to vote for their own projects, but by the way of other people's funds to vote together. Rule nine: Stay awake, do not believe the word VC praise when you get investment, VC may compliment you ——— more than 90% of them will be very encouraging to you. But you have to be calm. 　　Perhaps VC in the mind: your business has a 40% probability in 3 years to fall. There is only one criterion in the decision-making of the wind: whether the risk and the profit are matched. Professional investors begin to establish the concept of risk control from the first day of entry. They know that everything is possible, but the probability of happening is very small. 　　Risk is not scary, avoiding risk will accomplish nothing, the key is to determine as precisely as possible where the risk is and effectively control. In addition, VC to your business understanding and you are different. If the enterprise is your child, it may want your child to give up the college entrance examination to participate in "Super Girl", as for the development of stamina, it is not his business. He wants your business to get the most out of the show. Business is your child, so stay awake.