Ning investment is changeable, entrepreneur advantage still

You may not think that investors with large sums of money will be bothered, but in fact, in the field of technology investment, VCs are facing increasingly fierce competition.

With so much money in the market eagerly chasing a handful of good projects, venture capitalists need to redouble their efforts to gain the opportunity to become investors in potential start-ups.

The most powerful way to do this is, of course, to give start-up companies sky-high valuations, such as enterprise-class communication tools Slack's valuation is as high as $1.12 billion trillion, even if it is now only 26,800 active users (which is worth pondering because Slack is using a free business model, These users are not paid for. This means that Slack's Venture and Kleiner Perkins Caufield & Byers (Kleiner) are valued at $4180 for each Slack user. If Facebook has more than 1 billion users who can get similar valuations to Slack users, its market will be as high as $4 trillion trillion.

For the founders of Slack, of course, it would be better to get the value of the $120 million trillion in operating capital at the expense of giving up about 10% of the company's shares. For other VCs, the huge investment has shaken their hearts and prompted them to wonder how they can build a rival project.

So if you're a risk investor and you don't want to make so much money for a start-up that's still in development, you need to create some creativity for yourself.

"The model of venture capital is evolving in order to add value to its own business," Arvind Sodhani, president of Intel Capital, told me this week at the annual meeting of companies and partners in the portfolio.

Intel Capital, a semiconductor giant involved in venture capital, has a similar level of involvement in venture capital as Google Venture and Kleiner. Intel invests 300 million to 400 million dollars a year for investment in the past decade, making it one of the leading funders of tech start-ups. Intel Investment has invested a total of 344 million dollars in 55 projects so far over 2014 years. In the meantime, 3 of Intel's investment companies have completed the IPO process, while 19 have been acquired in their portfolios.

Intel invests not only in money, but in the past 10 years and more, Intel has provided a strong "ecosystem" for its investment start-up companies. Getting an investment from Intel Capital means a strong network of relationships that includes potential customers, partners, corporate advisors, and entrepreneurial peers. This negligible network effect peaked this week at the Global Summit on Intel investment in sunny Southern California.

About 1000 people attended the summit, half of which were CEOs and executives of startups invested by Intel, others were Intel employees or representatives of Intel's corporate partners, and a handful of media journalists. In this celebrity-packed occasion, you can even get a lot of cooperation in the hallway.

(Intel has even invited the DJ mixer Master Mike of the Beast Boy to a private gig, another surprise for the conference, but strangely enough, most of the attendees didn't seem to be immersed in it.) ）

In short, getting an investment from Intel means you get a ticket to an elite corporate club, and it also means that you will be exposed to a lot of purchases, investments in your company, or other businesses that help you in other ways. This can indeed be called an ecosystem, and Intel is rightly at the heart of it.

Idan Tendler, founder of Fortscale, told me: "I met the CEOs of a lot of different companies in the conference, but they had the same problem with their startups." "(Fortscale's 10 million dollars in investment from Intel and Blumberg Capital in June 2014)" is a great network, and if I want to reach out to clients or partners, I can do it at this conference. 」

To meet the challenge, other types of VC funds have adopted different strategies. Eden Shochat, the founder of Aleph, an Israeli investment firm that recently completed its first investment project, spent 150 million of billions of dollars on the investment. That is to say, the amount of Aleph a single shot has reached nearly half of Intel's investment in a year. For now, the network of Israeli companies and investors, though powerful, is still far less than Intel's ecosystem.

Because of this, Aleph companies want to use software to achieve differentiation advantages. It has developed an App called Karma, which can help Israeli entrepreneurs strengthen their relationships. Karma is an open network platform that does not only serve companies in Aleph's portfolio. In Karma people can ask questions, accept suggestions from others, and recommend others to join the Web platform.

Now 2,100 entrepreneurs are using karma,shochat to say they already contain the vast majority of Israeli technology start-ups. KArma not only provides real value to entrepreneurs, but also provides Aleph with unprecedented possibilities for discovering potential talent. For example, it is easy for them to find out which users are being consistently recommended, who have given the best advice on what startups are proposing, and to explore the industry's renowned engineers and designers, perhaps one of them.

The app also provides a shortcut for Aleph companies to reach their investment. "There is never too many collaborators, so you need software to help you reach a deal with the right collaborators, and the faster the better, of course." "shochat said.

Shochat believes that for start-ups, Karma can also help them add value and make their companies more attractive than other startups. Shochat that many VC companies are moving too slowly to embrace apps, although on the face of it they believe in the power of application software.

"The task and challenge of VCs is to identify innovative technologies, but it is interesting that their own IT systems still seem to remain in the Stone Age." 」

That's a bit harsh, of course, but one thing is clear: as long as valuations remain high for startups, as long as markets remain upbeat about technology companies, most venture capitalists will continue to struggle to stay on the table.