Nuggets Silicon Valley: Unconventional investors challenge VCs

in the United States.

Located in the north of California, the San Francisco Bay Area in the south of the Silicon Valley, not only is the world's most famous electronics industry concentration, because it attracts a large number of technology entrepreneurs, with venture capital, but also occupy the total U.S. One-third.

However, it is understood that the traditional position of venture capital in Silicon Valley is becoming increasingly challenged by the entry of non-traditional investors.

Investment in Silicon Valley fell 20% to $6.6 billion in the fourth quarter of last year, compared with 15% to $29.7 billion a year in 2012, according to data from the Dow Jones Risk Database (Dow Jones Venture Source).

By contrast, some hedge funds, private-equity firms and other asset managers have quietly opted for Silicon Valley, which has poured money into pioneering technology companies to reap the rewards of a future day.

VCs aren't the only choice.

Since the 1970s, venture capital has been the main source of funding for Silicon Valley technology companies, in lieu of IDF fees.

Venture capital and High-tech companies on the basis of mutual benefit, venture capital injection to help High-tech companies to convert High-tech products, and once the product is recognized by the market, its best-selling will bring a good return on venture capital.

In the early stage of the venture capital industry, entrepreneurs often need to give up control of the company in exchange for the necessary funds because of the difficulty in financing enterprises.

As early as 1957, Kenneth Olsen, a co-founder of Dec, gave up more than 70% of the vote in an effort to get a paltry 70,000 dollar investment from the US Research and Development Corporation (Anglo).

But now that has been reversed. Mobile Internet, cloud computing, clean energy and bio-technology are behind the block of gold, so that global capital, fierce competition so that venture capital generally willing to give up some control to support the ideals of the founders of genius.

Venture capital in Silicon Valley is concentrated on the Dune road (Sand Hill M.I.) in Menlo City (Menlo Park). More than 80% per cent of venture capital funds come from private independent funds, the main sources of which include rich personal capital, institutional investor funds, large corporate capital private equity funds and mutual funds.

In general, venture capital investment in the seed phase of the company investment in 100,000 ~100 million dollars, for the early stage of corporate investment from 1 million ~1000 million dollars, and the growth stage of the company invested in 10 million to 100 million U.S. dollars.

The U.S. government has also played a certain role in guiding the development of venture capital.

First of all, the U.S. government to venture capital business basically non-intervention, let it develop freely. Secondly, the United States government to standardize the behavior of venture capital through legislation, policy formulation and sound service and supervision system to optimize the risk investment environment. For example, the Small Business Investment Law (SBIC), Small Business Research Program (SBIR), IPR protection policy and foreign trade policy have strongly supported the development of venture capital.

But even then, according to our correspondent, Venture capital is now not the only financing option for Silicon Valley startups.

For example, the chief executive of a Survey Monkey company, Dave Goldenberg to fund his internet company, did not choose venture capital, but instead turned his eyes to the company, Goldenberg eventually to work with Tiger Global Fund.

In January this year, Tiger Global Fund dominated the "monkey" Company's assets reorganization, the value of 444 million of billions of dollars, and the total value of the reorganization of assets of 800 million U.S. dollars.

Of course, there are also conservative entrepreneurs who still favour venture capital. Bill Reddy, CEO of Braintree, a mobile payment start-up, said the 35 million-dollar investment that the company received last year was only 25% of the investors who were genuinely interested in the company. This prompted him to eventually choose a venture capital firm to co-operate. "Mind Tree" companies are valued at least 1 billion dollars, according to people familiar with the matter.

Some Silicon Valley entrepreneurs say they welcome non-traditional entrepreneurial investors, who have opted to sell their shares as soon as possible after the companies they invest in, in an effort to cash in as soon as they return.

And these unconventional investors are willing to continue to hold on for a while after the company's shares are listed. Fille Liebing, chief executive of Ever note, said it planned to use open market investors to finance the company's futures in recent years, using the money to buy back start-up shares that were originally sold to early investors.

Angel Funds and Brokers Ltd.

"Angel Fund" (Angle Fund) is another mainstream financing method for start-up technology companies.

Angel funds usually come from private accounts, because the money is often invested in the seed funds of start-ups, for the start-up of the lack of funds as a timely, so that the "angel" reputation.

Mr. Tan received his ph. D. in mechanical Engineering from Cornell University in 2007, and after 3 years in the Working field, he resigned, and a few of the colleagues who met in the workplace set up a technology company engaged in data processing in oil exploration--"high-end geophysical Company" (Advanced Geophysical Marvell, Inc. , the company is headquartered in Houston, the United States, the main business between the two countries.

At the end of 2010, when the company was founded, financing became the biggest problem, Mr. Tan initially found a professional venture capital company in the United States, but venture capitalists hope to return the funds as soon as possible, the company must be sold in a few years, and so on, and finally did not agree with the company founder, Mr. Tan then went through his friend's recommendation to find private investors, through the "Angel Fund" to get the first bucket of entrepreneurship, Angel fund investors accounted for about 30% of the company's shares.

Now, Mr. Tan's company has made ends meet, the current annual income of 2 million U.S. dollars, he plans to increase the annual income to 10 million U.S. dollars in 5 years, when this reporter asked if there is a listing plan, Mr. Tan said, for IPOs, they are not interested in listing, there are many uncertainties, may not be able to circle the money.

Mr Tan said he hoped the company would be able to be bought by large companies in a few years ' worth of 50 million to billions of dollars.

Entrepreneurs like Mr. Tan are often hardest at finding their first bucket of gold, and for angel investors, it's also important to find the next "potential unit" like Apple.

In this case, the intermediary company also saw a huge business opportunities, to win the angel investors and the founder of High-tech companies business.

ARC View is the pioneer of this kind of intermediary company, it gives the Angel Fund and the start-up technology company Matchmaking, provides the investment platform. Angel investors join Arc View through private referrals or other non-public modes, access their databases and pay 3500 of dollars a year for their contributions.

ARC view is responsible for aggressively recruiting information about start-ups, arranging for angel investors to meet with founders by organizing quarterly meetings, and helping start-up technology companies to introduce their products, business development models and industry prospects to investors, thus creating good communication and interaction.

Once an angel investor is interested in the technology company, ARC View will make an effort to finalize the investment transaction contract. Technology companies can either deal with an angel investor alone or reach a common agreement with a number of angel investors.

Of course, at the quarterly meeting, angel investors are required to pay a one-time admission fee, which is now between 1250 dollars ~3000 dollars.