Tips for Entrepreneurs

A few days ago to participate in the Qing Branch held 2007 China Venture capital Medium-term forum, presided over a special discussion, similar to the past, a lot of entrepreneurs friends and I exchange business cards, even the bookbinding neat business plan to me, and I talk about the specific content of the project. Because I have some arranged things below, and usually there will be our fund investors or friends of our peers about me during the meeting to discuss some issues, so there is not much time to stay in the venue and entrepreneurs to communicate, often only a short greeting, or just a change of business cards. Feel a little sorry, because I understand the entrepreneurs in order to finance the enterprise and rush to the various occasions, the initiative to understand investors, introduce their own feelings of the project, and even for their dedication and moved. However, although I know the goal of the entrepreneur is to melt into the capital to make the enterprise bigger, but from the heart, I think a lot of entrepreneurs in the conference just and VC for business cards, hurriedly chat a few words, the financing and development of enterprises will not have much effect. I think that on the one hand the entrepreneur to participate in this kind of VC meeting the significance of understanding may not be enough, on the other hand also have no good grasp and VC exchange way. I seriously thought about it, summed up a few of their own experience, hoping to be a bit of use to entrepreneurs friends. It is possible that what I said is not necessarily right, we do not necessarily like, but I still insist on the truth.

1. Maximizing the benefits from the investment Community Conference

The topic was caused by the venture capital conference, and I'd like to start with some ideas about the founders ' participation in the Conference. This kind of venture capital conference, such as Chingko organization, is relatively large, almost all the active VC in China will attend, and there will be many successful entrepreneurs, especially those who have received venture capital support. Therefore, such meetings are valuable to both investors and entrepreneurs. If it's in the role of the entrepreneur, I think it can be sorted like this:

(a) Understanding of the great environment for venture capital investment. Qing Branch has a special research report, analysis and summary of the past six months or a year of China's total venture capital, investment industry distribution, exit and so on. In addition, the issues discussed at some special sessions are often issues of general concern, such as the provisions on the merger and acquisition of domestic enterprises by the Ministry of Commerce and six, the establishment of RMB funds, the exit opportunities of domestic capital markets, the investment areas that investors are currently focusing on, Major opportunities and risks in different investment areas. Through the understanding of these macroscopic situation, the entrepreneur can make clear the development trend and financing condition of their own industry, so the development prospect and financing difficulty of their enterprise is generally well known;

(b) communicate with entrepreneurs. From the perspective of the development of the enterprise, the experience of successful entrepreneurs may be more illuminating than the investors ' comments. Every time this kind of investment conference is going to invite some successful entrepreneurs, for example, the Jiangnan spring of the media, ebay Shao Yipo, and the General Assembly please Ctrip, such as the founder of one of the hanting, sports 100 of the Zhang Guolen, in the operation of enterprises have a wealth of experience, many times, although in the industry different, But the experience is interlinked. In addition to the venture capitalists who have been supported by VC, we can discuss some common problems in the development of enterprises and listen to their views on the role of venture capital in the development of enterprises. This conference happened to have 50 companies in the Qing Branch awards, that is, the investment sector that the most valuable to the 50 companies have been invested in this meeting, entrepreneurs and the winners of these enterprises chat, should have a harvest. I remember the last time I attended an event in an entrepreneurial state-"from 20 people to 200 people, how startups cross the line, many startups take part in the meeting and share some of their valuable experiences, such as the 3G Portal's Zhang says he thinks the most important thing to do is attract talent, He recruited their COO, spent a full 5 months, 5 months to keep sending him emails "report" the company's business progress, finally moved COO from another city to resign from a high-paying stable work, the family came to Beijing. And this man is Zhang's roommate at Peking University. This kind of experience often can cause the entrepreneur to resonate, and may have the certain inspiration function;

(c) Exchange with VC. I put the exchange with VC in the end, because I think in the investment meeting between investors and entrepreneurs to communicate between the time is not very good, investors are very difficult to calm down to listen to a certain project, at least I am. If an entrepreneur really wants to talk to investors, I suggest we talk to the investment manager or analyst, who has more time. Our company will have 1-2 investment managers each time to attend such a meeting, I think other companies will have. The organizers of the Conference and the VC's investment managers are familiar with, so you can through the conference organizers to find them, of course, may also be directly encountered. In fact, if entrepreneurs just want to get the contact of VC, there are many ways, for example, through the company's website, we have every member of our investment team's email address, including mine, according to the address above to send us an e-mail, we can certainly receive. If it's a project we think is good, we'll forward it internally, and everyone will know. And this is our favorite contact, especially for the first time to contact with the entrepreneur. I often get some phone introductions from unfamiliar entrepreneurs, and I have a lot of meetings to talk about, and finally I suggest that entrepreneurs send me an email with a business plan. A more comprehensive approach to VC is to find financing consultancy companies, they are more familiar with VC companies, including key investment areas, investment stage, investment scale and so on. If the entrepreneur's project is good, there is no need to worry about contact with investors, I think VC is fundamentally to provide services to enterprises, including capital and value-added services. Looking for VC not so difficult, many people find VC difficult, in fact, is probably because the project itself is not attractive enough, so the VC will be a variety of excuses for prevarication. Of course, there are some situations may be investors in the field of knowledge is not enough, or the project is too professional, can not understand, so dare not vote.

2. Know how to respect other people's time, and VC exchange to grasp the key

We've had a lot of sessions with entrepreneurs, listening to their introductions and finding that many entrepreneurs talk about their projects without caring what they want to hear, which is a waste of time. I mentioned in the title of "Others", and not only refers to VC. Sometimes, our company will arrange a few meeting in one afternoon, each will be about half an hour to 40 minutes, we will talk with the entrepreneur beforehand. Some entrepreneurs are punctual, put their watches on the table, effective control of the rhythm of the speech, there are some entrepreneurs, we remind the time, or continue to supplement, this mood we are fully understand, but, from another side, the front of the people drag long time, behind the people will wait for you more than a long time. Moreover, we generally do not change our overall impression of the project because of the additional points, because half an hour's time will be able to list the most important advantages. If we think that a project is in line with our investment philosophy, there will certainly be a better communication next step.

However, entrepreneurs with VC dealings, sometimes a little nervous, especially before how and VC contact, also do not know what the other side, so the above situation is normal. Here, I list some of the issues that I care about when I look at items, and the next time I talk to my entrepreneur friends, I can go straight to the topic:

What do you do (business model)? Best can be summed up in one or two words, in fact, this is often a strategic positioning of enterprises. If the entrepreneur in this respect said a lot, I will habitually summed up as a sentence: "Your business can be positioned like this: ...";

How to make money (profit model);

Revenue earnings for the past 1-3 years (if any) and financial projections for the next two years, business growth;

What is the core competitiveness of an enterprise (team, technology or something), and whether this core competitiveness is sustainable. Market competition pattern.

4, 5 years after how big, there is no possibility of listing.

Each of these can be unfolded, but too much description of something general is not meaningful (such as the market), I hope that entrepreneurs can use a few words to make it clear, especially the company's positioning, the simpler the better. I often interrupt the entrepreneur, a bit impolite, this is related to my character, I speak very direct, want to quickly grasp the key, I hope friends can understand.

3. Establish the right financing mentality

One of the main points I want to make about this is that entrepreneurs can't take the money from VC as a standard to determine whether a business can succeed. An excellent entrepreneurial enterprise, with the support of VC, development will be faster, without the support of VC, on their own should also be able to develop, but the speed may be a little slower. VC as a financial investor, although some help to the development of enterprises, but this help is only auxiliary, the development of enterprises can only rely on the entrepreneur's own efforts.

Looking back at the projects we don't invest in, there are two types that make up a significant proportion. One is that the project stage is too early for us to be mature enough. Some projects may be more suitable for angel investments or have been invested in Angels, but it will take some time to prove that the business model is workable, that the team is strong enough to execute, and that the growth rate is fast enough. Many entrepreneurs in their own enterprises in the above capacity has not been validated, began to rush to the main focus on financing, so often there are two results, one is that the enterprise does have a certain potential for development, VC cast, but the price is very low, the other is not the capital. I suggest this kind of enterprise must pay attention to focus on the development of the enterprise itself, and so you develop to a certain stage, if the real proof is good, financing is very easy things, and the company's valuation will be relatively high. The second category is that the price of the project is too expensive. Many projects do have better prospects for development, but entrepreneurs in the search for investors, the price as a choice of standards, we think this is an incomplete attitude, entrepreneurs do not take a long-term view of the development of enterprises. In fact, VC provided to the start-up enterprises, in addition to capital, there are many intangible resources, many resources are difficult to use funds to measure. Therefore, entrepreneurs in the choice of VC, to the various companies to make a full understanding, including their investment style, the investment company's industry distribution and to the investment company to provide help. Another point is that financing is not the more the better, because the financing of too much money will be idle, only to dilute the role of the entrepreneur shares. The entrepreneur should have a more detailed plan to the capital demand and the application, may according to the Enterprise development phased financing.

It's good to get money. No money for the time being, nor does it indicate that your project is bad. If you think your own thinking right, firmly do it, the enterprise really one day up, VC will take the initiative to find you. Of course, regardless of whether there is VC investment, I suggest that entrepreneurs and investors to maintain good relations, even if there is no investment cooperation, from the point of view of friends can also make suggestions to each other.

4. To find the need, do not follow suit, do their own field of the best

In the entrepreneurial State read an article, is said Ctrip, such as the founder of one of the hanting, hanting in doing Ctrip, found that the user reflected in the Ctrip hotel booked on the price of expensive, after investigation and analysis, recognized the opportunity to do such as home, and in doing such as home and found the opportunity to do the Han court. I think he was successful, to a large extent, because we can find the market demand deeply, and this kind of discovery is based on the accumulation of experience, the layman is very difficult to see out, even if the experts, as you do not pay attention to, you may find that the need will not be taken seriously, to turn this demand into a cause. This is one of the important reasons why venture capital, including us, attaches importance to "people". There are also examples of companies that we invest in. Panorama of the founder of Lu Chen, the University of Astronomy and physics after graduating from the publishing industry, sold books, calendars, and in the process of publishing business, found that the supply of high-quality pictures of the publishing industry has an important impact, so founded a panoramic picture company, And learn from the world's leading companies experience, fully borrow the power of the Internet, so that the company in a short period of time has been rapid development, to become China's largest picture supplier. David Lee, founder of EditGrid, a company that has just invested in an online spreadsheet this year, is only in his early 20, and in the last few years he has been doing it outsourcing to some big companies, and in doing business, there are customers who want to share spreadsheets online, The company's employees can edit and update the same document in different parts of the world. David Lee led the team to successfully develop this product, the customer is satisfied, but David found that many companies have such a demand, so set up EditGrid company, specializing in online spreadsheets, the company's products in a short period of time has been greatly improved by many customers welcome.

In contrast, I think many entrepreneurs in the choice of entrepreneurial direction, and do not have the intention to find demand, but follow suit. For example, to do the Internet, we see a large part of the project is the Internet companies, including video, blogs, search and so on, almost the majority of income by advertising. It should be said that the market is there, but relative to such a large number of enterprises, advertising how can there be such a large market space? I remember one time I argued with an entrepreneur about the problem, but I still don't see why I'm convinced. I think that the Internet is a lot of entrepreneurs, a big reason is because the entry threshold is relatively low, technical content is not very high, and the concept of the Internet is easy to attract the attention of venture capital. However, I feel that it is becoming more and more difficult for internet companies to raise money simply by advertising, because we do not see sustained and steady growth in the future. I think it's fundamental that when entrepreneurs choose the direction of their business, it's essential to think about what value you can bring to the consumer. Hard to find the demand, on the one hand, for the choice of entrepreneurial direction, on the other hand, entrepreneurs in the entrepreneurial process to constantly adjust their strategic direction needs. Because, it is likely that your initial vision is inconsistent with the actual requirements, and you need to adjust. And the need may change as the environment changes.

In fact, the intention to find demand, not follow suit, is what we have to do. We receive a number of business plans every day through various channels, but there is little excitement. If we keep moving forward with these business plans, we are likely to lose some of the good projects that we are not exposed to, and proactively find the demand that will reduce our chances of missing a good project to some extent. Excellent entrepreneurs, I hope we can proactively find you, together to create entrepreneurial success.

Finally, I would like to say that luck. Whether it's entrepreneurs or VCs, luck seems to play an important role in the ultimate success. As I have said on many occasions, we have cast a minority, 90% is because of our luck. But I also know very well that "luck favors those who are prepared".

"Work Hard, Work Smart" is our company's philosophy, my Chinese skills are not very good, according to my understanding, this sentence can be translated into "diligence, thinking." Diligence, because we are not geniuses, to think, to make our work more effective.

Many of the entrepreneurs I have contacted are working very hard, believing that one day luck will befall them. Of course, also bless our own, and more excellent entrepreneurs to work together to fight the cause, share the lucky!

        Note: From Zhang Ying Sina blog.