VC Ten Cheat Language: entrepreneur, I watch you

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Did you really hear what it sounded like?

Editor's note: This is an "old article" three years ago. Interestingly, even if today's "trick" doesn't seem to be out of date, "I'll have a meeting later" and "I'm very optimistic about you, but it's a pity that the internal discussion didn't pass." These words seem to have always heard. Recently on Weibo has been turned over again, see people very happy, carefully think about it is all experience. Republish and welcome to add.

Gui Guang

Entrepreneurs in the financing of VC, will face the VC to the enterprise, the entrepreneur, the industry and the market of the query and investigation, some entrepreneurs will play small means, cheat and deceive investors. But more entrepreneurs in contact with VC, often VC fooled. The following list of VC commonly used in the top ten words, in case the entrepreneur in the financing reference use, understand their situation, do not be VC after the cheat also said: "Thank you!"

1. Keep in touch.

The frequency of this mantra is the highest, an active VC may be a day to use this phrase to fool 10 of entrepreneurs, almost can become their mantra.

In a conference forum, a group of entrepreneurs will be a big VC surrounded by a big, VC distributed business Card, one or two lucky enough to pull the VC to communicate their business plan, 3 minutes later, VC in order to get rid of as soon as possible, with the entrepreneur shaking hands and waving: "Keep in touch!" And then trot away.

In the VC conference room, you and your entrepreneurial team to VC to do financing demo, 1 hours later, you happily stepped out of VC gate, reluctantly to say goodbye to VC, VC holding your Hand said: "Keep in touch!"

This deceptive language is very confusing, first contact with VC entrepreneurs will be very excited, think VC really will keep in touch with him, in fact, this is purely a ritual language, and "good-bye" a meaning. If VC is really interested in the entrepreneur's project, they will immediately look up a higher level of "leadership" schedule, arrange the next meeting as soon as possible, if after the demonstration with VC, they said: "Zhang, our fund's director of the Friday afternoon is free, then we communicate in detail once, you see the time is convenient?" VC send the entrepreneur to leave, must not say "keep in touch".

Similar to this trick language also includes: "We study and then contact you." "I'll call you later." Usually, the subtext is: "How far to go, don't bother me again!"

2. I have a meeting.

VC do the most things is a meeting, their schedule is usually filled with a variety of meetings, and meeting with entrepreneurs, communication projects are the most of the one, they are used to cheat entrepreneurs commonly used as an excuse.

or in the VC conference room, you and your entrepreneurial team to VC financing demo, 100-page ppt, you are passionate about the 30th page, the opposite of a few VC is beginning to look sluggish, 2 senior VC interrupted you, said: "Sorry, Zhang, we have a meeting behind, go ahead, you continue." "So just leave a small role like an investment manager or analyst with you to continue with the presentation."

If it is a good project, VC will not be kicked out. If VC so fooled you, prove that he has lost interest in your project, this is either the problem of the project itself, or you show too bad. In your financing demo process, if the VC constantly ask questions, do not let you have the opportunity to demonstrate PPT step-by-step, or even 2, 3 hours is still not done, to eat the time to call takeout lunch while chatting, then you get money not far from success.

Similar to this trick phrase is: "I go out and make an important call." "Well ... Well ... Not bad...... Yes...... Good bye. "Usually, the subtext is:" What a bad project, wasting my time! "

3. Our internal discussions did not pass.

VC to see a lot of items, but usually only a small number of projects, the proportion may be less than 100:1. So to reject 99% of the project, for VC, is to make 99% of the entrepreneurs unhappy. Supposedly all the way to refuse entrepreneurs, that VC has Word-of-mouth and character should be a lot of entrepreneurs spit on, but usually very few VC will let entrepreneurs hate themselves, then how do they do?

It's simple--shirking responsibility. Even if a VC thinks a project is bad, when he refuses, he says to the entrepreneur, "I love your company and your team, but our internal discussions have failed." "This refusal will make the entrepreneur feel good about others, recognize your company, but VC Company's" other people "do not recognize, so don't blame him. Of course, there are other reasons, in short, VC will let entrepreneurship feel, not a VC let you suffer injustice, but behind the VC company's project decision-making mechanism of reason, to blame the VC company it. Therefore, often hear many entrepreneurs scold VC company, but scold specific VC partner, investment manager is not much. The real catch VC may be two kinds of people: one is the most kind-hearted VC circle, they are willing to tell you the real reason for the VC refused, and give you a bunch of suggestions; another is really do not understand a gang of VC gangs.

Similar to this trick phrase: "This project is too early." "I like your company very much, but the partner voted 3:2 failed." "Your financing limit is too low, we don't vote for 10 million dollars below the project." "Usually, the subtext is:" This is a bad project, I always pass! "

4. If someone leads the vote, we follow.

As we all know, VC is very greedy, they all day dream to be able to invest in the next Google, get hundreds of, hundreds of thousand of return on investment. But the reality is, really get more than 10 times times the return of the project can be VC called "star" case. Since the VC is greedy, then meet the Good project, only the exclusive to ensure the greatest benefits. VC said to be willing to follow the vote is like a euphemism to refuse, this kind of talk, than "stay in touch" more naked and annoying.

VC also has a feature, that is, before the investment, as far as possible to do enough work to avoid the risk of investment, to do due diligence on investment projects is VC to avoid investment risk of a customary means. But there are a lot of lazy, level and poor taste of the VC also has its own method, that is, follow the big VC go, or the flow. Like Sequoia Capital, Ding Hui Investment, IDG, race rich investment and other big-name VC are optimistic about the project, they must cry to be with the vote, but afraid they will not take him to play. So, if you have VC to say "we still need to discuss, but if you can let Sequoia capital, we are willing to vote", you will be directly with him, and not the head back.

For entrepreneurs, if a VC know that you are also with a lot of other VC communication, the VC is willing to cast this round alone, the entrepreneur's financing limit he can digest, not willing or need other investors to participate, then entrepreneurs have reason to believe that the VC is sincere. or VC said "if you have no one to lead, we are willing." "Such a VC is a real recognition of your company's investors."

Similar to the trick, "we're interested in this field, but we want to do it with a VC who knows more about the industry," he said. "Our single investment quota is not that big, and if you can find a joint investor, we'll vote." "Usually, the subtext is:" You this rotten project, can find VC investment, that is the holy crap! "

5. We value the team most.

Each VC has its own investment criteria, including investment areas, investment quotas, investment stage, and so on, but also have their own criteria for the evaluation of the project. However, almost all VC, will claim to judge the criteria of the project, the most important is the "team."

This is not know how many entrepreneurs to go astray, many entrepreneurs in order to facilitate the financing of VC, the beginning of a patchwork of so-called "dream Team", such a team is most difficult to produce the expected results of the company's operations, of course, not to help finance. VC is now basically a swarm of traditional industries to see the mature projects, the founders of these projects and management team many even peasant entrepreneurs, no academic qualifications, do not understand what management, there is a market to fight experience, courage and courage. When they started their business 5 years ago, 10 years ago, no one would say they were "strong in the team". Even like Google, Tencent, Baidu, and other successful enterprises, when the original venture, and who said that their team is very good, VC investment, these entrepreneurial hair of the young guy is not "strong team."

Therefore, "the team is very strong" actually a bit "hindsight" meaning, to a successful enterprise, can't tell how it succeeds, can be attributed to "the team is very strong." "In addition, from those successful enterprise out of the people, in VC eyes, can also be a good team of the necessary conditions, but these so-called" strong team "team, in addition to take the money of VC more successful, in the end there are several companies to do success? How many entrepreneurs are successful in a continuous venture?

VC said "We value the team", in fact, this is not a complete sentence. Although they may indeed be investing in the team, entrepreneurs must not think that VC will not fire you, maybe VC is because you and your team decided to invest, there seems to be no reason to fire you, but the second part of VC hidden is: "If the company works well, we are investing in your team, otherwise, we will fire you, Because no one is indispensable. ”

VC look at the project with the girl to find the same object: VC said that the value of the team, like the girl said that the value of the character of a young person; VC said your team is good, is equal to the girl said young man "good." But we all know, only no money, no good job, no good family, no looks, no qualifications ... There is no one, will be the girl with "good people" to "praise". Therefore, when VC really so "Kua" you, you will know he is actually want to say what.

Similar to this trick, it includes: "We do not interfere in the entrepreneurial management of the enterprise." "We evaluate the project mainly to see three: First, people, second is human, third or human." "I'm sure your team can bring the company to the market," he said. "Usually, the subtext is:" You idiots, if you can make the company bigger, I am blind! "

6, our fund has invested in XXX and many other successful projects.

A few years ago, VC in domestic or fresh things, holding a lot of dollars of foreign VC is grandpa, financing enterprises have to Thing to find the opportunity to see with VC side. Now the world in turn, in the domestic a-share and gem catalytic, the world are investment companies, VC funds, individual investors. As long as it is a good project, it is time for the project to do Big uncle, the investor, VC to do their own promotion, to persuade entrepreneurs to accept his investment, take his money.

This time is the competition among investors, what are they competing for? In addition to investment prices, the main is called "Strength" and "performance". Speaking of strength, the most important thing is the size of the fund, the foreign funds have advantages. The general VC funds 3, 500 million dollars, some even more than 1 billion U.S. dollars. And most of the local renminbi VC fund, the plate only 3, 500 million yuan, more than 1 billion is not much. As a then, VC in various occasions, advocating their own time, openings will say that their own under the management of several funds, the total number of large-scale. But the VC management Fund is facing the global investment, or focus on China? What is the proportion of real investment in China? How big a single project can invest? These are the things that entrepreneurs care about.

In addition, the performance of VC is not in the management of how much money, how many projects, but the success of how many, the return situation. Many VC rely on a successful project 5 years ago, 10 years ago to earn a full reputation, all over the the whole, but never to cast a decent project, but also a lot of VC rely on "alongside the rich", followed by a big VC behind the butt, but also lucky to pick up the leak, there are many "successful" VC, only do 2, 3 rounds of investment, Even only do IPO investment, 1, 2 years without listing possible projects do not look at all. Don't look at VC bragging about how successful your investment performance is, just ask him a few small questions: "Your company's last successful project came out a few years ago?" How often did you invest in the first round? Have you ever had a successful project?

Similar to this trick, it includes: "We have 20 companies IPO." "We are raising a 2 billion Yuan fund. "So far, we have no investment failure cases. "Usually, the subtext of this kind of trick is:" Such a good VC, how does not sound like us! "

7, we can bring great help to the enterprise.

VC Money in fact, similar to others, such as Shanxi coal bosses, Jiangsu and Zhejiang rich second generation, but VC himself will never look like this, they often claim that their money is more valuable, in addition to money, they will also attach "value-added services."

VC business model, the most important one is "do not put the eggs in the same basket," if the eggs in 10 baskets, even if the 9 basket overturned, smashed 9 eggs, as long as there are 1 eggs hatched chickens, they even succeed. In fact, most VC companies will not only put "eggs" (the funds) in the 10 "basket" (invested enterprises), usually even a VC company partners need to do "care" of more than 10 "basket"-do business board members. If the VC partner can spend more than 5-10 hours per month to understand the business situation, help the enterprise to advise, even thankfully. These VC also busy every day to see a lot of new projects, domestic and foreign, provincial introspection, flitting, can bring the "value-added services" may only be a little advertising fees for enterprises.

Of course, there are a few really can provide value-added services VC, but a small number of poor, should not exceed one-tenth. If a VC happens to know the business of the industry, or know a good professional manager, perhaps really give the enterprise a little help. These valuable VC often have many years of entrepreneurial and successful experience, but most of them away from the enterprise experience for many years, the feeling of the market has been disconnected from reality. Most VC so-called "industry experience", the real situation is this: you do new energy, he also know a coal boss; you do medical equipment, he invested in health care products company; you do business with business-to-business, and he's seen more than 10 of them. The most frightening is that investment banking or VC company grew up VC partners, they have no business management experience, but can take the investment enterprises to do experimental plots, to provide enterprises with the so-called "strategic planning" aspects of "value-added services", often the enterprise into the ditch.

Similar to the trick phrase, we have a lot of experience in this industry. "We can bring strategic value to the company." "We are familiar with the VC of Sequoia and Ding Hui, who are familiar with Morgan and Goldman Sachs, and we can easily handle the financing and listing in the future." "Usually, the subtext of this kind of cheat is:" We are actually MBA origin, have done a few years investment bank brokerage, did not run the enterprise, what industry development, strategy, market, marketing, human resources we all do not understand! Hurry to go public and make a fortune. ”

8. This is the standard clause.

Entrepreneurs in the VC term sheet, is both happy and worried. Happy is, finally get VC a written investment commitment (although there is no legal effect, and there are some preconditions), financing success is imminent, worry is, Term sheet the terms of the muddled, do not understand the mystery Ah!

If you don't understand, ask a lawyer for help, but the cost of a lawyer is too expensive for an entrepreneur, at tens of thousands of dollars or hundreds of thousands of yuan. So VC said, "in fact, these terms are standard terms, there is nothing to talk about, or let my lawyer explain to you on the line." "There are some entrepreneurs who are so confused about the legal language that they feel so confused," he said. VC is right, he gave you the terms are basically standard terms, but this is only VC protection of their own standard terms, these terms are a large number of VC, through a large number of cases, through expensive lawyers designed, such provisions can be "standardized" to maintain the interests of VC, can the interests of entrepreneurs? That's why entrepreneurs need their own lawyers.

In fact, most of the clauses can be negotiated. If you have a lawyer to help explain and communicate will make you more targeted, in addition, if you can get several VC term sheet will make things simpler, compare each other, you can have more confidence at the negotiating table. Project good enough under the premise, at the same time there are other VC competition, this time, the gas will be unable to take the initiative to let go of the VC, many harsh terms will be relaxed.

If the entrepreneur is doing a second round of financing, it is best to invite the first round of VC hired lawyers, because he is most aware of his first round for the interests of VC, he gave entrepreneurs set some of the terms, what kind of restrictions on entrepreneurs. This time, once he turns around and defends the interests of the entrepreneur, he will try to "confront" the second round of VC on all terms. This time, the entrepreneur will discover: Originally, all term sheet clause can talk about!

Similar to this trick, it also includes: "All investment agreements for all our projects are signed." "" This clause is absolutely impossible to amend, this is the industry practice. "In fact, these are standard terms, there is nothing to talk about." "Usually, the subtext of this kind of trick is:" We expect these terms to protect their interests, you must not find a good lawyer to help Ah, or Louxianer! "

9, now the valuation is too high for the company does not benefit.

Valuation problems are usually the entrepreneurs in the financing of VC, the most concerned about a problem, but also their most confusing problem. On the one hand they do not understand the valuation method, on the other hand, VC proposed the valuation results, they do not know whether it is appropriate. Although VC has its own set of valuation methods, but the valuation is usually a combination of artistic and scientific things, on the start-up, no profits, no income of the enterprise, is more artistic than scientific, which is called "Pat head." Since it is to shoot the head, VC and the founder of the shoot must be different heads, the two sides will have a difference of 108,000, the final determination of enterprise valuation is usually the result of negotiations between the two sides.

VC's dream is to enter 10 million to an investment before the valuation of 20 million of the company, and therefore hold the next Google's 33% shares, and eventually get more than 100 times times the return on investment! VC very much value the amount of return, but also in return multiples to measure the quality of investment. If a VC has been holding 33% of the company's shares until the listing, if the company market value is 3 billion, then the value of VC shares is 1 billion, he earned 100 times times. If the initial investment, the company valuation of 40 million, he also accounted for 33% of the shares, it is necessary to invest 20 million, then the company 3 billion market capitalisation, VC returns only 50 times times. Obviously, in both cases, VC has earned about 1 billion, this is the case of the millennium, but the return multiple is very different.

In fact, once the VC decided to invest, is that the project has a great grasp of success, in this case, more than 1 million will only make the final return on the total amount of a little bit; However, VC will still be in the investment, as far as possible to depress the company's valuation, tell you "too high valuation is not good for the company", so that in order to get the same proportion of shares, as much as possible to invest less, so as to achieve a more attractive return multiples.

For enterprises, to VC financing once, is equivalent to experiencing a ordeal, to spend a lot of time, energy and money, in addition, the timing of the financing is not when there is, once you can seize a financing opportunity, enterprises or to the valuation as far as possible to raise some money as much as possible, so as not to be subjected to a sin. Therefore, VC usually hate the business to hire the financing advisers, because the consultants are the amount of money to get commissions, they have the power to help enterprises to fry high prices.

A similar analogy to this phrase is: "The low valuations are now conducive to follow-on financing." "" Now the P multiple can only do 5 times times. "Usually, the subtext of this kind of trick is:" You want the price is too TMD high, how can I make 100 times times Ah! "

10, we are a family after our investment.

The negotiations are over, the documents are signed, VC and business parties have to celebrate, VC avoid to clap the shoulder of the entrepreneur, Earnest said: "We will be a family." Is it really a family?

If the VC and the enterprise "combination" compared to a man and a woman combined, the VC and business "marriage" is the only purpose of "divorce" as soon as possible, and partition the family property. They are not even willing to nurture a few more years of emotional relationships with companies because they are not long-term investors. VC Fund's life cycle is only 8-10 years, which determines the VC can not really become a living with the enterprise "family." If they are happy, they may be together for 3 or 5 years, if not happy, 1 years will be too long.

VC want to let the entrepreneur think oneself later is a family, is nothing but want to don't treat him as an outsider, the company management, business, finance, and so on the information do not have to hide the VC, daily things Regular report, major matters separate report. Because the Chinese company to do the false accounting, cheat VC is very common, VC is impossible, that VC hope to invest in the future, do not conceal to him--big deal everybody together to do the false accounting!

In fact, before VC investment, think the most is not how to help enterprises bigger and stronger, but there is no chance to run, how to escape. If once found in the short term enterprises listed, is not expected to be mergers and acquisitions, will try to trick other VC come in, a number of "Friends" many road! Once there is a listing, it is the Nasdaq, Hong Kong Gem, British aim, and other inaccessible, capital-raising markets As long as you can make their shares can be circulated, VC will also force enterprises to go public; Once a buyer is interested, VC because of the protection of priority, usually can be cheap to sell the company can also have a good profit, but may be left to the entrepreneur what.

Similar to this trick, it includes: "Our interests are the same." "We will do our best to help the company when it encounters difficulties." "Usually, the subtext of such a trick is:" As long as the company according to your direction and speed of development, is Hello, I good, everyone good. Otherwise, don't blame me, TMD over! "

Author Gui authorized the "Genesis" published, the first published in the "Business News-Corporate Finance" October 2009 issue, reproduced please indicate the source of the author.