cloud network hunting note: on October 25, zhang ying, founder of the partners China at seven cows released when third anniversary activity theme of “if a bubble, how strategy?” Speech, in view of the recent high-profile topic “bubble” of financing for the detail, and put forward several countermeasures for entrepreneurs. The following as the main point of view, latitude and longitude from Chinese officials.
one, the best of times
we still firmly believe that this is one of the best times, exports from China to production to consumption + service transformation, we extremely bullish on China’s economic transition, the emerging industry with great opportunities;
emerging technology companies such as wireless Internet and the Internet in China’s GDP proportion will be more and more big, 5 billion to $10 billion after the exit of listed companies is the norm;
I don’t think the mobile Internet is the extension of the Internet, but, it is the mobile Internet by mobile phone become like organs, lead to a chance to overturn any a traditional industry, if any of the companies don’t embrace the mobile Internet may be to die;
from the wireless Internet, is a pioneer in the United States, but carry forward must be in China, I firmly believe in the future, in the near future, the mobile Internet will more innovation comes from China, now we already have business model innovation, at the same time, I think will see more on mobile Internet technology innovation, the innovation will be ahead of the United States and Japan;
a growing number of mobile Internet companies will be listed in the country. I think in the next five to seven years, we exit, weft or warp/weft in mobile Internet exit, more than 50% will come from the a-share market, so we invest RMB, I think the future will have A series of high quality mobile Internet companies in the a-share listed;
excellent entrepreneurs will be more systematic and complete help, brand gap between investment institutions will increase, more and more high quality project and the quality of entrepreneurs converged on the frontline of investment institutions. The investment institutions of a line, a brand investment institutions is a dozen or so, the success of these brand foundation because they quit, they do, they give entrepreneurs to help, and with other funds to distance.
2, the so-called “bubble”
the so-called bubble, the bubble is financing, in the past couple of years the U.S. capital markets, coupled with ali, jingdong and other heavyweight, make capital more importance on the primary market. LP for from emerging industries such as science and technology stock returns is making a lot of money. LP investment of VC and PE in general is fixed, the ratio of 5% to 15%, for example the LP had 100 dollars, was supposed to put in funds, VC and PE is 10 yuan, two or three years because of their own size from 100 to 300, their investments in VC and PE doomed to increase 3 times, and then they want to speed up the investment in the VC, PE.
but we have our own financing structure, once every three years or is three and a half years, this is our financing speed, the fund size is not very, cause they want to throw some of the new fund, or often urged us, whether to faster and faster. So much money into the fund is bound to speed up, result in the primary market competition is very fierce. The recent 12 months, in the primary market, private markets quality valuation of project finance is almost surging, entrepreneurs almost don’t have to waste any energy. All of the money want to focus on high-quality companies, high-quality company valuations would go up high, the average value from the ABC, compared to the average normal before should be up about three times.
three, coping strategies
first, pay attention to director of sales, if the people have got the wrong number, a into a waste is a year, in winter this year is very bad thing to the company.
a lot of general wireless Internet company product orientation, founder or products and technologies, not a lot of experience in sales, but the entrepreneurial companies recruit the sales personnel, it takes all the energy to figure out, whether he is fit for this company, because you hire him, you will believe him team, about half a year or so to see how this person’s execution, perform well to kill him, the team has a group of people will leave, before and after at least a year, or even a year and a half;
second, efficient financing structure accurately, if there is a condition, a lot of interested in you, what are you doing for investors also very rigorous due diligence, bridge loans.
warp/weft over 190 companies, to some extent, we are like big data platform, any time, I probably can keenly feel every style of VC company internal change, with the change of investment strategy, the strengthening of their reputation is reduced. Named her this way I don’t, but there are some VC promised bridge loans, to borrow the VIE structure, about three to five months observation data, as their core competitiveness, what do you mean? He will be very easy to promise to give you a clause, bridge loans to you, see your data, data is not good in three to four months not voted for, if there is someone else, to return the money, others don’t throw the money as bond-and-loan, or on the account.
there are some funds this way had some company, you have to be careful, be careful, especially has the choice of company how carefully, this is to communicate with you before investors, because not only can take a bridge loan, some terms may be required at the same time, more to strengthen the protection of their;
third, the most conservative financial calculation, the cost of the most radical, see yourself how long development.
I’m bullish on China’s wireless Internet, I think is the best of times, do not represent no ups and downs, if one day the financing of winter coming, many entrepreneurs get the money of the probability is low, the process will be more pain, I just say that you should be prepared. Already raise a lot of money, but money each month amount larger company also cannot be too careful. Ice and snow in high-speed driving, if the brakes to slow down to a distance, is likely to skid and drift.
this year we are nearly 12 companies internal melting is $100 million more than money, is either public or private. There are a lot of companies spend each month months have been 35 million dollars, are in the market and users. I often remind their CEO, I should say that this is the thinking in the Internet, the Internet, I know, but is a little more careful. If winter comes, you have to hit the brakes, was supposed to spend $3 million a month, if the brakes, employees to bottom out, let a person walks, the cost of the month may jump 56 million dollars, because redundancy need cost, so be careful spending money, especially a lot of money the company also need to be careful. Because time is needed to brake;
4, cement board seats, defend the right to vote.
if you have a winter approaching, an entrepreneur or need more authoritarian, can control the company’s development direction. Likely as investors say this thing is a little strange, I have just said very clearly, I think the success of any a startup, 95% by entrepreneurial teams, 5% of investors, we’re just bet on the right person take a free ride, intermediate key periodically for help, such as financing, capital operation, key personnel recruitment plan plan, the government public relations… But again how, still should see entrepreneurial teams, I would recommend all entrepreneurial team, whether it is winter, winter, try every means to consolidate his own seat on the board, seize the right to vote, if you have any objection, the company can completely according to the founder, entrepreneurial team in the direction of thinking and development;
5, ensure company clearly know if one day, adversity strikes the company will do.
the CEO to take special care to talk when it comes to what to do what, if one day, the winter is coming, I a person is not cut, but when the time comes renege again, somebody else’s confidence in you after all the things will collapse, want to know what he said, say to want to do it. Any company, including our companies, investment companies, all need to take out, this is a very healthy system, can also be very naturally for the one thousand winter comes to prepare guarantee health personnel structure. Any company need to take out 10% to 10%. Winter isn’t a bad thing, if the market status in good company, if the financing in the winter, can consider to use their own market position, their cash to do some consolidation, do some mergers, can let himself go a bit faster. This case I think may not be suitable for a lot of startups, but for it to get the money, develop good good company;
6, a lot of people say I just raise money, and investors looking for me now, what should I do?
I’m one of the most simple way, that is to say you think about it, a year later, you look forward to the valuation me a specific example, using Numbers may be a little bit more simple, this harmony is the $2000 valuation, account to about $5 million, enough for you to develop for a while, but there is a VC kept looking for you, and this is one of the few, but also to say, it’s quite possible that startups quality, said should should not get their money. Said I would ask how much is a year after their expected value, calculated is $60 million, I said yes, if you look forward to $60 million at that time, assuming that your data can do it, if there is a VC for you now, just $60 million by 0.7, if you were given 40 million dollars can take, and it is not for VC, more than a little money, slightly diluted shares to fight in the harsh environment more fiercely.