The venture capital market has ushered in a great change, and how to survive is a problem that many venture capital institutions need to face in an environment where it is difficult to raise funds, invest and exit.
Lin Haojun, Secretary of the Party Committee and Chairman of Yueke Financial Group, believes that China's venture capital industry has shifted from the original period of vigorous development to the current period of restructuring and adjustment, and venture capital is shifting to science and technology. In the period of restructuring and adjustment, every venture capital institution needs to have its own comparative advantage, if you can't find the comparative advantage, you will have a hard time surviving this winter.
From December 7th to 8th, 2023, the 17th China Investment Annual Conference and Limited Partner Summit with the theme of "Inclusiveness and Progress, Gathering Momentum" was held in Guangzhou, hosted by China Venture Information and China Venture Network, and organized by Guangzhou Development District Industry ** Investment Group***. At the meeting, Lin Haojun delivered a keynote speech on the theme of "Gathering Momentum to Create the Commanding Heights of Science and Technology Innovation in the Bay Area".
The following is the on-site record, edited and organized by ChinaVenture.com:
Thank you very much to Mr. Yang Xiaolei, CEO of China Venture Information, for giving me the opportunity to give this speech today, I am a new recruit of venture capital and lack of experience, so I am not imparting to solve doubts, not enlightening, not leading, the focus is on enlivening the atmosphere, and I have the courage to come up and throw bricks and stones for everyone.
There is a "dilemma and two weaknesses" in the venture capital market
Today I would like to share with you three views. First, how to look at venture capital, and second, how to engage in venture capital in Yueke. Third, Yueke hopes to work with you on how to engage in venture capital.
The first point is how to look at venture capital. There is a saying called "looking at the side of the ridge into a peak, the height of the distance is different", everyone's feelings are estimated to be different, I feel that venture capital has shifted from the original booming period to the current restructuring and adjustment period, the original front of the economic boom There are many opportunities, so many investment institutions have sprung up like mushrooms after the rain, but now it has entered the cold winter. Although I don't feel so hopeless, I'm shuffling, refactoring, and adjusting right now.
At present, there are four phenomena in the venture capital market, the first phenomenon is that the team has shrunk, according to various data, especially the research data of the Jinke list, last year, this year, the entire venture capital team has seriously shrunk, and the number of investment institutions that have withdrawn in the past two years is more than twice that of the established institutions, especially those cultivated in the early stage like Guangdong, and the team that has withdrawn is quite large, so our team is not expanding, but shrinking, so our structure has changed. From the perspective of the national layout, Guangdong has withdrawn very much this year, reaching 40 or 50 percent, and the growth is a little better in Jiangsu, Zhejiang, Guangdong, especially in Shenzhen, although Shenzhen has a relatively strong foundation, but Shenzhen's exit from the first company is more powerful.
The second phenomenon, the withdrawal of private equity ** is very serious, but many new national teams have been added. Now there are venture capital teams in various cities and even districts, which is a structural change. Many financial, first-class, and banking companies are also engaged in it, and large industrial leading enterprises are also engaged in it.
The third phenomenon is that the market has been transformed, it turns out that the project is looking for funds, and money is king, so it turns out that many rich people who were established early are waiting for the project to come to the door, and they can calmly select the project. But now it's **looking for a project, **you need to take the initiative, and it doesn't matter if you have money.
The fourth phenomenon is increased competition. In the past, there were many mythical stories, when one or two hundred million was invested to do one or two hundred million such stories, now this phenomenon is gone, there is no such opportunity, the competition is intensifying, the quality of the project, the pressure of competition is seriously intensifying.
Why do these phenomena occur?I feel that there are four reasons for this, which are a dilemma and two weaknesses.
The dilemma, the first is the difficulty of fundraising, now fundraising is not the same as before, the economy is declining, the whole world is adjusting, everyone has not much money in their pockets, and now the pressure of financing has also increased, so it is difficult to raise funds, and many of them can no longer bear it. The second is that it is difficult to exit, in the early days, many projects were listed, and they rose more than ten times or twenty times at every turn, which was a fertile ground at that time. Although it is now easier to go public and exit, after many projects are listed, the issue price is lower than the cost price and has not risen anywhere.
Two are weak, one is weak and the countervailing power is weak. As an investor, as a **, you used to be able to live with your calves up, but now the consideration power is weak, the project is small, the competition is intensified, and there were projects everywhere before, you can fight alone, but now you are just investing money, or you are not as good as others, and the consideration power is weak.
The second weakness is that our expected appreciation has weakened. We focus on creating value in our investment projects, and I understand that there are three dimensions of value creation, one is to help the project create more profits, especially effective profits, the second is to help the project create expected growth, and the third is to help the project do risk control. Now that these three dimensions can be combined and can be effectively guaranteed, I feel that it is relatively weak, which makes our original investment thinking change greatly. In the past, a lot of it was speculative thinking, anyway, which one to invest in will soon be able to cut leeks and soon be able to return, but now it has become a creative thinking, a thinking to grow together, but now it is still relatively weak.
Since there are these phenomena, there are these pain points and difficulties, is it that venture capital will not be able to survive in the cold winter?I don't think so, but we can look at our current venture capital from four points.
First, I think venture capital must first identify the outlet, the tuyere is in the first place, it must be adjusted, it must be reconstructed, and it cannot be played according to the original way. Now China's economy has entered a period of adjustment, and during the adjustment period, the country has proposed high-quality development, what are the requirements for high-quality development?The entity enterprise is not the entity of the traditional industry, but the entity of the strategic emerging industry, and the foothold of the strategic emerging industry I think is science and technology. Therefore, I think venture capital should be transferred to science and technology.
Second, I feel that in the stage of economic transformation, everyone needs to be organized, and venture capital institutions need to be warm.
Third, to cultivate comparative advantages, such as a lot of venture capital V, I liken them to accurate hunters, they are good at discovering and capturing projects, and there are also like our national team, it is a scientific research level of "agency", using its resource advantages to concentrate projects everywhere, there are also a lot of state-owned enterprise capital to become a monopoly of resources, so every venture capital institution should have its own comparative advantages, if you can't find it accurately, this cold winter will be very difficult to survive the winter.
Fourth, it is to serve the main theme, around the main theme, why do you say that?China is a socialist economy with Chinese characteristics, and political economy is the driving force for our country's development. According to economics, there are visible hands and invisible hands, when the economy is booming, the market plays a leading role, and the invisible hand plays a roleYes, so we should focus on ** and service** to find space to expand our new development.
How does Yueke do venture capital?
The following is a brief report on how Yueke engages in venture capital.
Two sentences, the first sentence is to create three platforms to promote development;The second sentence is to cultivate core competitiveness and implement it in case of trouble.
The first platform is the matching platform, we have engaged in 15 Yueke releases in the past six months, released more than 2,000 projects, there are a number of provinces and 2 municipalities directly under the central government in the country, and now there are 450 billion projects that have been landed, effectively matching the project provider, the project investor, and the location of the project together, and truly solving the problem of landing science and technology projects, and has also achieved good results. The second platform is the resource platform, we are committed to entering the country's head science and technology projects, now more than 4,000 have been entered, if you want to find a project, you want to find investors to find Yueke, at the same time we have established a joint with the head, national, provincial, key research institutes, teaching units, by them to technical checks, we think checks, effectively solve the problem of transformation of scientific and technological achievements.
At the same time, in order to solve the problem of difficulty in exiting, we have also set up a first-class trading center, so that we can invest early and invest in small scientific and technological achievements project equity can be traded here, so that the country's resources will be gathered in the city and concentrated in us.
The third platform is the industry platform, we Yueke Group is the first platform specializing in science and technology financial investment in Guangdong Province, we are also the chairman unit of the Guangdong Venture Capital Promotion Association, we not only do it ourselves, we also want to integrate the industry, so we have more than 200 strategic cooperation units, we specialize in LP with more than 50 circles of friends, we also make our office building into the national venture capital headquarters, in addition to our group headquarters, all are venture capital companies. At the same time, we are now focusing on grasping the pain points of the company to do one thing, that is, to cooperate with more than 20 banks, to guarantee by us, and by us to evaluate the refinancing of the projects invested by the company with equity pledges, so as to effectively activate our market and make our investment projects can be leveraged and enlarged.
That's the first sentence.
The second sentence is to cultivate our core competencies and grasp the implementation when encountering problems. We have three aspects of core competitiveness, first, the cultivation of the model, we have both the mother, but also our direct investment team, so our fundraising ability has increased significantly, last year we raised 9.5 billion, this year so far now more than 11 billion, next year we can raise more than 30 billion. I feel that money is the key now, and there is ammunition to fight the war.
Second, we take the three ways of playing the soldiers, the allies and the united front, and greatly exert and occupy the market, we have the soldiers, we are also willing to invest, our number of follow-up investment has been more than 5 billion so far, we also engage in venture capital consortiums, and invest together with everyone in a certain region and a certain industry. So last year and this year, with the industry-wide contraction, the quantity and quality of our investments have risen dramatically.
This is our positive advantage, we have a horse racing economy, a co-investment economy, and an audit economy, so that we can develop relatively steadily, and have a good rate of return, steady growth. At present, Yueke's asset-liability ratio is 34%, and we have strong financing capabilities.
Thirdly, we have the advantage of talents, our whole team is relatively young, the average age is 35 years old, more than 75% are masters, more than 20% are doctors, and we also have a team of more than 300 experts, so that our ability in this area has also been strengthened.
There are three main aspects to grasp the implementation, first, we venture capital leading, through three dimensions to greatly accelerate the growth of our science and technology projects, today Yueke direct investment, co-investment is 30% growth, second, we are a science and technology financial group, we understand finance better than technology, more understanding of science and technology than finance, so we inject new water into us through the financial sector. On the one hand, the industry can support our financing ability, and on the other hand, the industrial park will enhance the energy level for the landing and development of venture capital projects, that is, "one fish and three eats", fish head soup, fish meat slices, fish bones porridge, and use this closed loop to promote development.
Finally, let's briefly talk about what Yueke wants to do. The first is to hope that venture capital institutions across the country will come to Yueke, and we will give you a big office for large venture capital institutions, and a small one can engage in a maker space.
Second, I hope you will come and move around more, we have a third platform, you can come and take a walk, and I also hope that everyone will come to participate in our Guangdong Venture Capital Summit to increase communication and interaction.
Third, I hope that everyone will come to exchange and cooperate, you have good projects to recommend to us, we are willing to co-invest, we also have projects, and I hope you can participate in co-investment.
Fourth, if we engage in venture capital consortiums, we will invest in some prefecture-level cities in Guangdong and some provinces in the country, because only one unit will go, for example, Yueke will invest, and it will be useless to invest three or two hundred million yuan.
Finally, Yueke's identity advantages, one is that it can integrate the resources of the Bay Area, and we have cooperated with Hong Kong and Macau to establish the Bay AreaSecond, it can be coordinated across provincial levels. Third, we can take advantage of the current great changes in the international situation, the integration of industry leaders and scientific research and teaching units, recently Hong Kong, Singapore is the best Huiji District, so we want to use Hong Kong and Macao to face the world, we have been talking with Hong Kong, the world's science and technology projects settled in Hong Kong, talents in Hong Kong, projects settled in Guangdong, and then the world's advantages of high-end scientific and technological resources in the Bay Area.
We want to take the lead in doing this, and if you have confidence, I hope to plan and cooperate with you. I hope we fall in love with the Bay Area and build the Bay Area together, Yueke hopes to work together with everyone here to create brilliance, thank you!