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A good investment often doesn't belong to the smartest of people
To be meaningful is to live well.
To live well is to do something meaningful.
Soldier Assault" is a young investor who has just entered the industry, and is always full of curiosity about the world. Some of them like to think and always try to use a set of logical frameworks to guide their investment behavior. After a long time, you will find out:When you take a magnifying glass and look at something that's already blurry, the result will only make you more confused.
It's like when you see a vivid picture on a large rear projection screen outdoors, you will be shocked; When you have the opportunity to walk in front of it, you will feel dizzy and even nauseous.
If investors pay too much attention to some details that even you can't control, they will often deviate from the main line of investment and make the mistake of abandoning the basics. After all, in the cycle of time, there are too many factors that affect a project or even an industry, and many of them are beyond our reach. Of course, this is not to ignore the professional research of the industry.
In fact, the most important role of VC investors is:1. Information transmission microphone2. Probability screening machineLeaders of investment institutions often say to investment managers, you go and figure out the xx industry. As a one-person investor, no matter how deep the industry research is, compared with those practitioners who soak in the industry every day, the depth is far from enough. In many cases, people in the industry feel that they are accustomed to things that do not need to be talked about, and for investment researchers, it may be a complete knowledge blind spot. The biggest role of industry research is to eliminate obvious pitfalls, so that investors do not make common-sense mistakes.
An investor, even if he has been in the industry before, once he leaves the industry for more than 6 months, the lag of information is reflected. Although some of their former colleagues may still be in the industry, it will still be difficult to obtain high-quality information due to the compliance and confidentiality of the industry. When an industrial system is large enough, cross-departmental access will bring about the decay of information quality.
Therefore, when VC investors make industrial investment, the most important thing they should do is to take the time to analyze the competitive differences between competing products on the basis of ensuring that they do not make common-sense mistakes, and then invest and bet according to the probability, which can be called professional. It's worth noting that what I'm talking about above is actually a three-step process.
However, in the actual operation process, many investors feel that the blind spot of knowledge in the industry is called professional, and they spend a lot of time talking about technology when reporting projects, and I am not saying that the popularization of technology is not important. After looking at a large number of projects, we found that the cutting-edge technology changes in many industries are difficult for even people in the industry to judge every day in the production line, and how can investors make accurate judgments. Therefore, for the investment in industrial technology,The so-called early and small investment is not to let VC's money bet on a certain technical route blindly, which is no different from betting. As for the verification of the technical class 0-1, it is better to hand it over to industrial capital or amortize it with the R&D cost of the enterprise.
I understand that VC investment early and small investment should be based on commercialization, and VC has become an early business booster for technology companies. In the current complex economic environment, even if a new technology of a start-up company has made a consensus breakthrough in the industry, there is still a lot of uncertainty before it grows into a mainstream player in the industry (not to mention the leader), which includes not only challenges from the upstream and downstream industry chains, but also from the confrontation of competitors in the industry itself, as well as the protection of internal technology patents and core personnel, and even the impact from the upper level and the external environment.
Consistently betting in a pair of probability panels to achieve positive feedback on economic returns is the most important thing in VC investment. Otherwise, dogmatism will end up being a piece of chicken feathers.
Hanhan is a good quality
It is becoming more and more difficult to make money in VC investment, which is ostensibly a lack of narrative thread; But at a deeper level, many VC investors don't know how to make money and haven't figured out the essence of business. When they themselves do not have enough sense of smell and perception in this aspect, they will not be able to grasp the momentum of the growth of startups.
The investment industry is not a simple elitism, only really down-to-earth, down-to-earth and in-depth into the industry, in order to grasp the main line of investment.
It is often seen that some investors, relying on their own investment for several years, or have stayed in the industry, are in front of the founder to make an axe and give directions. At this point in time, entrepreneurs who dare to come out must not blindly follow the trend, they must have something unique and worthy of learning from investors. Everyone can do high-quality products on an equal footing, which will benefit investors and entrepreneurs a lot.
VC investment is an industry in itself, and it is not simply a matter of paper. As an important factor of VC, capital and the technology and management of the founding team belong to different dimensions of production factors, and only by organically integrating these elements can the enterprise play its due role. Therefore, in the matter of investment, the founding team and VC investors are equal, and it is a two-way selection process.
Many investors will be arrogant and always questioning when meeting with the founders. I didn't have a clear understanding of the common sense of the industry, so I began to talk about it. There are also some investors who meet with the founders, which is the persona of the tool man, and it comes up with a syllogism: your income and profits, your barriers, and your team. Then he preached, patted his ass and left. From the very beginning, this type of investor has misplaced himself.
There is also a type of investor who, when he sees the founder of the research-oriented scholar class, begins to flatter without thinking, does not do specific business analysis, immerses himself in the world of science and technology innovation of his own imagination, but ignores the most basic business logic.
So, over the past period of time,We're seeing the relationship between the founding team and the investment team also become delicateEspecially in the context of capital cooling, the relationship between investors and entrepreneurs is becoming more and more tense.
Some investors not only have problems with the attitude and emotions of the founders, but also have a bad attitude towards partners or FAs. People in our investment industry often chat together, and we also talk about our investor friendsYou will find that some common friends are not emotionally intelligent。Many investors don't reply to FA messages all year round, and when they think of something, they suddenly ask, which makes them feel very bad to the other party, and in the long run, they may lose a friend from the channel. He thinks that efficiency is a priority, but in fact he makes fewer and fewer friends. Slowly, my information becomes more and more closed.
After the big waves, the primary market is a group of the smartest people in the game, investors must not think too shrewdly, they may be the belly of the fish.
VC investment is a business to look at the odds, investment institutions aside from personnel expenses, from the perspective of investment, the biggest costs mainly include:1. Miss a good project2. Wrong project (this is a common phenomenon).3. If you find a good project, you can't invest in itThe above three costs,Missing out on a good project is the biggest cost for a VC.
When an investment institution decides on a project, it usually encounters the following two situations:
1. If the project data has not yet risen, it will say to the entrepreneur: you run first and then speak2. A year later, when the project is put in front of us again, if the project data does not come up, the people in the investment committee will psychologically autosuggest: it really didn't work;If the data rises or even exceeds expectations, it is often accompanied by a phenomenon: the valuation of the project is again **. At this time, investors will think: after growing so much, will it continue to grow?Therefore, once an investor misses a project, it is probably missed.
When you look at a public company with a magnifying glass, all you see is problems.
When you turn a startup project upside down, it's all about risk.
At present, VC investment has entered the deep water area. Although the channels for capitalization and exit are tightening, if the decision-making of investment institutions still stays at only looking at data and focusing on profitsOne of the few opportunities in the downside may be missed。Discuss well before investing, no project seems to be risk-free, once the internal probability expectation is reached, you must make a decisive bet and cannot hesitate.
Removing the investment itself,There is also an important cost to VC investment: the cost of the cycle.
In the long run, a project that can make money for VC investors is a good project.
But no matter how good the project is, it can't survive the cycle.
No matter how strong the technology is, no matter how fast the team iterates and how good the business model is, there will be a twilight day. Just as the market capitalization of PDD will surpass that of Ali in a certain period.
The underlying logic of investing to make money is the flow brought by aesthetic consensus, and this closed loop will only exist in a special cycle.
As for the valuation of the project, whether the PE is 10 times or 20 times does not have a scientific standard in itself, but the important thing is the view of the phased consensus. Sometimes it is necessary to deliver on performance, and sometimes it is necessary to form expectations for growth;The capital value of VC is to accelerate the formation of the above two elements.
For example, the fundamentals of the two AB projects may be similar, and the number of employees is also similar, both of which earned 5 million last year and are expected to earn 20 million this year, but the valuation may be completely different due to different industries.
There are probably two main factors involved in the valuation of a project:
1. The company's future development expectations, which determine the company's upper limit2. The degree of realization of the current performance, which determines the probability of reaching the upper limitIn addition, consider the fault tolerance of the investment, which can be multifaceted.
For example, young entrepreneurs usually have a higher tolerance rate than older ones because they can make a comeback even if they fail, while older entrepreneurs often have less courage in the face of difficulties.
Similarly, it may not be possible for a technology project to simply tell a story of high growth, especially at this point in time, because most investors are cautious and don't believe in the story. At this time, if the project has some traditional business fundamentals, and then combines it with a new high-growth business, the fault tolerance rate will be significantly improved.
For another example, the entrepreneurial track of the project is wide enough, and the company's current business may only be a single-point breakthrough, but it leaves enough room for investors to imagine that the company can continue to expand its business line.
In addition, for many opportunities with long-term certainty, although it is difficult to determine the short-term inflection point, it will still make investors bow down to the game.
The role of VC is to enter before the market reaches a consensus, and use capital to help enterprises achieve a phased aesthetic consensus.
But in reality, the project that can really make money does not make money for the people who come into contact with it or even the shareholders. The reason is that in a large time cycle, everyone often loses the basics and does not really understand the project. Many people tend to put it down to luck.
The faces of all beings in the VC institution
Investors in VC institutions are also a hodgepodge, and the quality of investment decisions depends on the cooperation of internal teams.
Young investors are like perpetual motion machinesTheir advantage is the speed of information processing and the wide range of channels for obtaining information (but the level of the channel is not high, and there is a lot of noise, which is sometimes not necessarily an advantage), but the disadvantage is that they are impulsive.
Young people are easy to be strong-blooded, and they have seen few good things after all, so they are easy to be deceived by the appearance of the founder and the industry, and sometimes they always feel that the investment big brother is too conservative, and it will be a little high. Young people who enter the VC industry generally have ** IQ and are generally not too stupid, but everyone's perception will still be different.
Sometimes young people who are too smart may not do well, and they are easy to see the high and the high and the low, which is a big taboo in investment. And those who are tenacious, even naïve, are more likely to catch some good projects. People in the 27-32 age group are still the indispensable main force in the Chinese VC market, and in the United States, this is almost unimaginable.
Middle-aged people are more like foxes in their primeTheir strength is the interpretation of events, which not only refers to a specific project, but also to the general trend of the industry and news policies. After all, when I was young, I had a lot of pits, and I had seen a lot of good things, so I was able to make multi-dimensional comparisons between industries and companies. They have a stronger sense of the big picture and tend to get to the bottom of things quickly。The best thing about many middle-aged investors is that even if they can't invest in the company in the short term, they can maintain a good relationship with the founder of the company, and even become a good friend in private, grasp the details of the company in the first time, and achieve the lowest cost follow-up. When the opportunity arises, they can pitch it
But they also have disadvantages. As they get older, the speed at which information is searched and processed decreases in middle age. The bigger problem is that many veteran investors have seen a lot of the world, and their resistance to new things is greater than their novelty. This is like a man, he has seen a lot of beautiful women, and he has not eaten less, and he is tired and does not love.
Middle-aged investors are more valuable and scarce in China's VC marketBecause they have survived in round after round of cycle PK, many investors in the same period have been optimized as cost units in the past few years.
Every investment institution has a veteran old man. This is a bit like the role of the uncle in the TV series "Flowers". They often have deep experience and are the endorsers and even owners of the final resources, which not only refer to funds, but also include industry and resources. They are the representatives of the old money and represent the resources at the top. They are often the first 1 in a string of numbers, if there is no 1, no matter how many 0s are behind, the investment bureau will not be able to save, and the old money will always stand at the top of the pyramid.
Old money is a very difficult group to reach. In the past, many people wanted to raise funds, and they tried to start with the second generation of old money. Of course, some of the second generations themselves are very good, and it is also good to partner together with an entrepreneurial mentality. But some people want to get in touch with the resources of the old money behind them through the second generation, and this road will not work. Because the second generation has not completely **, they themselves do not have much endorsement ability. Sometimes the difference between the second generation and ordinary people is that the credit card limit is more, and the resources that can be deployed are ultimately in the hands of the previous generation.
The role of old money in the VC industry is resource grafting. Getting on the horse and giving it a ride may be the best choice. But a lot of old money like to go into battle in person, seeking more involvement and even control, and the results are often disastrous. one more thingIn the field of VC in China, I have been in business for more than three years before I know it.
In the past three years, everyone has gone through the epidemic, but there has been no prosperity in the VC industry. We VC practitioners are studying the most cutting-edge tracks and looking at the most advanced projects every day, but few people seriously analyze the macro logic of China's industry.
On the issue of the path of industrial development, China and the United States have completely different ideas.
The attitude of VC investment in the United States towards new industries is, in general, to allow bubbles and allow failures.
After each bubble, they always believe that the benefits of epoch-making innovation far outweigh the previous costs.
Their industrial development is constantly advancing around technological iteration. When a new theory is born from academia to gradually mature and commercialized, its utility must be significantly improved compared with the current technology. Then this new technology will give rise to a number of new industries, and they will basically not go back.
Our domestic attitude towards the industry is: no failure, no bubbles, time is pressing.
Usually the top level initiates the propositional essay, and if the entrepreneur wants to do the industry right and do a good job, he must make a correct interpretation of the topic of the essay.
In China, regardless of whether the cat is white or black, catching a mouse is a good cat.
Since the propositional essay was published above, everyone should write the essay according to their own interpretation. As for what technology you use, what new concepts you use, the above is not concerned. As long as it is not high pollution, don't oppress the working people too much, and don't evade taxes.
If a company can complete a propositional essay at a low cost within the time window, then it may create a new industry.
Many times, there is no new industry in China, but in the process of completing the propositional essay, everyone is doing business, and they find out: Damn, it turned out that a new industry was done, because they found that the income had risen.
Overall,In the U.S., the industry revolves around technology
In China, technology is a means to serve the industry
If you understand the real logic of the industry, you may avoid many detours, especially for the VC of RMB.
In the past few years, on the surface, the penetration rate of state-owned capital in the VC market has gradually increased, and the market share of private ** managers has declined.
Although the cake left by the market to the private sector is smaller, from another point of view, the private sector that eats the cake has become fewer, and the relative quality of the cake is better. China's VC market has truly entered the era of "the leftover is king".
In the next few years, the VC field will continue to reshuffle. Every crisis is a natural selection.
At the age of 10, you were punished by the teacher for fighting, and you were very embarrassed;
At the age of 16, you are very embarrassed to cry after a quarrel with your first love;
At the age of 29, he was diagnosed with insomnia due to kidney dysfunction because he stayed up late, and it was also very difficult;
38 years old, because the company bought back and tore his face with the founder, and it was very difficult; At the age of 52, you failed in business, saw through life, dragged your tired body into the foot massage shop, hoping to exchange philosophy with a young ***, only to find that there are no longer any girls willing to accept your precipitation, which is also very difficult.
Life is like this, peaks and loops, going round and round. Behind the embarrassment, there is always a more nostalgic reason for you to continue to persevere. Stay at the table and you'll have new opportunities.
In 2024, we are still on the road....
Author: Changlei Capital A Mao, first published in ***Changlei Capital (ID: Conswall Cap).