For venture capitalists, what they are most concerned about is undoubtedly the return from investment. Domestic Internet companies let these venture capitalists see the vast "Qian Jing". They judge whether a project is invested or not. Short-term profitability is not an important indicator, but the most important thing is the future growth potential.
Since 2005, the concept of Internet in China has once again become a hot spot sought after by international venture capital. Even the "Internet Queen" Morgan Stanley stock analyst Mary? Mick also published a thick China Internet investment report, optimistic about China's Internet investment.
First, the prospect is equal to "Qian Jing"
For venture capitalists, what they are most concerned about is undoubtedly the return from investment. Domestic Internet companies let these venture capitalists see the vast "Qian Jing". According to a venture capitalist, in the past two or three years, the average rate of return of domestic venture capital projects can reach about 35%, which is much higher than that of other countries, thus attracting international venture capital to gather in China. "Internationally renowned venture capital has entered China," the source said. Recently, Accel Partners, one of the top five venture capitalists in the world, and IDG jointly set up a $500 million venture capital, focusing on Internet companies with strong growth potential in China.
Last year, New Access Capital helped Jiang Nanchun successfully raise funds and finally completed the listing of Focus Media. Qian, vice president of the company, said that venture capital can usually be divided into early, middle and late stages according to the time of intervention. Early intervention is usually the so-called "seed company", which is small in scale, with little funds and has not yet achieved profitability. Venture capital is willing to invest in such a company mainly because it is optimistic about its future prospects. Companies that venture capital only intervenes in the later stage are usually relatively large in scale, have made good profits and may have plans to go public.
A venture capitalist told reporters that he often receives all kinds of business plans now, which are not only beautifully made, but also have a common feature-they promise to make a profit soon, and some even say that they will be flat after six months. 12 months later, he can recover his investment and make a profit, and boast that his team has rich management ability and operational experience.
However, the person admitted that he judged whether a project was invested or not, and short-term profit was not an important indicator. What they value most is the future growth potential. Looking at the team is actually looking at the future potential of this person and this team. Some people have just graduated from college for three or four years, and it is simply impossible to manage a huge department or company.
"Please tell me the future potential of your business model, not the petty profit after half a year. Please tell me what the potential of your team is, not your super management ability and rich operational experience. " The source said that the prospect is the most concerned issue of venture capital.
Second, value popularity.
"For websites that are already profitable, we pay more attention to their profit model. For unprofitable websites, venture capital often attaches great importance to their popularity. " A venture capitalist told reporters.
This preference directly leads many websites to haggle over daily visits, because it is said that venture capital often determines the investment amount according to the international ranking of websites. However, this statement has not been recognized. The above-mentioned people said that the popularity they value actually includes many aspects. "Simple world rankings are useless." He believes that "this reason is too simple. Venture capital depends on the strength, content, team and many other indicators of the website. The number of visits does not explain everything, but it is just a reference indicator. "
But this simple truth is often forgotten. Because the website is not profitable yet, I want to say to venture capitalists: Look, my ranking is very high.
However, among all the successful financing websites, most websites do rank in the top, or at least rank in the top of the same type of websites. For example, Tianya community, such as blog China, Maopu community and so on. This also reminds us from the side that the popularity and promotion of the website is very important and directly determines the value of the website. "Why are downtown shops more expensive? Because of the high traffic and good business, so is the website. " However, the above-mentioned people believe that they have their own methods to judge popularity, and it is of little use if the website falsifies the click-through rate in order to rank.
Third, it is not just money that is injected.
Usually, the intervention of venture capital may correct the inertia thinking of past operations to some extent. When starting a business, China people often don't want anyone to interfere with their own ideas. "Although many companies are in the initial stage and expansion period, the management of the company can be completed by the entrepreneurs themselves. But from the start-up period to the growth period, from the growth period to the listing period, the strategies adopted by entrepreneurs should be different. However, many entrepreneurs still follow their own inertia, which requires venture capital to make some adjustments to enterprises according to listing standards. "
According to a venture capitalist, venture capital is forcing them to do something, such as establishing a good enterprise budget mechanism, management incentive mechanism and so on. For venture capital, only by participating in large enterprises in the whole process can we get a smooth exit mechanism, or sell the shares at a good price, or go public overseas.
"Exit mechanism" is a very concerned issue for venture capital. Obviously, if the investment effect is not good, they certainly want to recover their investment. Even if the investment effect is good, they don't want to hold the equity for too long. The established goal of every venture capital investment is to turn the original investment into cash. Therefore, venture capital will naturally promote mergers and acquisitions or overseas listing after joining.
Fourth, don't be driven away by funds.
In different periods of Internet entrepreneurship, entrepreneurs will inevitably encounter different problems. As the Internet fever heats up, speculators begin to think about how to use the Internet to make a fortune. Many people start to build websites, dreaming of selling them at a high price one day, or financing from venture capitalists. But it must be reminded that there are two questions that you must think clearly first, otherwise you can only regret it.
The first problem is that if you can't clearly design your own profit model and find the breakthrough point of future profit, then you are tantamount to letting luck determine the key to success, which is very dangerous. Why should venture capital invest in you when you have no specific plans for the future? Is venture capital a fool?
The second problem is that venture capitalists are not good men who believe in women. They don't give money. Any financing has a price. "Companies are usually short of money at the beginning of their establishment. At this time, if they raise money, they often have to pay a relatively high equity price. Venture capital generally requires relatively high equity. " Han Li Capital's Money Theory.
Bai Yang, CEO of Douban.com, clearly understands this truth. At present, the most important revenue source of Douban is the revenue share with Dangdang and other bookstores. This income is enough for Bai Yang to be self-sufficient, because Douban is still a micro-team with only five people, and its daily expenses are only server and broadband expenses. As early as a few months ago, some investment institutions and even Douban's partners expressed their intention to invest and cooperate with him, but he still lacked interest in it. In Bai Yang's view, once venture capital enters, it will definitely dominate and change the style of the website. Moreover, if the website itself has a good hematopoietic mechanism, then there is no need to rush to finance.
Five, several steps of venture capital financing
The first step is to prepare a business plan and an executive summary and give them to potential financiers. Some financing intermediaries will be willing to help you complete this step, of course, provided that they charge a certain fee. They may tell you in advance that once the financing is successful, they will ask for some options from your company. However, in general, experienced financial consultants can often improve the success rate of financing and avoid detours, which is worth considering.
When you have written your business plan, the second step is to give it to the venture capitalist. The best way is to find acquaintances to introduce you. In fact, venture capitalists tend to get information and advice from people they know very well and even trust. The best recommendation usually comes from people who are familiar with the industry or have status. It is also a good choice to introduce through a financing intermediary, because if financial advisers take over your project, it shows that they have confidence in your future and it is also a promotion to venture capital.
If venture capital is interested in the proposal, both parties can enter the second stage-negotiation. This process may take some time, and venture capitalists will spend a lot of time in the process of project inspection, including: talking with management, doing background investigation, financial audit, due diligence and other processes are essential. The two sides will also further communicate on how much capital to invest and how many shares to hold. The investment decision-making committee of venture capital fund usually has the final decision, and it is possible if it is rejected by the decision-making committee.
There are also some precautions. For example, you should make venture capitalists feel that your enterprise is "clean", the financial problems are clear, the ownership structure is clear and simple, shareholders should not mix with some idle people, and the composition of the management team should be simple. You know, the more obstacles you need venture capital to remove, the less interested they are in your project.
It is also important not to lie. When you are forbidden to lie, you may lose 25% of your investment funds. Please calculate it. If you tell four important lies, you may not get any investment funds. Moreover, in the process of financing, the other party will do due diligence on you, and lying will not do you any good.