Kaifu Lee’s finance + talent venture capital model
After Kai-Fu Lee, the former vice president of Google, resigned, he established Sinovation Ventures to implement the finance + talent venture capital model and provide hands-on assistance to young entrepreneurs. With the help of Cai + Cai, this initiative attracted everyone's attention.
So, what is the financial + talent venture capital model?
In September 2009, "Sinovation Works" jumped It has become a hot word in China’s industrial and investment circles.
"Sinovation Ventures" is actually a company recently founded by Dr. Kai-Fu Lee, who has served as an executive at Microsoft and Google. According to their own definition, it is "a comprehensive entrepreneurial platform aimed at cultivating innovative talents and A new generation of high-tech enterprises. "At first glance, it is nothing more than a new case of a venture capital company, but an important reason why "Sinovation Ventures" has become a hot word is that Dr. Kai-fu Lee brought the angel investment model to China for the first time. It has reached a new realm of high scale and industrialization.
Angel Investment originated in the United States in the 19th century. It usually refers to a one-time early investment by free investors or informal venture capital institutions in original projects or small start-ups. They and institutions Venture capital together constitutes the venture capital industry in the United States. Since 2000, venture capital in China has developed rapidly, but the vast majority of investment companies prefer short-term, frequent, and fast projects, so it is relatively easy to raise funds for relatively mature large-scale projects (such as companies that are close to going public). However, entrepreneurial enterprises with relatively high risk factors and in need of comprehensive support are more difficult to obtain support.
In fact, Silicon Valley, the cradle of entrepreneurs in the United States, has formed a complete, streamlined system from angel investment to mid- and late-stage venture capital. Therefore, whether innovative enterprises are in the seed stage, introduction stage, growth stage, or mature stage, as long as they have potential, they can receive corresponding help. If an entrepreneur only has a good idea, he can find the help of an angel club or angel investor that focuses on start-up capital investment of about 50,000 US dollars; if he has an early version of the product and a startup team, he may start from an angel Clubs or angel investors receive seed funds of US$100,000-500,000; if the company starts commercial operations and has formal customers, it may obtain financing of around US$2 million-5 million from early or mid-term venture capital funds; and then there is Mid- to late-stage venture capital.
Take Google, which currently has a market capitalization of US$145 billion, as an example. 11 years ago, when Sergey Brin and Larry Page only had corporate ideas, the company had not yet been established. At that time, he received a check of US$100,000 from angel investor Andy Bechtolsheim.
In addition to the financial investment system, in Silicon Valley, some investors also provide added value to founding companies at different stages. Early angel investors are often successful entrepreneurs or former executives of large companies and industry veterans. They can often bring experience, judgment, industry connections and subsequent investors to the founders. In the growth stage of the enterprise, high value-added venture capital will also help lead the entrepreneurial enterprise into a more formal operating structure and management model, and even help the enterprise equip the professional team required for subsequent development. When a company develops to the stage of listing or merger, venture capital will provide corresponding assistance. Therefore, at different stages of a startup company, its investors are like running a relay, making a concept take root, sprout, bloom, and grow through inheritance and cultivation.
Mike Markkula is an angel. When Apple was founded, Markkula not only invested US$92,000 himself, but also raised US$690,000, plus a US$250,000 loan guaranteed by him from the bank, totaling US$1 million. In 1977, Apple was founded. Markkula officially joined Apple as an equal partner and served as vice chairman. Jobs served as chairman. Markkula even recommended Michael Scott to be Apple's first CEO. Markkula served as chairman of Apple until leaving in 1997.
Due to its relatively complete innovation system, many Silicon Valley talents are also very willing to work in founding companies.
Different types of talents can participate in startups at different stages based on their skills, preferences, and risk-taking expectations. There are serial entrepreneurs who focus on building a business, there are managers and technical talents who like to work as a business grows from dozens to hundreds of people, and there are managers who are good at expanding a company from a few hundred people to a larger scale. . At different stages of a start-up company, it is easy to match different types of talents and even change management.
It can be said that angel investment is the main pillar of early-stage entrepreneurship and innovation in the United States. In the United States, angel investment currently accounts for 40% to 50% of the overall venture capital market. A report from the Entrepreneurship Research Center of the University of New Hampshire shows that in 2008, there were more than 260,000 active angel investors in the United States. In addition, there are multiple angel investment organizations. They have invested a total of $19.2 billion in 55,480 startups. According to a statistical report by PricewaterhouseCoopers, in 2008, late-stage venture capital firms in the United States invested more than US$28 billion in funding 3,700 investment projects. It can be said that if there is no angel investment, late-stage venture capital will be a skillful woman unable to make a meal without straw.
There was once a vivid metaphor in the Chinese investment community: venture capital is like looking at a plate of food. If the dish is easy to pay for, then don’t get rid of it. Mature angel investors will say that this dish is good, but it lacks two peppers and two pieces of tofu. Who will prepare this dish? Angels come to match. Angels will say, this dish is good, but the chef is not good, let’s find a chef, or the chef is good, but the dish is not like that, let’s cook it again.
In contrast, although venture capital has become very popular in China, there are very few angel investors.
According to data provided by Zero2IPO Group, due to optimism about the Chinese market, venture capital has poured into China on a large scale. In the first half of 2008, mid- and late-stage venture capital *** raised US$49.302 billion, which was higher than that in 2007 An increase of 190% over the same period, 348 companies received mid- and late-stage venture capital, with a total investment of US$7.383 billion, an increase of 50% over the same period in 2007. But at the same time, angel investors are hard to find. Judging from 2006 data, the scale of domestic angel investment is only between RMB 500 million and RMB 1 billion.
No wonder that at a venture capital conference in 2008, people in the Chinese venture capital community asserted that it would take at least ten years for domestic angel investment to truly reach a certain scale. Industry insiders say that, corresponding to the situation in the United States, in China, angel investment as an industrial chain has not yet been formed.
The birth of Sinovation Ventures just filled this gap. Compared with venture capital in the traditional sense, Sinovation Ventures is more "hands-on". Sinovation Ventures will start by recruiting engineers and entrepreneurs and build multiple elite teams. Under the leadership of Dr. Kaifu Li, we will create projects with the most market value and commercial potential. The teams will conduct R&D and market operations on different projects until the projects mature. , spin off the parent company and become an independent subsidiary, and even eventually go public or be acquired. Dr. Kai-Fu Lee, head of Sinovation Ventures, expressed his hope that through the new model of Sinovation Ventures, he hopes to help establish a new venture capital model of 'finance' + 'talent' in China."
In the venture capital industry for more than 20 years, Peter Liu, known as the “godfather of Asian venture capital,” said: “The Sinovation Ventures led by Kaifu will bring the angel investment model to a new level of high scale and industrialization in China. I have always believed that venture capital companies should play the role of coaches and mentors, get rid of the role of pure financial investors, and become a more active technology promoter; because the significance of venture capital is not only to pursue new investment cases and introduce technology from advanced countries. Technology and capital enable localized industries to upgrade and thrive. ”
Currently, venture capital in the Chinese market only plays the role of financial investors and does not participate much in the operation of investment projects. The characteristic of Sinovation Ventures is that it helps entrepreneurs and investors create At the same time, it also discovers, gathers, and trains a large number of technical and management talents for the entire industry. The so-called "factory" means that it has the ability to clone efficiently and market the best ideas on a large scale and industrially. .
Liu Chuanzhi, President of Legend Holdings Co., Ltd., said: "Mr. Kaifu Li once held leadership positions at Google and Microsoft in China. He has both practical leadership experience and a strong sense of innovation. He uses innovation to This new model of work in the factory is an innovation in itself and is very worthy of support and encouragement.”
And Kai-fu Lee has an accurate grasp of cutting-edge technology, rich management experience, deep industrial relationships, and talent in the industry. His huge charisma, international vision and strong communication skills are the reasons why Sinovation Ventures has won the favor of investors including Liu Chuanzhi, Terry Gou, Yu Minhong, Chen Shijun and many other big-name figures. In just one and a half months, Sinovation Ventures has established a blueprint to invest 800 million yuan in the next five years.
Liu Yuhuan said: "From the 1960s and 1970s to the present, venture capital has created many mainland companies from Silicon Valley to the Four Asian Tigers to today. The investment philosophy of China Economic Cooperation Group has always been: Choose new technology start-up companies that will guide future development. Sinovation Ventures undoubtedly belongs to such a company. Sinovation Ventures allows me to see a new model of 'finance' + 'talent' venture capital in China, which is also a combination of angel investment + innovative products. A new model of highly scaled venture capital. I believe that Kaifu will successfully implement a model that Chinese venture capital companies, especially angel investment companies, can learn from in the future. I believe that this model can inspire the research and development of the entire Chinese venture capital industry. mechanism, talent training mechanism, and even affect the innovative growth model of entire technology companies in China.”
Obviously, this model has led the venture capital industry to the path of industrialization and scale. We will wait and see what the future holds.