After five rounds of financing, hungry Zhang Xuhao article summarizes the experience

note: hunting cloud since 2008 campus entrepreneurship, hungry yao has gone through five rounds of financing, has nearly $500 million, total amount of investment is not only A GSR ventures, partners China, there are Internet giant tencent jingdong, vc contact experience for many years, the company founder Zhang Xuhao accumulated on the startup financing their own observation, he thinks, must be good at A wheel, otherwise harmful legacy.

here is a report from dark horse I, finishing the Zhang Xuhao readme:

to choose the appropriate time to start, the sooner the better not

we start a business from 2008, “hungry” was created to solve our own a pain points, at the same time can also help small and medium businesses to solve their problems, this is our original intention.

in recent years, the capital market is getting better and better. In 2008, our understanding of “entrepreneurship” two words are fuzzy. Entrepreneurial idea originated from several people we look at some of silicon valley legend story, then I began to have some understanding of entrepreneurship two word.

at the end of the year, 2008 countries had policies to encourage college students to start business. Since then, college students can be zero yuan of registered capital of company, we were very excited, also registered a. Since then the atmosphere of the whole business is becoming more and more good, from 2008 to 2009, we use their own resources and operating funds to maintain the whole company development. The sooner we don’t want to early to financing at the time, because of concerns about financing the sooner will be diluted.

in my opinion, the financing is to sell your flesh and blood, to seek development. We hope to be able to take the business model building at the time, has the certain data and competitiveness after financing, that will be diluted to less. By 2011, “hungry” started the first round of financing, our business model is more clear this time. But we were young college students, many investors can’t vote. After all, we have no work experience, investors questioned whether we own business line not line. So we had to take a long time to investors prove that I can make out of this matter.

bouquet afraid of deep alley

if a new product can accepted by the market and can be replicated, can grow quickly, risk investment will come in soon. In 2011, “hungry” mode in the vicinity of jiaotong university success, though we don’t have any written business plan, but the vc to find us. Their job is to find project, Chinese good projects is not much, as long as your product right, in an area is a good data to support, I think a lot of investors will come looking for you.

in 2011, there are a lot of investors looking for us, but we are selection criteria. “Hungry” is an Internet project, the future may be listed abroad, so we prefer to dollar funds. I think the dollar funds at that time, specialization, and the more focused on short-term profits. Inside the dollar fund to choose some in values, strategy, tactics more fit investors do you partner with you. Every investor’s style is different, you have to know his former investment case.

it is very important to A round of funding, to be avoided at source

we are in the financing, the framework of the whole investment agreement, including the terms of the core, have a certain understanding. Valuation of financing is important, but in addition to the valuation, a lot of terms is relatively important. Especially in the first round of financing, it is the foundation of the company your entire future investment structure. If you first round a lot of terms is not good, the future you have to pay a high price to modify; And basically you can’t fix unless your business has a very big change, or if you have a very strong voice. Good investors will stand in your point of view, in the first round will make some compromise for you, help you to put a lot of core terms set up good. If the first round of financing terms is very strict, that also to after several rounds of financing. I feel today, at the time of the first round of financing, can ask a lawyer, help you to take these things to good. It won’t spend too much money, but also can let you of the entire financing process more smoothly, do not save the money.

after the second round of financing, your business began to trot. If your company growing fast enough, but also in copy of your business model validation, so there will be more investors to join in. In 2011 the entire capital market is depressed, slowly rebounded in 2012, as long as you have a good project, basically can stand out from the crowd.

in addition to financial investment, we also have strategic investors, such as tencent, jingdong, public review. Communicate with strategic investors, the more is some strategic cooperation on resources. Strategic investment agreement, in general, want to spend more energy than financial investment agreement, strategic investors more important is the strategic resources of cooperation, how can you get some of the resources, each other has made some binding. There are some terms don’t have to talk too detailed, if is very fine, the whole negotiation period will be very long. But if there is any conflict between the terms of some on strategic, still want to talk.

all in all, all of the strategic investment eventually are complementary, and in our business on a contract to restrain both sides, is not a guarantee a very good. Only when your business is strong enough, there is a complementary to each other, the partnership will be more and more good, will not so big differences.

capital is the icing on the cake, not timely

is the key to your business with growth of the financing, capital is essentially the icing on the cake, it is difficult to have a nice surprise. Development is not good enough, you will eventually be abandoned; You will always have the growth, your project is sought.

for financing, the business is at the core. If you are not good at dealing with others, you can let the professional person to help you do, after all, there are a lot of professional organizations and lawyers. You want to put more energy on business, your do a solid user experience, it will naturally obtain financing. About the financing amount, a lot of people ask me how many money to the most appropriate melting, how much money I think harmony: there is a better algorithm combines the next 16 months you need money. If you want to be a more secure cash flow, you can expand from 16 months to 18 to 24 months. Each round key or by the board of directors, the company’s business don’t slow down, because shareholders to join your business there is explosive growth in the next 16 months. After melting money, according to company development to your path. If not these two purposes, any financing should be more cautious.

good enough words, capital market is more in harmony. Because you have more money, can have a better form monopoly in the market. You can quickly occupy the market share, especially in the field of the Internet, you don’t have a very high speed growth, or money become a factor in considering a day you, you will not meet expectations, the development of the company will be eliminated by the market in the future.

business center is not money is

when you do business, don’t worry about the money, money doesn’t matter, later should focus on the business itself. Monopoly core resources, how to occupy some of the core business, it is very important. So financing don’t say the money in the bank it is very happy, this is totally wrong. Because capital to give money to you, because you money efficiency is higher than capital. So melts the money you want to spend money quickly, take you to achieve the expected goals, achieve high speed growth, so financing is to flowers.

today O2O market development faster and faster, the market is also very hot, has a great potential. The whole development not by several rounds of financing can be ended. In the market good, want to raise money from private market more, don’t pay attention to when listing. How can form monopoly in the industry, this is the most important.

after the monopoly of the market is good, if the listed before haven’t put down the market, as a listed company in the future will be very passive. If really want to do a great thing, today is a very good time, over the years, even in the next five to ten years is the capital of the best times. When capital, you want to run.

A wheel can raise A lot of money no relationship, you still have B, C. Many investors in the future will help you with, it is important in A round your terms and conditions to build A good, don’t be too strict to healthy enough. Relatively weak investment institutions to your higher valuations, at the same time you want to have high valuation, and better terms, investment institutions are very rich is not important, you can be in B, C round again to make up for.

A round of funding is equivalent to establish the capital structure of A whole, if the first round is somebody else’s pit, it will take much to make up for back later. In A round may not raise A lot of money, but your lawyer, to find, because this lawyer team can help you to go down in the future. Early may charge a little bit expensive, but it can help you to build the foundation, development is of great value for the future.

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