cloud network hunting note: in the entrepreneurial frenzy, people know that money only experienced a bubble burst rout consequences brought by the attack. Throughout 2014, there was a problem in China’s startup valuations, the startup investment threshold is more and more low. Investors competition for investment projects and cause some speculators to blindly technology company valuations are raised to the height of a ridiculous. So my prediction is that by the end of 2015, investors began to shrink after A round of investment to science and technology company, in 2016, the caution is likely to affect the investors to invest in angel rounds of judgment.
oral: ‘jui (blue ventures partners)
reporter: Wang Zaixing
in the entrepreneurial frenzy, collusion by investors and entrepreneurs of the game of musical chairs are likely to be reversed in the second half of 2015. my judgment is that by the end of 2015, about seventy percent complete angel round and A round of entrepreneurs cannot continue to external financing, and probably died because of lack of financing on the entrepreneurial path.
from our master data: the second half of 2014, for an angel round and A round of funding than in previous years have dramatically increased the number of startups, in 2014, most of the venture capital fund. Voted for at least 30 technology projects, and in the usual year, this number is 10 or so, so, I said on the number of investment projects, there are already one hundred percent growth in 2015.
I think, for the whole of 2014, there was a problem in China’s startup valuations, the startup investment threshold is more and more low, on the one hand, because of the fierce competition, you can see, in China, now in almost every field has investment fund for the project. Some investment institutions could ever only rated a-class entrepreneurs, but because the competition is intense, now also began to spread in A circuit, or rob the tuyere for some not so good entrepreneurs.
you will also find that, the number of venture capital fund investment managers began to surge. Back then, we will enter a silicon valley VC companies in the United States when the investment manager, there should be at least degree of harvard and other famous universities. Now American vc institutions of higher standard of choose and employ persons, must want to have 5 to 10 years of experience, and have to sell the company’s performance can be competent partner.
investors competition for investment projects will bring? I think, can cause some speculators blindly technology company valuations are raised to the height of a ridiculous. will fight for those investors, founder of valuation higher class A startup, this behavior makes the startup valuations are A rising tide lifts all boats. A round of financing is generally the traditional technology companies $4 million to $5 million, now the threshold of A round of funding has increased to $10 million, if to entrepreneurs to cede A 20% stake to calculate valuations, the technology company valuation is $50 million. Traditional B round amount is about $30 million to $40 million, is now a $80 million to $100 million.
this situation is likely to cause at the end of 2015, seventy percent of startups in B rounds of financing problems, or can not achieve the founder’s expectations. Say so, because you put the part originally should B and C round of money into A round, this causes A surge of A wheel project. For example, you have 100 dollars, you have 30 to 40 dollars to A wheel startup, it is not so much money to B or C chakras. Front for too much, there will be not enough.
in addition, once the most entrepreneurs less than B, then after A round of investors would consider stop. Say you voted for the ten projects, only two items in harmony to B wheel, other project cannot remain unresolved, behind someone to see you again melt A wheel, you will become cautious, your criteria of entrepreneurs is impossible to fall too low, or you have A lot of bad project. Sometimes, it is this a herd mentality, improve economic prosperity, in an era in another time and speed up the economic recession.
so my judgement is that by the end of 2015, investors began to shrink after A round of investment to science and technology company, in 2016, the caution is likely to affect the investors to invest in angel rounds of judgment.
my personal judgment standard has two “bubble” burst, the first stage is when most technology companies into A round of financing $40 million to $50 million, far more than usual about problems during 10 million ~ 20 million. To make money standard, the risk investor’s investment principle is to buy low and sell high. You ten projects, each project of A wheel is 40 million ~ $50 million in financing, this article is the line, because you buy the price is too high. Another line is, after you put the price of A wheel and the technology company to continue to be in harmony B wheel price no difference, even no money, you will be very careful this time.
these warnings, because I have seen around 2001 bursting of the dotcom bubble in the United States. It was my first time into the risk investment fields, to be honest, my luck is not very good, after 2000 years after the technology market, I quickly learned the power of boom suddenly burst.
but at the time, no one is aware of the danger is coming.
in 2000, the nasdaq stock market index peaked at 4000, when the market began to go crazy, just any technology companies A round of funding to reach $30 million. In my memory, when silicon valley University (University avnue) restaurant, on either side of the street is crowded with investors and entrepreneurs, a meal of the time can tommy, trading of tens of millions of dollars.
in this thriving technology markets, few people are able to stay awake and restraint. At that time, the Middle East have an oil merchant find out I’m Peter teal of PayPal, after the first institutional investors, from the moment we are not sure the businessman is shoehorned to give us a check for value of $50 million, I was thinking, if I lied to him, what to do with him. Visible, the silicon valley investment market how crazy it is.
but in the early 2001 before and after the Spring Festival, the nasdaq index fell, the most striking, stock index plummeted to 2000. The disaster comes too suddenly, that let people unprepared, the day my stock lost 52%, when people lose their wealth, usually as a result, become more rational and cautious.
after the stock market rout, then collapse is the heart. In the secondary market investors start selling after buying shares of Internet companies, together with many Internet before the company’s financial situation is very bad, there is no any profit ability, lead to the nasdaq index continued to fall.
on Wall Street, the volatility of the stock market directly endanger the survival of silicon valley companies. Began to melt no money I have a good project, to start with, I also hope that with the other investors make a phone call to ask for help, but almost every investor I called to tell me, is evidenced by their own hand project, the investment community in silicon valley was born a new word called inside finance (internal financing), less than the investment of a few shareholders sit together to discuss the rest of the money out, companies can continue to operate, good let his hand in winter. In early 2002, the nasdaq index had fallen to 2002 points, I suddenly found that the old investors gathered at the university of the restaurants in the street now empty.
although recession unpredictable, but investors should be how to help entrepreneurs through possibly the sudden disaster? my experience is that first investors need to have enough reserve, once the bubble burst, and immediately began to “internal financing” , when markets change, if the investors can not help him good projects investment by melting to B round, even if it is a good business project will be failed.
local time on September 19, 2014, New York, USA, listed on the nyse formal alibaba group, jack ma, with eight bell ringers.
light rich enough, the answer is clearly no. entrepreneurs also need to learn how to improve the efficiency of capital use , now China’s market is a kind of phenomenon, namely the start-up financing, the listing of some have reached to the size of the company, I’m not trying to persuade the company public, but they do exist the potential risks, and may even evolve into a ponzi scheme (in short is the use of money from new investors come and old investors to pay interest and short-term returns, to make money illusion to obtain more investment). According to my observation, most of China’s startup founder of some problems in capital utilization, investors’ money has not been effective utilization, founder of the lack of data to management methods, for example, must focus on company founder year how effective was the use of money, even down to every employee expenses cost and he returns. If startups IPO as early as possible, shareholders and investors will alert, founder of the service efficiency of funds, or stock market volatility will punish you at any time, you know, the stock market is a kind of effective external supervision mechanism. , of course, if entrepreneurs don’t want their own companies listed soon, that I hope he at least in the case of more money, to pay attention to their own management style.
in the end, my advice to entrepreneurs is, to learn and investors with business secrets.
at this point, I quite agree with Peter teal said that sentence: “successful companies based in open is the secret of the unknown.” I want to give several examples in 2011, electricity was very hot, but we’re judgment of the industry is very costly, because want to consider inventory, “secret” of electricity to retail industry is basic same, so, we are not simply sell goods electricity project, only the two related projects: one is the market network, related to the service; Said the other one is beautiful, basic no inventory, service direction only for girls size small. We also considered the jingdong, but jingdong will consume a lot of money. When investors investment projects need to pay attention to two points, first, ask yourself whether you so much money; The second depends on the service efficiency of funds, because that determine how much you can get in return.
when the Internet financial become boom, we and the founding team together to resolve the secret of this market, we find that the Internet is the biggest problem facing the need to solve the problem of loan security. How to solve the problem which is the industry to the secret of success, so we chose a target population is a natural with the good faith protection of college students’ group projects, easily circumvented the security risks of lending.
in 2015 when O2O market has hundreds of projects, we are not still ask yourself if you want to grab a O2O project more, but ask yourself, is the secret of the O2O there is another interpretation. so, both investors and entrepreneurs don’t rush to jump into a boom, but to resolution under the tide of hidden secret together, because that is the key to open the door to wealth.
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