Feast of Wang Hua: early investment bubble, entrepreneurs are open

investors and entrepreneurs must first distinguish prosperity and bubble: the boom as a bubble, all be missed opportunities; But the foam as a prosperous people, often in crisis. This article from the New York times Chinese website for innovation works co-founder & amp; Managing partner Wang Hua an interview, when reporter mentioned the question of whether early investment overheating, Wang Hua put forward early investment hot, but not the bubble point of view. In this paper, Wang Hua will use the phenomena and data can be verified to detail this view.

2014 outside early investment is hot, one of the reasons is the source of money is much, from the social capital, such as traditional industry money, the first wave of Internet enterprises, they used the money to support new business is not so much investment, rather than inheritance), in addition to Chinese Internet companies like BAT strategic investment is back on track. At the same time, the late late capital think profits may fall, is now desperately to early. Several aspects of hot money inflow, early capital to produce increased greatly, 2014 investment overheat illusion, but don’t think this is a bubble.

bubble or economic growth?

what is a bubble, “bubble” refers to the extraordinary assets (stocks, real estate prices as the basic characteristics of false prosperity, its direct reason is unrealistic high earnings expectations and common speculative mania. The essence of the bubble is out of the false prosperity of real economic growth.

but in 2014, for example, although the early investment is very hot this year, the number of investment projects, there is tremendous growth, but the amount of money or concentrated in a few investments, like a bunch of people crowded into the room, just all CARDS in several channels, but the bus compartment is still very empty, still have a lot of people don’t get the money. For early investment, no real competition, if there is no more money to come in, of which there are so many people in business.

and, in turn, the business environment, we will find that with the influx of hot money, now out poineering person many, can do the project also many, so investment amount more is normal. Before a few years out of entrepreneurship, or pure Internet of things, such as community and games, or software, little can be done. But these two years, the benefits of a mobile Internet, is to the real economy penetrated, then you will suddenly found that now has sent food O2O products out, culture, theater also have Internet companies are doing, even what wash feet nail a door-to-door service model of the Internet.

in 2014, there are many entrepreneurial hot word, O2O, Internet, industrial reconstruction… To say this is the same thing. Everyone has a mobile phone, hand each time point, every workplace need to production data, are connected to the Internet, so from the perspective of product definition, a thing from production to distribution to the consumer, the entire process will be readjusted and optimized. This is equivalent to an industrial revolution is based on the software.

such as millet, for new people to redefine product, changed the way sales, even to the supply chain has been reconstructed, into a manufacturing-according-to-sale – the chain of millet simplified to first put forward by consumer demand, planning production by millet, foxconn to complete production, through the electricity logistics directly sent to the hands of the user.

the new industrial revolution, the first step is to complete the Internet of the process reengineering, involved in all areas, try very hard to improve efficiency. The second step, when the efficiency is raised, quantitative change to qualitative change, will cause a new round of consumption revolution – there is a lot of new products, is that we now want to get and unexpected. For example, before starting point “literature” the product, the privilege of writing a novel is a minority, now this privilege was broken, these are only we can see now.

again in the future, that is, the third step, and more horror – a lot of labor force will be left out of the traditional manufacturing services, like didn’t need one farming, the farming people had to be thrown into the factory, it needs to create new categories of consumption and production to absorb these people, these are creating new business space.

so you will see China’s national policy support for the innovative undertaking in early 2015 and a big step, li made it clear that when chaired a state council executive meeting “to support the development of” the “space” entrepreneurial innovation platform construction, the innovation works, a guest room and so on incubation model, based on the developing of marketization, specialization, integration and network “and the” space “, the implementation of innovation and entrepreneurship, online and offline, incubation and investment combination, for small micro enterprise growth and innovation entrepreneurship to provide low cost, convenience, all elements of the open integrated service platform.” This for China’s overall business environment is a great deal of good.

so don’t say is a bubble and now is the golden age of entrepreneurship. Too many industries and fields are waiting for this based on the software of the industrial revolution.

bubble in the us capital and the dividend

some people take the data for the United States capital bubble, think that China is the same. But we will find that in a few years ago, silicon valley early investment market has been very hot, but still growing in the recent years.

from CVR (venture capital research center of the university of New Hampshire) statistics show that in 2013, active angels have 299000 people in the United States, a 11.4% growth in 2012. 2013 American angel investors sustain continuous rise since 2008, a total of angel investment of $24.8 billion, rose 8.3% from last year. A total of nearly 30000 investment, up 5.5% from a year earlier.

the data from the qing branch research center statistics show that 2014 years ago, 11 months, angel investment in China hit a record high, angel investors have invested some 571 companies and institutions, a combined $340 million, even so, the Numbers are still a big gap with the us.

from the infrastructure, such as incubators, accelerator, etc., according to foreign experience, per 1 million population have five to seven incubator is more appropriate. As provide growth nutrient start-up enterprise incubators, the development of the United States in this regard from 1959 has been more than half a century, as of October 2012, more than 1250 incubators in the United States, but the population of only 300 million people, compared to 1.3 billion of China’s population, China’s theory should be 6000-9000 home incubator, for now, China is still far less than the total incubator.

in the early investment market, both the number of total amount of investment, investment, and the number of incubator in silicon valley, China and the United States and the larger gap, and China’s demographic dividend has not fully get digging, so China’s early investment in the future market space is very big.

early investment services into diversified

U.S. service gradually diversified, for early investment in infrastructure, for example, the incubator of professional services to the start-up will contain mentor for new entrepreneurs, guidance and practical training in technology, business and finance, to help them understand the idea, product, etc. Incubator will usually provide microfinance to start-up companies, in return for a small company.

but most of China’s incubator only provides site or part of the financial support, also has a part to entrepreneurs to provide training services, etc., but the universal services provided by the relative concentration and single; Compared with the professional and comprehensive business services also have larger gap. This, innovation works since its inception, has been in the business services on other investment institutions more than a step forward, founded in 2009 is put forward at the beginning of “investment + all-round innovation service” model, from the human, financial, legal, marketing, IT, business, etc., was for enterprise to provide a full range of services, help early stage start-ups smooth start and rapid growth. In 2015, we will further open its own network, knowledge, and service capabilities, to all the other phase angel investors and key nodes in the industry character and institutions, to attract them to be a part of our system, rather than a wide range of competitors, to form a new benefit sharing mechanism, even we will announce an alliance with parallel investment institutions cooperation.

is not only the infrastructure, including the innovation of the mode, the Angel of the list in 2013 when it launched the Syndicates, let ordinary investors can raise funds and acquire revenue sharing, further mobilize social idle resources, let those who don’t have much money, resources, the more investors have the opportunity to play the role of VC, and to the whole business market.

there is a start-up company in the United States: SecondMarket, founded in 2004, mainly to trade some listed companies in illiquid securities. In April 2009, launched a “private company” equity trading center, to help those who want to exit early investors or employees quick returns. Such as you are a Uber employees, and can’t wait Uber listed, you can own stake on SecondMarket trading, return ahead of schedule.

bubble where to start?

than the early of 2014 investment overheating, than a few years ago China’s early investment is insufficient, institutions rarely, big angel also very few. Now, I think is in to quickly return to normal – was there should be more early investment. The amount of investment in the United States, early and late investment amount is almost the same. Can be seen below:

(note: this data from the qing institute)

xiao-ping xu teacher early November 2014 phoenix finance interview, also once expressed views as I do, and he was also mentioned: “I don’t think with foam in the area of the angels, although we are now truly investment is more than two years ago, three years ago. But the other way round, ma right, started with $500000 and $two hundred billion the somebody else to do. What’s wrong with you give a little more initial entrepreneurs. And if so, I want a little bubbles come more violent, the good of the wealthy and unscrupulous rich, should put aside part of their wealth to do angel investment, is to take out a few percent to pursue their dreams of a bubble.” “In 2004, 2005, 2004, China’s little angel investment environment, to now, still looks quite good, but it is just a preliminary, I think should be in the next three to five years, angel investment will reach a state of equilibrium, meet the demand of the market.”

thought bubble of the early capital, often has an error, think the explosive growth of the economy is out of the bubble of the real economy. Whether they just ignored the starting point of the explosive growth is already a high, also selectively ignoring the real economy synchronization in rapid expansion, and waiting for a new round of innovation and growth.

so, the golden age of entrepreneurship has been open, and there is no bubble early investment, but the party has just begun!

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