Investors say: entrepreneurship false valuation is burn out, must be the boy

(compile: bread cake)

cloud network hunting note: “burn out” is we hear since childhood to the big fable, start-up companies and we want to talk today about the story of “burn out”. Start-up companies to financing success, like the bubble blew up, this kind of marketing entire may exploded in popularity for start-up companies in a short time. The hype, however, the “big data” is not good.

tell you what is reported what, or what all don’t have to be reported. This is the reason why Chinese start-ups investment “reached new highs,” the naked reality. Of course, not everyone is under the principle of with the facts, with some praise is normal. But it was not until recently that I have found that the scale of the Chinese start-ups intentionally false positives financing rounds too big!

“this is the old trick of startups, as far as I know the vast majority (50%) of start-up companies do,” melvillo (Rui Ma) said. (note: cloud network editor king hunting melvillo is silicon valley incubators 500 Starups China investment partners, interested in early start-up comparison.) “Without carefully investigated the exact number, I cannot prove that it must be more than 50% of start-ups misstatement financing rounds. In addition, some enterprises was I questioned, but doubt has not been confirmed, to say how much is the specific enterprise, I didn’t also the statistics.”

melvillo think startups should take main responsibility for fabricated data, however, gobi partners co., LTD., Shanghai Zhu Lin (Michael Zhu) believes that China’s emerging risk investment company also can’t get away. He said: “relatively speaking, this kind of phenomenon is normal, the emerging risk investment company was eager to rush out a name, but the lack of experience, is unlikely to handle these situations.”

this trend is worrying, not just because of the large number of startups, more is that they are false data. Melvillo and zhu Lin agree that under normal circumstances, the start-up capital data will extend to two to three times, six times some expand (equivalent to RMB conversion into dollars, ten times more expand (financing amount directly to steal into valuation).

“at the beginning and finishing enterprises financing, found that more than the amount of the initial public offering funds theory, then began to produce a lot,” said zhu Lin. “In general, erase fraction to add up to an integer or understandable, for example reported more than $190 to $2 million. However, if a company earned $one hundred million, but the reported data is between $300 million and $2, it’s related to credibility problems.”

a bad habit

industry raise money, no immediate and direct consequences, so everyone to follow. Over time, the company’s valuation has become one of the most Chinese start-ups normal counsel.

“in my opinion, these start-ups disguised herself into a very powerful appearance, was simply trying to consolidate the cooperation relations, recruit a virtuous man, attract the initial investors,” said melvillo.

“for some start-ups, to exaggerate the data can be appalled rivals, are more likely to be in the news a part,” zhu Lin explains. Investors in this regard, he said: “the company sometimes published on internal data correctly, but sometimes this kind of honesty is not to make their own decisions can get ideal result. Especially when many investors are present, some investors will pick things, does not consider the company’s actual situation, regardless of the feelings of other investors, also announced some huge data.”

however, in the long run, this dishonest behavior will eventually hurt yourself, hurt start-ups, hurt investors, even against the whole of the entrepreneurship ecosystem. Zhu Lin added:

“we have a saying in China:” burn out “, say is exaggerated data such as startup valuations. Start-up companies thought to do so is conducive to go out, but in the end, put them at a dilemma, up and down is not easy to talk about sustainable development. Exaggeration and valuation positive influence brought by the fleeting, investors soon learned the truth. Companies in the United States securities trade fair (SEC), securities registration, all this will be written in black and white and clear again.”

Lin zhu said, once the real data, “previous exaggerate about the consequences of financing and valuation will dog fierce back immediately, which means that companies and consumers, investors and market a new trust crisis between […]. For some companies, if everybody is rushing fabricated data, they have a sense of urgency, feel that their data will also be necessary to raise. And the industry peer “is formed.

melvillo also agree with that, and said it was “a very adverse trends, because some naive entrepreneur to the elevation data for benchmarking, to the overheated market unreasonable factors. This kind of false prosperity impractical for investors and entrepreneurs have the looks, so more and more people get involved.”

this trend will undoubtedly make has appeared more and more enterprises bubble. Matrix partners China fund founding managing partner Zhang (Zhang), and to follow the CEO ran wang warned enterprise bubbles in different occasions. At a meeting of the entrepreneur, ran wang urged investors and start-up in 2015, reports on real data.

Gu Ying shame

as a often report such controversial financing problems, I’m sorry to admit that, in terms of spreading false news, I was suspected of repression. I am forced to choose “tell you what is reported what, or what all don’t have to be reported,” I regret to I chose the former.

but, to be honest, due diligence has its limitations, start-up companies want to verify the data, find out what is the number of users, income data, number or value of funds, we are unable to do this. After all are private company with private investors, no one is willing to publicly blamed them.

“so to speak, if these are the level of vc company funded startups, vc firms also know these things, but, no one is willing to come out publicly correct enterprise business volume released at the news conference,” said melvillo. “So far, I found that the best way to find a major investor, or go directly to but if you do not have this aspect of resources, can only go to the company. Rely on certain media, in my opinion, to do this thing doesn’t work, because people usually believe that some ‘officially’ data. Helped to get the situation, it is bound to open first find out some misleading the public’s start-up.”

“involves financial data and valuation, the established firms behave more solid,” said zhu Lin. “They witnessed the consequences of fabricated data, have experienced the dotcom bubble, will know that exaggerated data is more harm than good. Find the differences is the key in due diligence, have a data comparison, can know whether start-ups in accounting fraud. As for the external resources, will be in “officially” false data breach.”


zhu Lin and melvillo can be said to be the representative accused two data hype, melvillo represent large investment company, zhu Lin is young upstart entrepreneurial field representative. However, regardless of any subtle differences between the two, one thing is clear, data hype is existed in the whole system problems in the field of entrepreneurship. One more thing, whether it is a big investment company or start-up companies, manipulate data are not good.

“it is a waste of time. I have been looking at some company valuation, the emergence of the false data disturbed the real market environment, to chase the valuation of these companies is wasted effort. Extra work began to appear, false data flooding the market, I had to convince those who use fake data comparison of entrepreneurs, to prove that they made a mistake; Coupled with the lack of transparency, the entire system began to weak, loss of efficiency, “said melvillo.

“but it also can make us more cautious,” zhu Lin added. “In this case, we will put more time and energy into in due diligence, to make sure our investigation is credible, never again to spread false news.”

although the wind of false diffuse in the field of the entire Chinese entrepreneurship, but overall, the outlook is optimistic. “A few years ago are worse,” said melvillo.

“the Chinese market is still in learning, also need time to adjust,” said zhu Lin. “If there are more voices advocacy integrity assessment report, will speed up the pace of industrial area normalization. There is reason to believe that everything will slowly get better.”

in the end, hunting cloud network editor you want to say, in terms of us, we will do all we can to minimize the error in the article, but we also have no way to know exactly the company will raise much money. Before we have a full grasp, we all want to the polish eyes such information.

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