On VC don’t want to hear “fantasy”, please use the data to talk!

cloud network hunting note: vc under the total want to find a the most outstanding in the industry, they will be the company called “dragon” and “unicorn”. And entrepreneurs also need you to show enough potential in the start-up phase, make investors believe that they are under a “dragon” or “unicorn”. This doorway includes reduction of storytelling ability, also cannot leave the down-to-earth thinking and data.

recently cloud network compiled the TC hunting a paper entitled “”, analyzed the wind made different investment theory. This paper, an investor statement, use “unicorn” to describe a good investment is a good metaphor, but to better “the dragon”.

I have carefully reviewed the investors good word used to describe a good investment opportunity, discovered an interesting thing: there is no doubt that in the world of finance, whether men or women, when they want to describe a good investment opportunity, they will be used in fantasy literature.

said extreme, risk investment not only believe that there is “no scientific” things in the world, they even think that a good investment and boring completely is exist in the two things of the world, they each have each rules and laws. “Unicorn and dragon” this article I suddenly realize: I suddenly realized that investors want to prove to them your own way and investment value.

but many entrepreneurs after that it is easy to go wrong, thought to attract investment, spell is who the story is even more magnificent. But that is not the case. VCS have learned through the eye of the nature, in those grandiose story capture the core, and entrepreneurs can be a powerful and unconstrained style is driven by market reality we kept up the key evidence. But when investors perceive the story of the entrepreneurs have enough reliable basis and dared to challenge all the standard, that at the moment he is no longer a based on the reality of critics; He would cheerfully to focus on those stories of entrepreneurs, like to indulge in tolkien’s magical stories of children.

when I listen to entrepreneurs to self-promotion, disappoint me most was not their stories, but they failed to give my present specific scientific data points, so that I can keep their story roots to down-to-earth plan (hopefully at least in my ideal world). Entrepreneurs need to understand that investment in this kind of behavior is based on a certain. Only if the entrepreneurs and investors have reached common agreement, agreed that the dream by the saga is under the condition of both sides to be trusted, they can talk about investment.

since all say to this type of fantasy literature, might as well let me emphasize the investors focus on the field.

this man is a hero in the team?

venture capitalist Tim Draper would his business incubator and venture camp called “Hero City”, the Hero City. When investors analysis of a team, they first want to know is whether the team unity, how honest, whether the focus, with or without forethought, and its degree of self-discipline. Whenever we heard an original story, we are in pursuit of a story of enough, can relate actual founder and market opportunities, when they make the company to let them into the upper hand in the competition.

when we look at the slides of a group, we hope that entrepreneurs can bring the company to develop all the necessary skills and technologies that are present, let us see a “the sparrow is small, all-sided” of entrepreneurial teams. When the team about these founders convergence, how we want to see, they have a strong bond between a brotherly friendship and affection, with a common goal, to let them share the joys and sorrows, in the same boat. We seek is the commandos as strong spirit will, every one in the team can be independent in the unknown environment to create the greatest value. When we listen to a company’s history, we want to see, flexibility and creativity of the team can do with very little resources great products.

when we learned that a company is how to put money, we want to hear is that they are in understanding the market demand, customer habits and development patterns, strict and principled to capital control and management.

the innovation based on the undisclosed facts?

as investors, we always favor those who has unique insight on the market company. As Peter Thiel emphasise, if the company some original ideas about the market and upset, so much the better. Because of this, the company can be cast on others realize that it’s a good idea and start before the competition, keep enough time to cultivating and developing itself.

a special life experience, learning fields or professions, these will lay a solid foundation for you. I pursue is to understand customers and their habits and the ability to demand, I will it become “empathy” market. I believe that deep empathy or sympathy ability is the source of unique market insight. If we think our opinions on opportunities than other investors for deeper or more, then we will be more inclined to a company, because so that we can more efficiently to sponsor the company, or to get a better valuation.

this company is a magic beans?

magic beans from the fairy tale story “jack and the beanstalk”, have magic beanstalk grow to hate day high within a night.

some companies is growing faster than other companies, even if their products are similar in position, the speed of their jilt others several street. (Mike Maples vividly describes it as “lightning lizards”) investors will grope for the way of the company into the market and prevent the advantage of market and customers.

there are some companies in planning marketing strategies is quite flexible, and therefore can attract customers more efficiently. Some teams market policy is calculated, but beyond that the vast majority are occasionally found inspiration. What is more even after a breakthrough to find the answer to all don’t know what he did. Investors are “magic beans” team bole, because they had also seen a lot of teams do similar things.

one day, a little-known team suddenly broke into your field of vision, then crazy to grow up, the other team is far left behind. “Magic beans” team is the most difficult: they’re too highlight growing up too fast, so everyone can see them easily. So as an investor, do you have to be quick, want to catch up before anyone else found. Of course, you also must bear the risk and error estimate, or your anticipation “magic beans” for some reason eventually failed to grow. When an investor phase a magic beans, they usually will immediately put money, don’t let anyone beat.

the company will make money?

the best investment machine is always good to let a person feel not true, for it seems to be no fairness in the industry. Such opportunities for investors is like heaven fell pie – can create a tongue with no wealth, like magic. All the profit model, pricing strategy and profits in fact never equal (Bill Gurley have discussed this topic). Investment in silicon valley, the Internet industry often means that you have to under the condition of the profit model is not clear, will bet on “magic beans”.

but occasionally there will be several companies, while we found that they have found the profit pattern of madness. I call this “alchemy”. “Alchemy” for investors is elusive, because this company can sponsor themselves development, or valuations rise to high, and as the early investors you encounter probability will be relatively small lot of dilution.

the company can dominate a category or the market in the future?

in the emerging and changing of market competition, the company, they account for market share often could not be more different. Market leader in the usually account for 40-70% share, followed by the second is the half of the, and the third is the second half, and so on, until a series of providers to meet the diverse needs of customers in the market. So when the decision to invest, do market research is one of the critical point of forecasting, whether there will be the mob started with others grab market resources, instead become a leader of the market.

company can foresee it of your own destiny?

there are a lot of companies and their market changes, the others are inevitable. Investors have to do is not only the “king” of certain products, they also need to predict the company scale is large enough, in this kind of product has a high enough value, enough to make it in a large scale in the market share of the shock. Sequoia partner compared such entrepreneurs to surfers, doomed to the fate of his will was pushed to the top in this moment, due to the right place, right time and at the height of others cannot reach.

the investor takes a long time to think, to assume that, to predict, to speculate, sometimes even to do research for the future market. They all have sensitive intuition, can smell the fate of the door, also can see that the fate of the future can roughly to nothing. Business, products and company’s development way is unpredictable, but their future and investors are usually not foreseen by the difference is too big.

this investment can be “unicorn”?

Cowboy Ventures, CEO of Aileen Lee because its definition of “unicorn” and famous. She will support the venture capital company as much as $1 billion 0.07% of the value of the company is defined as “unicorn”. Vc of the economy and the impetus is not allow to ignore. Venture capital returns, for the most part, depends on domination, exclusive market opportunities in the market of the few several high performance of companies. Yes, you think that’s right: most of the company is short of “high performance”.

so investors a good company to ensure that each can have considerable market opportunity, so that the company at $1 billion valuation. The “good” company is too rare, venture capitalists are always possessed in order to find them. So, a “unicorn” so only mythology of animals, used to describe these companies, it seems to be perfect.

the investment will become the “dragon”?

New Atlantic founder of Ventures, Jhon Backus in “unicorn and dragon”, “dragon” is defined as capital returns can be limited partners for investment. He points out that now every investor wants to make a “unicorn” type of investment, their nature is hope that the higher the value, the better. nullnullnullnullnullnullnullnullnullnullnull