Focus on technological advancement and business advancement between resource-rich regions and resource-poor regions. The
[New Capital] series aims to tap into the real and valuable content of investment institutions, allowing a wider range of entrepreneurs and readers to understand the realities behind an organization. These capitals are currently one of the most active investment groups on the market and a future catcher.
“Nok Capital Growth Fund (NGP Capital) is a company that has been in existence for 14 years and has successfully invested nearly 100 A company that invests in nine unicorns. In terms of investment style, NGP is relatively stable, mainly investing in growth companies around the B round, focusing on technological progress and business progress in resource-rich regions and resource-poor regions.
On September 11th, “World of Connections China 2019 – China Subversive Innovation Summit” co-sponsored by NGF Capital and Chaos University was held in Shanghai. The event has been held four times in Silicon Valley in the United States to create an interactive, connected and interoperable global network for the venture capital industry.
Before the summit, we interviewed NGF management partner Deng Yuanzhang and talked with him about NGP’s view on 5G and sinking market. Perhaps the next unicorn was born here.
The following is an interview record that was deleted and edited without changing the original intent:
1. What areas of NGP focus on investing in the Chinese market in China?
Deng Yuanzhang: At the beginning of the 21st century, NGP invested in mobile Internet-related platform projects. By 2010, the smartphone ecosystem was gradually formed, and NGP focused on the smart phone ecosystem. Now that the market is entering a period of digital transformation, NGP focuses on digital service solutions that can help companies improve efficiency. NGP is a fund that invests heavily in growth. In addition, the complexity of the Chinese market has also allowed us to see investment opportunities in the sinking market, and the sinking market is also the focus of the NGP market.
Depending on the specific field, NGP focuses on four directions in the Chinese market:
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One is smart travel, including autonomous driving, supply chain logistics optimization, smart transportation, and intelligent dispatching platforms.
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The second is the Internet of Things. The Internet of Things is bound to benefit from the development of 5G, and the Internet of Things is the key to the digitization of many traditional enterprises. The Internet of Things will promoteOur life, industry, and business transformation.
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Three and four are education and medical treatments. Due to the differentiation of Chinese society, we can see that there are many inequalities between regions and people. All areas are people’s livelihood events, and there is still a lot of room for development.
2. How does NGP define a sinking market?
Deng Yuanzhang:What we think of as “sinking market” has nothing to do with the region. It refers to those high-quality products and quality services that have not yet been touched. The market where the crowd is located. Although the word “sinking market” is a new word that has only recently emerged, Nokia began to pay attention to this market in 2005. At that time, mobile phones were the “high-tech” that only the middle-income people could use. The people who can’t afford the mobile phone are the audience of the “sinking market”, but the mobile phone is the just-needed product for them to contact family and friends remotely, so Nokia launched the “ultra-low-end mobile phone” for this part of the user, Let them communicate with friends and relatives who are far away from home, and let Nokia’s market share reach a record high of 44%.
This is a relative concept. For example, in some 4th and 5th tier cities, there are very few good teachers and good doctors, but good education and quality medical care are just needed for them, as opposed to those already owned. For the market of good teachers and good doctors, they are “sinking markets”. NGP’s optimistic “sinking market” is a company that can bring these quality products or services to them using mobile Internet, AI and other technologies.
3. That is to say, NGP tends to invest in projects that provide solutions? In what way does NGP judge the value of the project and is not worth investing?
Deng Yuanzhang: NGP is a project with less hardware. The project we invest in is more about what kind of solution it can provide. This solution may include hardware. NGP is a growth fund. We have to verify that it has been tested, which means that this solution is indeed a great pain point.
The main criteria I have summarized as “Four P”, that is –
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One is to look at “People”, see if the team, the founderHave potential, whether there is complementarity.
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Second to see if the “Pain point” has been solved, and how much pain point is solved is positively related to whether the market opportunity is large enough in the future. And is the pain point enough, is the consumer willing to pay for it?
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The third is “Proof point”. We will research the company’s business data and industry data to verify whether the project is really good.
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Four is the potential. As an investor, we also look at business models, valuations, and returns. How much space the company has in the future can bring more returns to investors.
4. The core issue of China’s disruptive innovation peak is 5G. What about NGP and NGP?
Deng Yuanzhang: Based on the industry background and technical advantages of Nokia and Bell Labs, we have seen the transformation that the mature 5G will bring to the society and ultimately provide subversion to the public. Sexual service to meet the needs. For example, in the medical field, doctors can make consultations for patients remotely. Only mature 5G solutions can achieve ultra-low latency and ultra-high definition. The final maturity of automatic driving is also inseparable from 5G. Only 5G can satisfy the vehicle at high speed. Low latency requirements.
At present, the market’s understanding of 5G is still very limited, because now 5G is still in the initial stage of development, and many standards have not yet been established. Therefore, some people think that 5G is only improving on the speed of 4G network, and can not meet many advanced ideas.
5. A few years ago, AI rose and there was an “AI bubble” on the market. Now, if 5G rises, will there be a bubble? What does NGP look like?
Deng Yuanzhang: Previously, AI was a new thing. Some people in the market didn’t understand it. They always shouted slogans, as long as it was AI. After the market returned to rationality, it believed that there was a bubble in the development of AI. But today’s investors have experienced the baptism of “bubble”, more rational, and less likely to be “fudged”, and investors who study 5G are hard to be affected by the “bubble”. As for NGP, because we are behind Nokia, which has deep research on new technologies such as 5G, we can definitely see the true value of 5G and the company that really uses 5G service users.
6.NGP is an international fund. What characteristics does the NGP think of the Chinese market compared to foreign markets?
Deng Yuanzhang: A notable feature of the Chinese market is “big.” China’s market is very large and has a lot of demand. As long as the company’s innovation can subvert a small part of the market, the returns are very good. Now 5G is an important project promoted by the Chinese government. We judge that China will be the fastest growing 5G market. And China’s huge customer base also means massive data, which can promote the development of advanced technologies such as AI.
But China is also facing challenges from the outside world. China’s labor price has gradually lost its advantages. Coupled with the relatively tight international economic situation, how China maintains its growth, there are still many challenges to overcome.
7. Many entrepreneurial projects emphasize their own innovations. What kind of innovation is NGP optimistic about?
Deng Yuanzhang: From a fund perspective, we value the company’s continued innovation. At the same time, there will be the “4P” standard mentioned earlier to judge whether these innovations are really efficient.
The market is constantly changing, and user needs can change a lot. When we invest in a project, we will also see if the team can really withstand the changes, whether the team’s products can adapt to these changes quickly, and whether the company’s innovative solutions have a sustainable competitiveness. As long as the company can catch enough pain points, have sustainable and competitive innovation, and the team can adapt to different changes, they will be able to move forward and run faster than others.
8. What investment plans does NGP have in the future?
Deng Yuanzhang: We are not a company based on quantity. Our goal is to find the best companies to invest in those areas that we talked about earlier. We will cooperate with some investment institutions investing in early projects to track the good projects they have invested in. Some companies will track one to two years or even longer, and also conduct relevant industry research and find suitable ones. When the time comes, we will take the initiative. Because of the background of NGP and the advantages of the team, we believe that it can also provide sufficient value to these companies.
Attachment 1: Basic information of respondents
Deng Yuanzhang: Nokia Growth Fund Management Partner
Deng Yuanzhang has over 25 years of experience in IT and venture capital in the global and Chinese markets, including venture capital, sales, marketing, business development, R&D and production. Deng Yuanzhen is responsible for managing the annual sales of the company with a sales volume of 70 billion yuan. He has served as a consultant for the industry’s leading mobile business, “UC Vision” and “Jiji.com”. Currently , he is also an independent director of Standard Chartered Group, Kingsoft Software Co., Ltd. and Huanji Times (YY).
Before joining NGP, Deng Yuanzhen served as Senior Vice President of AMD and President of Greater China. From 2004 to 2010, Mr. Deng Yuanzhang served as Vice President of Nokia Global, Chairman of Nokia Communications Limited and Vice Chairman of Nokia (China) Investment Co., Ltd. Prior to this, Deng Yuanzhang held senior positions at Apple, 3Com, Digital Equipment Corporation and AST.
Attachment 2: Capital Basic Information
1, Capital Introduction
Nok Capital was established in 2005 as a global independent venture capital firm that invests primarily in growth companies. NGP provides market insights and networking, with coverage in China, the US, Europe and India, and is good at analyzing investments from a global perspective.
The limited partner “Nokia”, with its industry advantage and “Bell Labs” has a wealth of research and technology accumulation, so NGP can bring technology research and development and cooperation assistance to the invested companies. For example, Nokia, with more than 100,000 patents, is one of the most patented companies in the world of mobile, AI and IoT. Bell Labs has advanced research and development capabilities in many fields such as AI and IoT.
Fund’s official website: http://www.ngpcap.cn/
2, capital size
NGP’s only LP (Limited Partner) is Nokia, which manages more than $1 billion in funding. The fund has been funded to issue four funds. The second phase of the successful exit rate in China is 100%, and the fourth phase of the fund currently launched is 350 million US dollars.
3. Investment Projects
The track that NGP focuses on includes: Internet of Things, digital education, travel logistics, consumer upgrades, digital health, and more.
NGP has invested in more than 100 innovative companies, 9 of which haveBecome a unicorn, including Xiaomi, UC Web, Jiji.com, and overseas GetYourGuide, Deliveroo, LIME, Quikr, Rocket Fuel and Heptagon.
Recently, Chinese investment projects include the Internet Chinese Medicine Platform “Little Deer Medical Center”, Xiaomi Ecological Chain/Internet Kitchen Appliances Enterprise “Pure Rice”, Medical Cold Chain Logistics and Information Technology Supplier “Quick and Easy Inspection”, Sports Health Ecology Chain software and hardware product development company “Yuedong Circle”, artificial intelligence adaptive network education company “study education”, children’s smart wearable device developer “Xiao Xun”.
4, star project
Millet Technology (currently worth about $28.2 billion)
UC Web (market value of $4.7 billion when NGP exits)
The market (the market value of US$3.6 billion when NGP exits)
Related reading:
New Capital | Nokia Growth Fund: Focus on non-head projects, focus on sinking market< /p>
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