The experience of different positions also made Li Fanghong realize that a semiconductor company is not only strong in research and development, it is more like a system-level project, and it is very important in products, markets, and supply chain management. Such a high-tech, high-integration industry has huge investment risks. Wanting to go through the death triangle of semiconductors requires investment institutions to be more tempted and more precise in their search for targets.
Editor’s note: This article from the micro-channel public number “ Chong Jing capital ” (ID: AS_NewVisionCapital) author: Amdo, authorized release.
In early 2000, the Chinese semiconductor industry was still in a state of silence.
But in a global perspective, this year, the world’s semiconductor sales for the first time in history exceeded 200 billion, a record. At this time, the US semiconductor companies stood strong and killed the Quartet. At that time, SMIC was just established, and the domestic semiconductor foundry was just starting.
During the same period, just graduated Lifang Hong received a well-known US company Cypress chip olive branch thrown, the system began four years PSoC chip on programmable chip design workWork.
After four years, Li Fanghong was promoted from the design post and went to the Cypress Shanghai branch to work on chip application engineering, completing the first turn from design to application, from research and development to market. Two years later, she joined a well-known domestic investment institution to invest in science and technology. From here, Li Fanghong completed the second turn from technology to investment.
The Chinese chip market in the other hemisphere has also undergone subtle changes. In the past one or two years, in addition to the 100 billion industrial funds established by the central and local governments, many VC/PE institutions have a long-term layout in the semiconductor field. Domestic semiconductor investment has begun to heat up. Fission from China Central Star Investment Group, a pioneer in the early investment in semiconductor and enterprise service software, starting from 2016, began to look for potential unicorns in this high-tech field. Up to now, Chuangxin Capital has invested a total of 1.4 billion, with a management scale of 3.5 billion and an IRR of 40%. Among all the invested enterprises, 80% of the projects have completed follow-up financing and valuations have risen.
“Before the end of the year, we have several projects to complete the exit, this year should be our rewarding year.”
Chuangyi Capital Partners Li Fanghong
Get out of the semiconductor “Delta” on the eve of the investment inflection point
In 2018, China imported $312 billion worth of chips and semiconductors, even more than China’s total oil imports.
From the current situation, chips and semiconductors are the foundation of modern electronic products. Since China is still a global factory, it is not surprising that there is a large demand for these products.
From another perspective, the semiconductor industry. According to the IMF calculation, the output value of each US dollar semiconductor chip can drive the output value of the related electronic information industry to 10 US dollars, and bring about 100 US dollars of GDP. The amplification effect of this value chain has established the important position of the semiconductor industry in the national economy.
From 2013 to 2018, the global semiconductor market rapidly increased from US$305.6 billion to US$468.8 billion, with an average compound annual growth rate of 8.93%. According to IC Insights statistics, from 2013 to 2018, only China’s semiconductor integrated circuit market has expanded from US$82 billion to US$155 billion, with an average annual compound growth rate.It is 13.58%. It can be seen that this is a very huge market.
The extremely tempting future has not attracted more capital. The reality is that the bottom line of the industrial chain such as chip manufacturing in the semiconductor industry has not been optimistic about domestic VCs. The “death delta”, which has high costs, long investment cycles and slow returns, is a key reason why investment institutions are reluctant to touch this field.
In Li Fanghong’s view, although the investment in the semiconductor field is difficult, the prospects are broad. In particular, dedicated chips, modules, etc., as well as early companies, are more suitable for VC investment.
From the current composition of the industrial chain, capital-intensive areas such as manufacturing links and general-purpose chips are difficult to bend and overtake in the short term, and are generally funded by central enterprises and national prefix funds. In terms of some specialized sub-products, the Chinese chip market is promising.
Li Fanghong introduced that since 2019, Chuangyi Capital has focused on the semiconductor, semiconductor, and power devices.
From the ZTE incident last year to the intensification of trade frictions, China’s “strong core” dream has become more urgent. “From import substitution to independent first-line brands, China has begun to appear more and more semiconductor startups. With the rise of domestic mobile phone manufacturers such as Xiaomi and Huawei, some start-up chip companies attached to these large factories have many opportunities.”
However, the semiconductor industry still has a long way to go. Li Fanghong said that the products of chip companies want to enter the international supply chain list, which requires years of trial and continuous product iteration. At present, the stage of Chuangyi Capital Investment is mainly Pre-A to B-round. The reason why the focus is on the eve of the turning point is mainly due to the certain test of the product and business capabilities of this stage, which is expected to be realized after capital injection. Sales volume.
“The teacher opened the restaurant, and then the amount is very fast.” From another perspective, at this stage, the company’s valuation is more reasonable.
In terms of the layout of the track, Li Fanghong tends to sell water instead of digging gold. “We don’t have to dig gold, and we can avoid certain risks by selling water.” At present, Chuangyi Capital focuses on investment opportunities in optoelectronics, power devices and RF circuits. But she also bluntly said that for the new market demand, Chuangxin is still watching carefully.
In the past year or two, new energy vehicles have rushed into the capital market with the rush of RMB. The industry chain associated with this industry is also entering the eve of the outbreak. For the new energy vehicle industry, Chuangxin did not rush into the brain, but bet on the power devices upstream of the industry chain. “We still do things in areas that we are familiar with and stay calm.”
Strongly making a “core” restrained investment
Calm and restraint. In the four years since its establishment, Chuangyi has invested in high-quality projects including Dajiang Innovation, Qihoo 360, 360 Finance, DaoCloud, and Yanyou Optoelectronics.