This article is from WeChat public account:CV Intelligence (ID: CVAI2019), OF: Hanjing Xian, from FIG title: Oriental IC
When the vents move, can the hard technology that replicates the Internet “money-saving” mode really use “burning money” for the “cycle”?
ShowOf course, no.
“This year is almost in the ice water”, “the industry fever is declining, and institutional investment is shrinking.”
An entrepreneur in the field of artificial intelligence expressed the real feeling of market chill. He originally planned to complete a new round of financing this year, but the results were not satisfactory.
The data shows that in the past ten years, fundraising has peaked between 2015 and 2017, and it is also the two years of hard technology.
Now, a cycle of four or five years has arrived. At the turning point, the hard-tech venture capital market is returning to a rational and cautious normal.
“The investment in new projects is relatively small”, “Only continue to overweight to support those data that continue to be strong, and the founders are clearly growing potential companies.”
Change: Frenzy becomes rational
“In the past few years, technology has been a niche market. The companies that come to us are all specialized institutions in the field of science and technology. But now there are not only many investment institutions that we are looking for, but many of them are invested by the Internet or business models. Institutions that have been transformed in the field of investment,” said Liu Bo.
After the flow-type and mode-based entrepreneurship has reached a certain bottleneck period, hard technology companies have become a hot spot for investment.
But hard technology has barriers. “There are not many people who can understand it.” Some investors who have transformed from the Internet have “transferred the investment logic and models of the original money into the hard technology field.” The project, “Investors who can’t grab high-quality projects will grab medium-sized waterways, and even see some early or slightly worse.”
In a way, hard technology has inherited the “crazy” of the Internet Internet.
“For so many years, we have always been a ‘scientific and technological innovation, people-oriented’ investment strategy, the frequency of investment is 20 or 30 per year, and the valuation of each investment project is between 20 million and 50 million. But 2016 I feel that everyone is opening one or two hundred million. We don’t give it. Anyway, someone will give it. But recently everyone has been relatively calm.”
A period of four or five years has passed since the year 2015 and 2016, when the industry has changed significantly. Above the turning point, the hard technology venture capital market is returning to a rational and cautious normal.
CV Source invested in statistics. In the three quarters of 2019, the total number of financing was 908, down 59.82% year-on-year; the total financing amount was 11.865 billion US dollars, down 55.89% year-on-year; the total number of projects invested was 818 projects. , a year-on-year decline of 61.21%.
“For this industry, the opportunity for mutual leverage has been quite large, the market has been rapidly enlarged, and there has been a slight expansion. Now there is a significant reduction in real money investment. Among the 200 LPs we have contacted, the main contribution One is the industry, the other is the comprehensive state-owned group, and the other is the government’s guiding fund.”
The cautious transmission of the venture capital market to hard technology companies, like a high-speed machine, suddenly hit a big iron.
Shu Liang once revealed that the valuation of some autopilot projects this year is not “waist” and is directly “cut to the ankle”, reported a valuation of 10 billion yuan, lasted for one year, and finally only melted down two billion.
The capital thinks that when you save money, “there will always be people picking up anyway,” but once the money is reduced, no one will take over. In addition to the risk of hollowing out the technology and the market-free product, some startups. It will quickly disappear from the market, and the big waves can’t be avoided.
According to the IT Orange New Economy Death Company database, there were 322 companies closed in 2019.
And even for some companies that run faster, even preparing for an IPO will have an impact.
On November 5, foreign media reported that people familiar with the matter said that considering the uncertainty of whether to maintain their existing $4 billion valuation, Defiance Technology is considering whether to postpone its IPO plan. When the CV intellectual contempt for verification, the other party replied that “the report was false.” But for a long time, the industry has been arguing about the high valuation of AI companies.
As Howard Marks said, no matter how good the assets are, if the purchase price is too high (including the first and second markets) will change Become a loser.
Regression: Value Investment
“Can it be valued by the number of doctors in the company?”
This is a story of a media peer sharing a circle of friends in the past, from the founder of a startup.
This question is the tip of the iceberg of irrational valuation of hard technology, but it also reflects the fact that the hard technology valuation system is missing.
“A share capital, Hong Kong stocks, US stocks have different capital markets. Whether it is the final valuation of the industry’s existing valuation-led companies, or the ability to form a common valuation standard is still unknown.” Gao Tianyu said.
There is a lack of consensus in the industry, and some hard-tech entrepreneurs who are born from some technologies “do not understand valuations and do not know how to talk to investors.” The valuation can only be based on the prices of Internet companies in previous years. .
“Now some AI chip companies’ valuation is the sky-high price.” A person who has been engaged in the FA business for many years believes that “a fast-filling mobile phone chip and RF chip with a certain sales revenue are 6-8 times PS. Valuation, but like AI chips, is there S? No matter what kind of coreThe films are all proof of sales revenue.
Technology is new, since business is about to pay attention to business value. In fact, hard technology is not much different from any Internet whistle in the past, but on the other hand, hard technology has its own logic.
For the market of the model class, the chain of intermediate conversion process is too long, and any one chain can not be adjusted, it will be greatly degraded.
But hard technology is relatively more “real”, and its expandability is clearer: Can technology be transformed into products? Does the sales team have the ability to sell it and turn it from sales to profit? Is it a resource that is scarce enough or does it have a large market that can be expected? Is there a high enough profit in the segmentation field?
Taking robots as an example, there are currently industrial robots, service robots and special robots on the market, but in the view of Zhao Wenyu, partner and CEO of Harbin Venture Capital, the only favorite robot is the current one because “this is an initiative.” “The market”, that is, customers have strong demand to propose robots to replace manpower, but “most of the companies are still in the research and development stage, and they can be invested temporarily.”
And the industrial robot is, in his opinion, an intermediate device, that is to say, when it is applied to a certain field, it makes sense, otherwise the robot arm is a cast iron. “We spent three or four years to screen quality projects, basically not, unless it is for the needs of the industry chain.”
For the fiery service robot, he said, “If you don’t have a mature application scenario, how can you invest? Some people are laying out early, although it makes sense, but it takes too long.”
This involves another development of hard technology: The transition from technology to product is a long one.
In this long cycle, entrepreneurs must face the inadequacy of their own development cycle and external development: making fast money or making products?
An entrepreneur in the field of hard technology revealed that in the case of smart manufacturingI have worked hard to earn 20 million a year, but the local government can directly sell hundreds of millions of shares. Some investors will propose funds to build funds around the industry chain and make upstream and downstream acquisitions. “This is hard work. R&D and entrepreneurship make money.”
“Some founders may have tried to make this happen, and may eventually be held by capital or driven by the market, so that they forget how to develop in the end.”
Of course, a long business cycle means that the cycle of VC running is also long.
The US venture capital fund The Engine CEO KatieRae said that the average venture capital investment cycle is generally around 10 years, and the “hard technology” VC cycle can be up to 18 years.
If the industry is placed under a scientific cycle logic, Zhao Wenyu judges, “From 2025 to 2030, when the results of the transformation of Chinese enterprises may be effective, there will be some enterprises that will become pillars at that time.”
Gao Tianyi also suggested that in the perspective of AI landing industry, startup companies should pay attention to industrial capital, because industrial capital can often help AI startups to achieve industry landings at an early stage, and industrial capital is relatively more willing to Support AI startups in the early stages.
The back of the coin: the entrepreneur and the investor reach a consensus
“The market is so bad now, why not take a break?” Recently, Liu Bo was often asked this question. She said that whether it is from the market environment or the industry’s calmness, it is now doing early science and technology ventures. The best time, so we must pay close attention to the reserve of food cannonballs, so that there will be better opportunities in the next few years.
“The overall size of the fund this year is larger than before. It used to be between 50 million and 100 million yuan per year. The amount that can be invested this year is at least 100 million to 200 million.”
While keeping abreast of reserve ammunition, the other venture capital institutions are constantly adjusting their rhythm to avoid misjudging food.
October 16, Jingwei China’s Zhang Ying’s Weibo also wrote: It will only continue to overweight to support those data that continue to give strength, and the founders are clearly growing potential companies. For the latitude and longitude companies that have been wrong and we are completely disappointed, no longer waste more new money, it is the greatest respect for ourselves and our investors.