Where change is possible, so is the opportunity.
Editor’s note: This article is from WeChat public account “ Northern Light Venture Capital “(ID: NorthernLightVC), author Lin Lu.
The outlet of the consumer Internet comes fast, and so does it. Where the strong wind blows, “the pigs can fly up”; after the strong wind rolls over, what remains is the scarred “red orange yellow green blue blue purple”.
“If the fourteen years from 2005 to 2019 belong to the golden age of VC, we believe that the next ten years will be a silver age.” Northern Light Venture Partners partner Lin Lu believes that the past vents are obvious, and the future Vent is a fragmented existence, so what investors should do is use a systematic approach to find the opportunity for fragmented vents.
At the Northern Lights “Now Decade” sharing meeting on November 27, Lin Lu analyzed and researched intergenerational differences from a unique perspective, sorted out investment directions, and looked forward to the next decade to share with you.
Intergenerational Opportunities
Northern Light Venture Partners Lin Lu
In the past, there were many air outlets, most of which were the Internet in the late 1990s. This outlet created three major portals and BAT. This year AT is a giant company. In 2007, the birth of the iPhone as a sign of the era of the mobile Internet has created headlines, Meituan and Didi, as well as companies such as Kuaishou and Momo. There are many small tuyeres, such as the sharing economy, AR / VR, AI, blockchain, etc., but these tuyeres have not brought huge opportunities like the two previous tuyeres. The sharing economy is involved in huge investments, but there are few successful cases. In addition to AI, there is no systematic opportunity for face recognition, and AR / VR is even worse. Suddenly everyone began to lose confidence in these air outlets.
In the past two years, entrepreneurship and investment have become cold. Some people call it the capital winter, but this winter is not a problem of no money. From the beginning of 2004 to today, VC has indeed brought great benefits to LP in the past 14 years, so LP is at least USD baseKing ’s LP has enough money and is willing to continue investing in the VC industry. However, everyone has been worried about the future entrepreneurial opportunities. The most frequently asked questions by LPs recently are: Where are the future opportunities for the consumer Internet?
Qualified VCs need to bring 3 times the return to LPs during the 10-year life cycle of the fund. In the past, the return from consumer Internet investment may be 10 times, 20 times or even 100 times, because the return of individual projects can make up for the failure of most projects, and VC’s support for innovation will be a very open mindset It is very important, because those zero to one projects have a very high failure rate, and VC’s unflinching support, these projects that can truly change China and even the world can survive. If opportunities like consumer Internet disappear, it will be a structural change for VCs. If an innovative project is successful, it can only bring 4, 5 times the return to VC. VC needs to ensure the success rate of the project. The failure of any project is likely to reduce the limited investment income. Then you will be very cautious when investing, and your acceptance of innovation will decrease. Therefore, the venture capital investment of the consumer Internet is very important. We should find out what opportunities the consumer internet has, in other words how to find a new outlet.
In the past 14 years, we can call it the golden age of VC. With the gradual closing of mobile Internet venture capital, we can say that the golden age of VC is over. But science and technology will still develop a strong impetus in China in the future. If we believe in the power of science and technology, at least we will enter the silver age. Unlike the Golden Age, there are not so many obvious huge vents in the Silver Age. If the vents are fragmented, then what we should do is use a systematic method to find opportunities for fragmented vents.
It is necessary to study the cause of the downwind outlet. Physically the pressure difference is the cause of the wind, then the pressure difference is caused by the change in climatic conditions in a certain place. Then go back to the real world to find the next outlet, then you should find where the change is. Change is a continuous long-term process. As long as you observe carefully, you will be able to find clues in the middle. Finding the changes can find the vent and even predict the vent. In this sense: the tuyere is the largest entrepreneurial tuyere.
Look again at the impact of the economy on different generations in China. I have marked several important events on the map. China began to implement reform and opening up in 1978, the Internet entered everyone’s field of vision in 1997, the Internet began to develop rapidly after 2000, China joined the WTO in 2001, the iPhone started production in 1997, and mobile The real explosion of the Internet began in 2010. Since 1978, the total GDP of China during the 40 years of reform and opening up has drawn a very beautiful upward curve.
We put the different stages of the previous analysis below, focusing on the overlap between the green parts of different generations and the rapid economic growth. It can be clearly seen that the post-60s generation is the one that really began to enjoy the rapid economic development, but the economy has entered the middle-aged period; the post-70s and post-80s have fully enjoyed the dividends of the economic take-off stage. More importantly, the post-70s enjoyed the benefits brought by the Internet economy, and the post-80s enjoyed the dividends brought by the rapid development of mobile Internet. We will discuss this effect later.
Attention to the yellow part. The childhood and youth of the 60s experienced a relatively backward period of economic development in China. The childhood of the 1970s experienced a relatively backward phase of the economy. Then the economy of the youth began to develop, and the economy started after the birth of the 80s. With the rapid improvement, we began to live in a relatively affluent environment in the 1990s. The post-00s generation has been born after the economic take-off. The impact of different affluent environments on people is very huge. If you have been living in a more difficult economic environment, you will be relatively frugal. For example, my parents are from the 1940s, and it is difficult for them to spend money. Providing elderly care services for them today will be difficult to do except for the health care business driven by death fear. The memory of life in the 1960s when he was young is indelible; the memory of life in the 1970s is the four emperors of Hong Kong. In an open environment, economic developmentBetter choice. At the same time, the rise in house prices and the increase in other living costs have made them pay more attention to the cost-effectiveness of products, which has given the soil for domestic brands to grow. At the same time, the past foundry has created mature production capacity, and the reduction in exports caused by trade friction has given domestic brands a good supply chain foundation.
The third opportunity is the opportunity for commercial healthcare and pension insurance. The fastest growing industry in the past year is the insurance industry. When the economy is developing at a high speed, there are many ways to invest, such as buying a house, such as stock trading, such as investment. If the economic downturn stabilizes at low and medium-speed growth rates, the relatively wealthy generation of 70s and 80s need to think about how to maintain the quality of life after retirement. Commercial insurance, which used to be relatively small in the past, will become an option. The dividend of the policy may come from the opening up of the insurance industry.
The fourth opportunity is the rise of home fitness sessions. Compared with 17% of people in the United States who have long-term fitness habits, only 0.7% of users in China have a fitness payment habit and have a good room for growth. There was a saying in the past that there is no time to be rich and no money to describe the fitness industry may be a very appropriate word. Because the relatively wealthy 70s and 80s were busy picking up money in 996. If the economy no longer develops so fast, these two generations may slowly have time to relax, and they will start to pay attention to their physical conditions, and fitness will become a way of life.
The fifth opportunity is an opportunity for the next decade, 6People in the 1970s and 1970s have gradually entered the retirement age. Compared with previous generations, their consumption habits will be very different, and they have enough money. Perhaps today’s post-40s and post-50s are growing in an era where the economy is relatively less developed. Consumption such as square dance will be a frugal lifestyle choice. Maybe after 60, 70 will choose a more comfortable retirement.
The opportunities brought by China’s intergenerational gap are not just the five opportunities mentioned above. Opportunities brought by intergenerational differences are like many trains with similar personalities but very different personalities from other trains. At different stations, they have different needs. Your need to serve one passenger may not meet the next passenger. Demand, this difference in demand brings the possibility of change. You seize the business of one passenger and then deduce the demand of the next passenger, then you are likely to grow in this changing market. This is a unique opportunity for China in the future.
The above content just provides a way of thinking for everyone, and does not want everyone to remember the result of the derivation. The derivation may be wrong, but the way of thinking can be iterative.