In the future, China ’s investment direction will change from model innovation to technology innovation. / a> “(ID: lighthousecap), author light source capital. Authorized release.
“This is the best and the worst”, Dickens described the period of rapid development of the British capitalist economy in the opening chapter of The Two Cities. In 1986, China’s first domestic private equity investment company was born. Over the past three decades, China’s private equity market has developed rapidly and has gained a seat in the world. So far, it has reached a trillion-dollar investment scale. However, the more mature the market, the more prominent the opportunities and challenges, and China has ushered in its own “two cities”.
While in the cycle, how should we look at the current situation and future opportunities, recently Jixing, Managing Director of Light Source Capital, accepted an interview with China Fund News and Niutoubang, sharing the core track of the private equity market Investment context and potential opportunities, this article extracts the core information of the interview, enjoy:
This article shares the following thoughts for us:
It is more correct to focus on mining value rather than focusing on valuation
In the future, China’s investment direction will change from model innovation to technology innovation
The investment logic in the TMT field has shifted from simply focusing on the growth of user scale to focusing on how users can monetize.
Q1: In 2019, the VC / PE industry is facing multiple pressures. Not only does the fundraising situation continue to be difficult, but many investment indicators have also reached new lows since this year. How to look at the problems facing the current industry and the future opportunity?
Jixing:
The current difficulty of raising funds in the VC / PE market has not a single impact on the entire investment and financing market. On the one hand, it will have an impact on the investment and financing market to a certain extent. It is directly reflected in more precise capital investment, more stringent project selection, and more careful investment amount. The situation that all companies in a track will receive money should no longer occur. It is believed that following the signs of easing in Sino-US relations, the macro economy has gradually improved for a long time. After the “relaxation” of the “new rules for asset management”, the problem of difficulty in raising capital for venture capital funds will be eased. The inflow of living water at the fund-raising end will gradually dissolve the capital winter, but the future industrial investment needs to be developed steadily to avoid overheating in 2015.
On the other hand, from the perspective of opportunities, challenges will also promote the maturity of China’s capital market, and future capital will be more rationally concentrated in head companies. In the future, it will be more correct for people to focus on digging for value rather than focusing too much on valuation. From this perspective, I don’t think this is a cold winter of capital, and this phenomenon should become the norm.
In the past few years, China has been more about model innovation. In the future, this direction will shift to technological innovation. TO C companies with pure model innovation may face more uncertainty. The empowerment of high-tech industries will become the future. A major development direction, and with the improvement of infrastructure, the application of new technologies such as 5G is likely to create a new wave of technological innovation opportunities. Therefore, despite the current downward pressure on the macro economy and sluggish demand, there are still high-growth projects and opportunities in the direction of industrial Internet, corporate services, education, technology, and medical care.
Q2: The TMT sector has always been a very important part of China ’s private equity investment, and it is also the focus of Light Source Capital. However, the investment logic of each sector is actually slightly different. What are the characteristics of the investment context? What is the investment logic?
Jixing:
The investment context of China’s TMT sector consists of two major lines.
The first line is investment opportunities arising from infrastructure improvements. For example, in the field of instant messaging, QQ used to be the largest instant messaging software for users. With the improvement of the entire infrastructure, the Internet has gradually moved from PC to mobile, users have moved from computers to mobile phones, and now The rise of 4G and 5G has created a lot of investment opportunities in this series of infrastructure changes.
The second line is investment opportunities arising from model innovation. In recent years, we have found that China is completely ahead of the world in terms of overall model innovation. For example, you can go out of China without a wallet or a key, and a mobile phone can help you do everything. Innovation has brought great dividends to investment over the past decade, and has also gathered and cultivated a large number of world-leading products and technical personnel for China’s Internet industry. We believe that in the future, the investment context of China’s entire large area will also rely on the results bred from the investment in the Chinese primary market in the past ten years, and change from model innovation to technology-driven and technological innovation to make new investments. opportunity.
Compared with other fields, a big feature of the Internet field is that it does not have heavy assets. Therefore, in the past, when we invested in the Internet field, we valued the high-speed growth of this company itself., But ignored the industry’s most essential business logic, and there were problems such as inability to generate effective income and profit.
As the market environment changes, the investment logic in the Internet sector has also changed. For example, when we watched the track of social entertainment in the past, we would look at more indicators, such as the value of DAU (Daily Active User, Daily Active User). Many institutions simply and crudely follow the valuation of Internet companies. $ 100 / DAU way to value.
But later we found that the internal business logic of different companies is very different, and their ability to make profits is also different. Therefore, not every Internet company’s DAU is worth $ 100, which affects the determination of DAU value. Another positive correlation indicator is ARPU (Average Revenue Per User, average revenue per user). Under such changes, the investment logic of the Internet has also shifted from simply focusing on the growth of user scale to focusing more on how to use users to monetize and tap more value in the life cycle of users. Comprehensive income, user scale, and enterprise scale are the current investment logic in the Internet field.
Q3: What do you think of venture capital hot words such as “sinking markets” and “intergenerational dividends” and the investment opportunities behind them?
Jixing:
I think that the Internet traffic dividend in the first and second-tier markets has basically disappeared, and China’s sinking market is actually huge. Because China ’s first-tier cities and second-tier cities, whether in terms of total population, geographical area, or degree of development, are actually relatively limited, but there are several outstanding opportunities for sinking the market.
First, people who sink the market will have more free time. Jokingly, they may brush their hands and shake the vibrato during work hours. Now all online product forms, whether it’s video novels or information platforms like Weibo, including today’s headlines, etc., are essentially grabbing everyone’s free time, more free time, and the opportunity to sink the market is sure More.
Second, we found that the consumer desire and disposable income of the third and fourth tier cities are not necessarily worse than those of the first and second tier cities. Because first- and second-tier cities will actually face a lot of pressure on food, clothing, housing, and transportation, in terms of absolute income, it is true that first-tier cities will have more than third- and fourth-tier cities. Is almost the same.
So this is a potential opportunity for the entire sinking market, so we have found the fast hand, and we think that the fast hand can open a big wave of the market in the future. Kuaishou as a traffic giant platform now has more than 100 million daily users, we accompany thisThe company’s initial valuation of 70 million to 80 million US dollars to the current valuation of more than 20 billion US dollars has witnessed the growth of fast hands.
Let’s talk about the “intergenerational dividend”. In fact, the intergenerational dividend includes two ends, old and young. Today, I mainly talk about young people, younger generation, post-95 and post-00 people. We think these people actually have their own characteristics. First, they have stronger personalities. Second, these people live in the era of mobile Internet. They are more accustomed to ingesting more information in a unit of time, so they will prefer to watch content such as comics and videos. Based on this, we found a quick comic. In fact, for the post-95s and post-00s comics, this kind of carrier is not only a way of reading, or not just a platform for reading, but a new cultural heritage. We even think that looking at comics is actually a collection of readings plus MARVEL Marvel. It’s not just reading. It will have more imagination in the future, because not only many users are deposited on the comics, but also a lot of good IPs. In fact, only one or two core IPs are needed. If it can be derived in the end, the concept of China MARVEL can be copied.
Q4: Are there other promising investment areas for the next five or ten years? what is the reason?
Jixing:
In the previous investment process, everyone saw more investment projects related to model innovation and To C projects. For example, O2O has been a very hot concept in the past few years. However, we clearly found that starting from the second half of last year, the Industrial Internet and B2B have become one of the investment areas that we value in the future. Although these fields seem relatively traditional, through high-tech empowerment, the industry’s efficiency has been continuously improved, and there are a lot of opportunities to be integrated and eliminate information asymmetry. . For example, FMCG-related retail, wholesale-related logistics supply chains, and even fabrics and cold-chain fresh produce are changing quietly.
In addition, we also focus on technological innovation in the entire high-tech field. In essence, these things are ultimately reduced to infrastructure, because many of China ’s infrastructure over the past few decades has to rely on imports, such as core chip technology. China will want to rise and develop rapidly in the future. Like Silicon Valley, it must have its own high-tech industrial chain and R & D line. In the future, these things will definitely have a great opportunity in China.