In the to B field, we are optimistic about the multiplier effect of technological innovation, providing B with a value from 0 to 1, and users can clearly recognize that this is the value you provide him.
Editor’s note: This article is from “Creation Partners Capital” , author: 24 new sound.
From the first year of the enterprise service investment in 2015, the To B field represented by enterprise service has ranked first in the investment and financing data of various industries in the primary market for five consecutive years. The pneumonia epidemic has driven many companies in the To B sector to usher in new growth opportunities.
In the field of To B, Zhou Wei led the team to excavate Venus Star (Shenzhen SME board listing: 002439), Youluoke (listing code: 837110), Guozhengtong, Youpaiyun, Limei Technology , Second hand system, Shukun Technology, Yunhu Medical and many other well-known cases. What logic and observations does Zhou Wei have for investment in the TO B field? The following is the specific content:
“Team hunting” style selection team
Yao Yi: Generally speaking, there are two ways to invest in VC investment, one is pitching and the other is pitching. Each of these two styles has its own advantages and disadvantages. You have invested in a lot of unicorn companies and created a unicorn success rate of 30% in 10 years. Do you or Genesis Partners Capital pay more attention to the track or players in terms of investment? What is your investment logic?
Zhou Wei: In simple terms, the track is very important, but the players are more important. I have been in the investment industry for 13 years. Prior to this, I had 11 years of entrepreneurial experience and worked as two startups. From 2007 to 2017, in the 10 years of KPCB, my thinking logic has also evolved. Until 2010, after I led the investment of KPCB China Fund TMT, I formed a relatively unique style of play, which is more like my approach in the entrepreneurial stage of the enterprise. We call this the “team hunting” style. Team He will concentrate his energy and work in concert to work hard on the selected target. After we invested in CreditEase, a large number of companies imitated CreditEase came to us.It is profitable, but we tend to support the only investment company and use all resources to help it grow. I think for most of the funds, choosing is not so difficult for the track. There are different approaches after choosing the right track. One approach is to invest a few more to obtain a higher certainty rate of return. We have done a very good job of choosing the right winners. Like you said, there is a 30% success rate for unicorns. It also depends on whether our investment is a selection type. In the final analysis, the right team is selected.
Impressive from 0 to 1 enabling platform
Yao Yi: It is very important to choose the right person after the right track. Genesis Partners Capital has also invested in many well-known projects in the field of enterprise services, some of which are universal and some are vertical. Among the two types of companies, from the comparative perspective of enterprise-level service companies in China and the United States, What type of companies are you more optimistic about the potential of? If it is vertical, what track do you like?
Zhou Wei: I have been investing for 13 years. Before I started my business, I was also in the field of corporate services. China and the United States have very different investments in enterprise-level services. In the United States, To B’s investment is a huge field. It started to make a lot of money for VC 10 years ago. But in China, the To B market is still in the early stages, and SMEs are not willing to pay for the provision of insignificant value. Enterprises want to make money must do customized services for large enterprises on a universal basis. This model is easy to make money, but it is difficult to scale, because you have to readjust, deploy, and communicate with each new environment.
Personally, I am known for investing in platforms, and of course I prefer platform companies. Once the platform becomes a platform, its vitality and survivability will be very strong. I hope this company is placed in the cloud, and everyone uses the same criteria to choose modular functions, not to be customized because of very specific special needs. This is the most perfect plan, but in China this kind of plan is difficult to charge. Therefore, many enterprise service companies do customized services for large companies, and eventually become project-based companies, and it is difficult to become a long-term sustainable business model. If a platform-based business model, it is difficult to make money. In China it is a dilemma. I can only hope that in the future China’s To B market will change as quickly as To C consumer and content markets, and everyone has the willingness to pay.
Yao Yi: As a standardized platform company, When should charges be made to avoid losing customers or the failure of enterprises due to broken capital chains? Do you have any suggestions at this time?
Zhou Wei: The choice of this time point is not based on your starting point, it depends on the user ’s acceptance and stickiness of the service, And the thickness of value provided by the enterprise. Or go back to some old questions-what value do you provide each other? Is it hard for the other person to leave your service? If you do 85% -90% efficiency improvement, it is difficult to receive money, but if you can empower the enterprise from 0 to 1, the value of the value is very large. As long as there is a lot of value provided, the service provided is very special, very sticky, the cost of migration is very high, and there will be a great loss without your service, of course you can charge.
In the final analysis, it is difficult for companies in the enterprise service field to make products with great value-added, and everyone is competing with each other. Compared with 10 years ago, the market has made great progress, but it is not yet time for quantitative changes to cause qualitative changes.
Yao Yi: From the perspective of demand, technology and market environment, what kind of market do you think is a mature market? You will choose to consider entering into it Some good projects to invest?
Zhou Wei: Demand brings innovation. Recently, Square in the United States has become very popular and has been hailed as “upending the American credit card industry.” In fact, as early as when I started my business in 1999, my team and I designed a customized battery with a credit card slot on the Motorola flip phone, and cooperated with mobile SMS channel communication to complete the mobile payment function. Cooperation to promote the use of merchants in various regions of Sichuan. Unfortunately, the mobile data channel was insufficient and unstable at that time, and the problem of lost transaction data packets occurred repeatedly, which ultimately prevented large-scale commercial use. At that time, neither the demand nor the entire technical environment was ready, the user’s mentality was not completed, and he did not realize the possibility of facing such losses.
When entering an industry or investing in an industry, it is necessary to analyze whether the key elements are all relatively complete and whether they are supported by the ecological environment. Of course, someone must determine the ambition of Shengtian, but one cannot completely ignore the integrity and competitiveness of the entire ecological environment.
Yao Yi: As you mentioned before, the digital transformation of traditional enterprises is a promising direction. This market is large, but it also involves many fields and needs, such as the digitalization of traditional retail enterprises. Transformation, digital transformation of real estate companies, digital transformation of manufacturing companies, and digital transformation of the medical industry all have different needs. What kind of entrepreneurial direction are you most optimistic about? Is it a general-purpose enterprise service company that empowers the transformation of traditional enterprises, or a vertical enterprise service company?
Zhou Wei: I think that the current corporate services in China are all vertical circuits. GM means that everyone can use it within the track and in the industry. The possibility of common use across tracks is still too early. Returning to the track, the standard and general flatFor Taiwan-type products, it is difficult for a product-oriented company to make a profit.
Customized product development for enterprises is something I did more than 20 years ago, and it is too old. This is a very good business and can be a profitable company. Twenty years ago, such a company was in the financial industry. Every province has it, and even each provincial capital city has a few, and each year ’s income is much larger. Tens, hundreds of millions. But this does not mean that these companies can grow bigger and grow longer. We are focusing on large platforms and companies that are long-term and have a long-standing foundation. So no matter how difficult it is for general-purpose and platform companies to profit, I still firmly believe in this direction.
Using technology to achieve the multiplier effect
Yao Yi: One of the digital transformation is medical digital construction. There is a lot of investment in this direction of Genesis Partners Capital, such as Shukun Technology and Yunhu Health. Especially in this epidemic, Shukun Technology has developed a new coronary pneumonia AI system that has been used by many hospitals in Wuhan. From your point of view, what is the investment logic of service companies in the medical industry? What aspects of digital transformation in the medical field are you most optimistic about?
Zhou Wei: Digital healthcare is our investment focus and will continue to invest in the future. First, we believe that a general direction is that the entire venture capital circle in the past 20 years has mostly been connected, using the Internet to connect people and people, things and things, business and commerce, people and commerce. We believe that a new stage has now been entered, and technology can finally play a role in solving the imbalance between supply and demand faced by various industries. This is a problem of different key processes.
In the field of digital medicine, 5 years ago and 7 years ago, Internet companies did online diagnosis and registration. But as of today, although some companies are very valuable, they have not 100% proved that their business model is very successful, and there is still no one that is recognized as a super successful company. Because the medical industry is useless to establish connections, the resources of good doctors and good hospitals are far from enough to meet everyone’s needs. Under the circumstances that are not enough, it is worthless to establish connections. In the long run, we believe that the technology is now ready to multiply some scarce resources.
What we want to invest is to use the technology of TMT to help the medical industry solve the supply problem and rebalance the unbalanced medical resources. An AI-supported imaging diagnosis company represented by Shukun, after assisted by AI diagnosis and treatment, can allow very ordinary and inexperienced young doctors to make imaging diagnosis of the same level as the best doctors of Concord. Shukun has now been used in many domestic hospitals, which has proved its accuracy very clearly. It is equivalent to cloning an excellent doctor with technology to achieve a multiplier effect.
In addition, we pay more attention to helping the medical industry to allocate and rebalance imbalanced resources.Weighing mode. For example, most clinics can only achieve simple functions, forcing many patients who do not need to go to the hospital, resulting in a shortage of hospital resources. Yunhu Health is building a SaaS cloud service and offline logistics team for the clinic to help the clinic retain patients, generate income that was not originally available, and retain income that would otherwise be lost to the hospital; at the same time, the hospital will not cause medical resources to run.
Yao Yi: The impact of this pneumonia epidemic on all walks of life, especially the TO B industry, is short-term or long-term? Chuangshi Partners Capital has invested in Food Enjoyment and Dingdong Classes. They represent local life and online classes. From your perspective, will there be new changes in these two areas?
Zhou Wei: I think there will be deeper influences and changes in these two fields. Shixianghui is a social fresh food supplier, Wuhan is their key city. During the epidemic, the food enjoyment played a very important role. The Wuhan government listed them as the only fresh service company among the 7 different industry-supported companies in the government, and they helped the government achieve fresh home. At present, the community coverage rate of Food Enjoy in Wuhan has increased to 15%.
The impact of the epidemic on consumer psychology and behavior is long-term. First, the younger generation is more and more reluctant to go to the vegetable market. After the epidemic, everyone will have a sense of avoidance of the crowded supermarkets and reduce the number of crowded closed places. Everyone will make more use of fresh e-commerce, and social e-commerce is the most perfect solution. Second, the younger generation is increasingly inclined to use simpler ways to cook, which brings the possibility of deeper fresh e-commerce services. Third, in the future, Chinese cities will definitely clean up the vegetable market on a large scale, and standardized and hygienic fresh food services will become just needed. So there is still a lot of room for development in the future.
In the field of education, in my 13 years as a VC, Internet education has been booming almost every two years, but no successful companies have appeared before 2015. We believe that today’s online education model is a matter of willingness to pay compared to 10 years ago. Today’s post-90s willingness to pay is much higher than in the past 80s and 70s. In terms of product form, moving offline offline is the 1.0 version of online education. Although it solves many problems, it is not a fundamental solution. We still hope to see the multiplier effect of technical solutions. Only the more value it provides, the less irreplaceable it is.
Dingdong Classroom is using AI to solve the high cost of online class. They split the teacher ’s response to the child into hundreds of possible scenarios, such as the child ’s good reading and praise; the poor reading and encouragement, come again; do n’t concentrate on reminding him … all photographed, use AI to analyze the child ’s status . When the granularity you make is fine enough and mature enough, it is difficult for young children to find out that it is not a real person who talks to him.
Yao Yi: What is the logic of domestic SaaS valuation? From the perspective of investors, you value Saa mostWhat are the core operating indicators of S Corporation?
Zhou Wei: The valuation of early startup projects is hard to say. I think it can be based on the expectations of the future, but the premise is that this is a very good team, because the market is a winner-take-all, and ultimately only one or two companies can survive. What do you do in the future will give you a valuation framework, but everyone in the early projects should not be overly optimistic.
The core indicator of SaaS companies, I think one is user stickiness, or the cost of switching platforms; the second is the value provided. This value also needs to be distinguished. The value added outside its original value chain is still the value dug out by reorganizing the value distribution method on the original basis. The most perfect is of course the high stickiness and the very high conversion cost. It does not need to compete violently with the existing system. It provides additional value, and the user can clearly recognize that this is the value you provide him.
About Genesis Partners Capital
Creation Partners Capital is an early VC. Former KPCB China managing partner Zhou Wei led the establishment of KPCB China ’s complete TMT investment team ten years after managing top dollar funds. The historical management scale exceeds 7 billion RMB, focusing on cutting-edge technology, industrial Internet, and artificial intelligence.
During the KPCB China Fund period, the team invested in 29 TMT projects and 10 of them grew into unicorns, 4 of which brought over 100 times returns and 1 brought 500 times returns. During the period of Chuangshi Partners’ capital, the B-round investment companies listed IPO within 18 months.
The team early discovered and invested in JD.com, Yixin, Rong360, Venus Star, Xia Technology, Tantan, Yachuang Group, JD.com, Himalaya, Wanjia OneLink, PlayMe Mobile, Bingjian Technology, Kuaicang Companies such as Smart, Cool Wow Robot, Yue Running Circle, Yunhu Health, Shukun Technology, MetaAPP, etc.
Yao Yi: It is very important to choose the right person after the right track. Genesis Partners Capital has also invested in many well-known projects in the field of enterprise services, some of which are universal and some are vertical. Among the two types of companies, from the comparative perspective of enterprise-level service companies in China and the United States, What type of companies are you more optimistic about the potential of? If it is vertical, what track do you like?
Zhou Wei: I have been investing for 13 years. Before I started my business, I was also in the field of corporate services. China and the United States have very different investments in enterprise-level services. In the United States, To B’s investment is a huge field. It started to make a lot of money for VC 10 years ago. But in China, the To B market is still in the early stages, and SMEs are not willing to pay for the provision of insignificant value. Enterprises want to make money must do customized services for large enterprises on a universal basis. This model is easy to make money, but it is difficult to scale, because you have to readjust, deploy, and communicate with each new environment.
Personally, I am known for investing in platforms, and of course I prefer platform companies. Once the platform becomes a platform, its vitality and survivability will be very strong. I hope this company is placed in the cloud, and everyone uses the same criteria to choose modular functions, not to be customized because of very specific special needs. This is the most perfect plan, but in China this kind of plan is difficult to charge. Therefore, many enterprise service companies do customized services for large companies, and eventually become project-based companies, and it is difficult to become a long-term sustainable business model. If a platform-based business model, it is difficult to make money. In China it is a dilemma. I can only hope that in the future China’s To B market will change as quickly as To C consumer and content markets, and everyone has the willingness to pay.
Yao Yi: As a standardized platform company, When should charges be made to avoid losing customers or the failure of enterprises due to broken capital chains? Do you have any suggestions at this time?
Zhou Wei: The choice of this time point is not based on your starting point, it depends on the user ’s acceptance and stickiness of the service, And the thickness of value provided by the enterprise. Or go back to some old questions-what value do you provide each other? Is it hard for the other person to leave your service? If you do 85% -90% efficiency improvement, it is difficult to receive money, but if you can empower the enterprise from 0 to 1, the value of the value is very large. As long as there is a lot of value provided, the service provided is very special, very sticky, the cost of migration is very high, and there will be a great loss without your service, of course you can charge.
In the final analysis, it is difficult for companies in the enterprise service field to make products with great value-added, and everyone is competing with each other. Compared with 10 years ago, the market has made great progress, but it is not yet time for quantitative changes to cause qualitative changes.
Yao Yi: From the perspective of demand, technology and market environment, what kind of market do you think is a mature market? You will choose to consider entering into it Some good projects to invest?
Zhou Wei: Demand brings innovation. Recently, Square in the United States has become very popular and has been hailed as “upending the American credit card industry.” In fact, as early as when I started my business in 1999, my team and I designed a customized battery with a credit card slot on the Motorola flip phone, and cooperated with mobile SMS channel communication to complete the mobile payment function. Cooperation to promote the use of merchants in various regions of Sichuan. Unfortunately, the mobile data channel was insufficient and unstable at that time, and the problem of lost transaction data packets occurred repeatedly, which ultimately prevented large-scale commercial use. At that time, neither the demand nor the entire technical environment was ready, the user’s mentality was not completed, and he did not realize the possibility of facing such losses.
When entering an industry or investing in an industry, it is necessary to analyze whether the key elements are all relatively complete and whether they are supported by the ecological environment. Of course, someone must determine the ambition of Shengtian, but one cannot completely ignore the integrity and competitiveness of the entire ecological environment.
Yao Yi: As you mentioned before, the digital transformation of traditional enterprises is a promising direction. This market is large, but it also involves many fields and needs, such as the digitalization of traditional retail enterprises. Transformation, digital transformation of real estate companies, digital transformation of manufacturing companies, and digital transformation of the medical industry all have different needs. What kind of entrepreneurial direction are you most optimistic about? Is it a general-purpose enterprise service company that empowers the transformation of traditional enterprises, or a vertical enterprise service company?
Zhou Wei: I think that the current corporate services in China are all vertical circuits. GM means that everyone can use it within the track and in the industry. The possibility of common use across tracks is still too early. Returning to the track, the standard and general flatFor Taiwan-type products, it is difficult for a product-oriented company to make a profit.
Customized product development for enterprises is something I did more than 20 years ago, and it is too old. This is a very good business and can be a profitable company. Twenty years ago, such a company was in the financial industry. Every province has it, and even each provincial capital city has a few, and each year ’s income is much larger. Tens, hundreds of millions. But this does not mean that these companies can grow bigger and grow longer. We are focusing on large platforms and companies that are long-term and have a long-standing foundation. So no matter how difficult it is for general-purpose and platform companies to profit, I still firmly believe in this direction.