Faced with today’s dilemma, so-called investors should be ashamed

Faced with today’s dilemma, so-called investors should be ashamed

From Didi to the Internet, from online education to education, many people have been living like years and sleepless all night.

During this period of time, there are always some fragmented images appearing in my mind:

  • On April 13, 2015, in the presidential suite of the Westin Hotel reserved by Ganji.com investors, besides the lawyers of both parties, at the negotiating table, there were 58 Yao Jinbo, CFO Zhou Hao, Yang Haoyong and COO Chen Guohuan of Ganji. And 7 to 8 investors from Ganji.com;
  • In the second half of 2018, promising investors flew to Changsha, tens of billions of capital gambled on community group purchases, and then the “Thousand Regiments War” reappeared and the craze swept across the country.
  • In the last week of 2020, several top online education companies have raised more than 6 billion U.S. dollars in rapid financing. Not long after, it was revealed that four online education institutions had hired the same actor to pretend to be an English/math teacher to do information flow advertising for their endorsement…

These fragments circulate in tandem, converging into several difficult questions: Why has the Internet, which we are so proud of, come into the predicament it is today? How did disorder and monopoly come into being? As entrepreneurs, I believe that none of the founders is willing to be frightened day by day, let alone take the initiative to let their child-like company go to an end . Then what mysterious force drives them to make those incomprehensible god operations?

Maybe you can deduce a few steps later today, and turn your attention to investors who have left a lot of feathers but are alone. As the source of the “new economy”, VC/PE investors seem to have forgotten the original intention and basic logic of investment, and are actively or passively engulfed in the endless profit-seeking space, promoting one big merger after another. It provides ammunition for the money-burning battle again and again and weaves one story after another to the world.

To put it bluntly, investors should be ashamed. Are investors who shouting for long-termism and value really making friends of time? Does the exquisite escort who bayonet inward with funds and terms as weapons really grow up with entrepreneurs? They have the answer in their minds.

1. What is the original intention of capital?

The logic of capital operation has already deviated from the original intention.

The emergence of venture capital and private equity funds is due to the fact that entrepreneurs lack the necessary funds to start companies in the early stage, and capital helps companies grow rapidly by investing in companies with good business models and high growth potential. Capital enjoys the dividends brought by capital appreciation while the enterprise grows. This is obviously a win-win situation for enterprises, capital and society.

But the current thinking is “start with the end”, what can be withdrawn from the investment, what can be withdrawn from the fast casting, and what is with the wind to cast.

What’s even more frightening is that in recent years, the head capitalization and power concentration, the strength of head capital has grown too fast, and the volume is huge. To a large extent, it can not only affect startups, but also affect the entire competition. Road, even relying on its scale advantages and head effects to create new outlets for investment.

An investment manager working for a small and medium-sized institution told Shenxiang: “ We are now a real atmosphere group. Among the tens of thousands of investment institutions registered on the market, only the top 20 institutions that can truly become market participants are. And those big Internet companies. For star projects, otherwise it is too expensive, or else it is not resources to get the share, it is difficult for our small and medium-sized institutions to participate; and for more start-up and relatively high-risk projects, small and medium-sized institutions It is also difficult to vote due to risk considerations.”

When we discuss the Internet monopoly, perhaps the monopoly of capital should be more discussed. Good projects are invested by large institutions, and the money in the market is more willing to flow to large institutions, and their ability to control the market is getting stronger and stronger, and at the same time, the ability to influence the market is also greater, and finally achieves like “God’s creation”. Let the mediocre track take off instantly.

2. Who is defining value?

Zhang Lei, who has always been low-key, wrote in the preface of the book “Value”: “True investment has one and only one criterion, that is, whether it is creating real value and whether this value is beneficial to the overall prosperity of society.”

The words are true, but the actual operation of many investors is under the guise of value, chasing wind and short-term benefits.

For example, for chips, the Huawei incident in May 2019 greatly increased the demand for domestic substitution. Many leading semiconductor companies in the secondary market continued to improve their performance, so the wave of semiconductor market at the end of 2019 began to rise all the way to 2020. Half a year.

As a result, in the primary market, “50% of institutions are looking at semiconductors.” A head of the FA technology sector, who did not want to be named, told the “capital detective”: “There is a project where investors even the founders I’ve never seen it, and sent 400 million TS (Investment Intent) directly . More investors are worried about not getting good projects.”

Thinking purely from the perspective of capital, the stock of listed semiconductor companies is frantically lifting the ban; lifting the ban means the possibility of reducing holdings, and reducing holdings means that more stocks are available on the market. The fixed increase will further increase the supply of stocks on the market; in addition to the listed semiconductor companies, there are hundreds of semiconductor companies waiting in line for review and listing, which is equivalent to a lot of new supply on the market in the future. When the chip projects invested by investors in the primary market become “mature,” the secondary market is bound to be another scene. When the valuation is upside down, it can only say “deserve it” to short-sighted investors.

And thinking from the perspective of value, how many targets that investors are chasing crazily now really solve the card neck problem? How many investors really understand this industry?

There is an episode. At the beginning of this year, when we were working on a chip-related content, we came into contact with a chip investor. We thought we could ask for help, but after chatting, we found that his understanding of chips is not as good as that of a fresh graduate. The 20-year-old liberal arts students dodged the problem and talked over and over about some empty words such as “the chip market is huge”. (Lao He from Lenovo Ventures, a CTO background, takes two months to do research every year. In contrast, how many investors come with open mouths?)

“VCs are swarming to invest in PA RF chip startups, and in the end, the gross profit margin of PA chips became 20%. It was originally a high-tech. It is a sad thing to achieve 20% gross profit.” Walden International Partner Wang Lin Said at a semiconductor venture capital forum.

And Yang Chonghe, the founder of Lanqi Technology, made it clear in an interview with China Investment Network: “The gameplay of Internet investment now affects chip companies. It can raise a lot of money in many rounds in a short time, but the characteristics of each industry are different. The chip industry is not a fast-growing industry like the Internet. We must respect the objective development laws of enterprises. For the chip industry, it has its own development laws, and it is not easy to copy the Internet’s money-making solutions .”

He is right. Not all industries are the growth logic of the Internet, and not all industries need capital to disrupt the situation to be vigorous. Capital should be the follower of value, not the definer of value.

3. Wrong at the beginning?

The strong power of capital is unavoidable. Under this pressure, the will of entrepreneurs and the order of the market appear vulnerable.

May wish to recall the online car-hailing war that year: On January 10, 2014, Didi announced the opening of WeChat payment in 32 cities. The use of WeChat payment will reduce the passenger fare by 10 yuan and the driver will award 10 yuan. Ten days later, “Kuaidi Taxi” and Alipay announced their follow-up. Since then, the subsidy strategy has gradually evolved to limit the number of trips to subsidies. By the end of March of that year, Didi Dache announced that since the subsidy began, its number of users has increased from 22 million to 100 million, and the average number of daily orders has increased from 350,000 to 5,218,300. , The subsidy amounts to 1.4 billion yuan. Although the subsidy per order has dropped by two-thirds from its peak, it still costs hundreds of millions of yuan every month.

After the merger soon, Didi and Uber will start a money-burning war for the second time, and the capital will continue to provide ammunition. Uber founder Travis Kalanick said, “I hope this world is not like this. I prefer to create (Building) rather than always desperately financing (fundraising) . But if I don’t participate in large-scale financing, I will be affected by others. Competitors who spend money to buy shares squeeze out the market.”

The way of heaven is to make up for the deficiencies if there is more damage; the way of man is to make up for the deficiencies if the losses are insufficient; Maybe we were wrong at the beginning. Market share is not obtained by product quality/user experience, but by capital wars. The former requires time and ingenuity, while the latter destroys the dead, and it takes effect immediately.

Faced with today’s dilemma, so-called investors should be ashamed

“Let the Bullets Fly” stills

And this “error” continues. Investors change a place with one shot, constantly creating new outlets.

This year’s catering is not a “re-emergence of routines”. This track that was once forgotten by capital is now loved by thousands of people. A dim sum store is valued at more than 100 million yuan, ramen, noodles, small noodles, noodles ascend to heaven. Investors know how much water and unscientific there is.

Just this July, “Wuye Noodles” in more than 700 stores completed a 300 million yuan A round of financing. What does the 300 million yuan A round mean? Today’s Toutiao’s A round is only $1 million, and JD’s A round is only $10 million. After financing, Wuye Noodles has set the goal of opening “10,000 stores”. Its founder revealed that around 2024, the number of Wuye Noodles stores will exceed 7,000. Ajisen Ramen has been accumulated for decades, and currently there are less than a thousand stores in China.

Of course, there is also Chen Xianggui Lanzhou Beef Noodles, which is valued at 1 billion by Angel Round, and Ma Jiyong Lanzhou Beef Noodles, which is coaxed by Challenger Capital, Xianfeng Evergreen, Cathay Capital, Gaorong Capital, Sequoia Capital and other well-known capital. It was written, I felt a little full before I had eaten. The capital is so crazy that it has forgotten that the reasons for not investing in offline catering in the past were that it was difficult to grow, to scale, to standardize, and to precipitate competitiveness.

We can even foresee now that the future of the catering industry will be like online education, community group buying, shared office, and long-term apartment rentals. The indicators of capital growth will be suppressed, and stores will be opened frantically, money will be lost frantically.

4. Where does monopoly come from?

Is the capital crazy? they do not.

The money invested in burning money can be fully recovered from startups in the future-by making startups the industry leader. If strength alone cannot be achieved, then a strong alliance must be made.

It is not difficult to find that the end of most money-burning wars is the merger of the first and second places, which paved the way for future “monopoly”.

Youku Tudou, Didi Kuaidi, 58 Ganji, Meituan Dianping, Ctrip Qunar, Jiayuan Lily, Ocean Music integrates Kugou and Kuwo…… These big mergers that dominate the headlines are mostly the planning and promotion of investors.

Investors are also willing to share the stories of how they “matched” these rivals. In these stories, they represent the foresight and victory.

When communicating with a well-known investor a few years ago, I asked him: “What exactly are your VCs investing in?”

He thought for a while and replied that it might be an opportunity to create a monopoly. The monopoly here is based on the market share of a certain industrial chain link. Monopoly is also a guarantee for the longevity of large companies. Monopoly companies based on high market share can set industry standards, have higher profit margins, and thus have the same advantage in future competition.

Five, the past is not as good as smoke

Those in the past are not to be admonished, but those who come can still be pursued. Now to sort out the list of what top investment institutions “escape from the top”, it seems to be of little significance. But the past is not like smoke. This heavy weight shouldn’t be dissipated in Yu Minhong’s tears and the so-called bitter smile of the so-called investors’ leeks.

Returning to the original topic, investors are right to invest in “growth.” It’s just that the method of judging “growth” and the means of promoting “growth” have gone wrong. This led to a series of forks and detours behind.

Of the ten birds on the tree, the hunter killed one and a few are left. In this silly joke, I think it is not the hunter who kills the birds.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/faced-with-todays-dilemma-so-called-investors-should-be-ashamed/
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