There was a chip company valued at 1.4 billion, I did not invest, and now it has become a 250 billion dollar giant

Investing in a company is the same as getting married. You want to marry someone but the bride price is too expensive and you can’t afford to pay it.

There was a chip company valued at 1.4 billion, I did not invest, and now it has become a 250 billion dollar giant

What is the extent of the semiconductor investment fire?

Some investors said that the dollar fund began to drive a tank into the field; some investors said that the water projects are basically invested.

some investors said, feel that the project is getting more and more expensive, originally wanted to put the main target on the 500 to 1 billion valuation of the project, the results of looking around, found that at least 1 to 2 billion valuation.

Some investors said that they also feel very confused, originally thought that the investment in 2020 has stopped a bit, this year XPU and out of a bunch of financing, bubble bubble bubble, what the project dare to big billions or even tens of billions of valuations.

even some investors flirted that this year compared to last year, the overall valuation level growth is more, there are many good companies, but as with marriage, want to marry someone but the bride price is too expensive, can not afford to pay the bride price.

Even some entrepreneurs have said that the hot chip investment not only exists in the primary market, the secondary market is as hot as ever, the money-making effect is very obvious, Goldman Sachs organized activities, originally only wanted to do a simple demonstration, the results were asked to speak directly to an hour not to mention, but also all the foreign investors in various discussions and scramble ……

Investment institutions on the scene to share a lot of real journey, such as someone recalled in the 1.4 billion valuation when looking at Weir shares, but because of a small gap in performance did not invest, “missed the opportunity to earn 100 times. But the good thing is, after the chip giant grows up, it still provides many opportunities for industry chain integration in the segmentation track.

Under the status quo of how hot “The Speed and Passion of China’s Core” is, perhaps in the closed-door salon of this series of projects in the 2½ Salon, many guests can provide a direction for thinking about the status quo.

Question 1: What are the investors thinking?
Xiong Wei, partner of Linxin Investment, mentioned that in the previous seven or eight years, there were so few investors investing in semiconductors that a table could be filled and hands could be counted, especially before the launch of the science and technology innovation board, there was gold everywhere, but the capital was relatively cold. Therefore, in Xiong Wei’s opinion, it may show a slow replacement process, but after the launch of the science and technology board, the whole investment environment has completely changed, and the heat is up at once.

Therefore, Wang Zhi, a partner of Weihao Chuangxin, obviously feels that the projects are generally more expensive now, and it is more and more difficult to find projects that meet the previous valuation perception. Moreover, because the efficiency of information dissemination in the era of mobile internet has increased a lot, once the head enterprises of each track emerge, they will be widely known soon, which makes the investment decision a bit difficult.

Wang Wenrong, a partner of Dacheng, said that if it is an early stage project, it is hoped that the subsequent return can be more than ten times; if it is a mid- to late-stage project, it is hoped that the future can grow to a market value of more than ten billion, which is the current standard for screening projects; combined with the current market environment, Dacheng has also set up a specialized team and fund internally, which can quickly make investment decisions on projects in this track.

Of course, Guo Ke Jia He Fund partner Lu Jia Qing also proposed that, on the one hand, the semiconductor market is very large, many projects want to survive, but face the valuation is too expensive investors will not buy the situation; on the other hand, many investors worry that the semiconductor investment cycle may only be two years, two years later may be a chicken feather, immediately surplus; also therefore, he suggested that investment projects should be cautious, even if you want to invest, do not invest in too early but to invest in the project of strong certainty, after all, although the valuation is now high but two or three years later may not be able to make money, out of the mix always have to return.

As a professional investor, he is willing to evaluate whether he has the ability to help make up for these deficiencies, assist in the development of the company, tide over the difficulties with the company and enjoy the process of progress together.

This is mainly because, in Wang Fuyu’s view, semiconductor investment bubble but not all bubble, after all, the semiconductor is not like tulips, it is the actual demand and development cycle, even if the capital will become cold in the future, but as long as the right investment, there will always be market demand. Therefore, whether it is winter or summer, the impact is on the tail of 80% or 90% of the projects, so the selection logic of Hutchison Capital has become very simple: the best track, the first and second best.

As for Zhang Gaonan, the managing partner of Huaying Capital, who just entered the field, he felt something else. He mentioned that in the chip investment, Huaying Capital has just started the layout, but the underlying logic of investment is not the chip itself, but in the process of the ecological layout for the underlying arithmetic of data, 5G and new energy, there are many intersections with the chip industry. At present, the only chip project that Huaying has invested in is Bi-Ren Technology. “The decision to make an investment is also a huge determination, because the valuation is much higher than other consumer projects, and the project will face many challenges and uncertainties in the future. But the mega track mega incremental market does require decisiveness, which also makes me have more reverence and patience for chip investment.”

On top of this investment, Zhang Gaonan is more concerned about the underlying arithmetic of data, related software and hardware, and various changes in the bottom of the 5G industry chain. Of course, he also set three basic principles for this: focus only on the incremental market, segmentation head, and must have a strong technical barriers. Under such a premise, the absolute valuation is not the bottleneck, but the core is whether the project has higher growth space in the next 5-10 years.

In the words of Zhang Gaonan, “As long as the price is within a certain reasonable range, there is enough potential growth and head effect, and there are enough competitive barriers, we are still willing to make a bid.”

Jinpu Xinchao investment general manager Feng Sicheng said that some industrial investment institutions are now more in-depth to the industry chain inside, find some technically strong team, and help them integrate industrial resources, so that can really help the industry now, to solve the relative shortcomings of the industry chain and scarce products, but also in a better time to get biddable. He judged that the large shortage of chips is more of a structural shortage, and these need the industry chain, investment institutions really act together to produce synergy.

From the U.S. dollar fund, Xu Rongfeng, executive director of Wuyuan Capital, offered a more different perspective. Xu Rongfeng said that Five Sources Capital wants to invest in something innovative and revolutionary that will bring new opportunities for other business models.

Therefore, Xu Rongfeng said, he hopes that the entrepreneurs will not be limited by the available funds or the existing market, so that they can not show their talent, and that Wuyuan Capital is willing to accompany these entrepreneurs, regardless of whether they have a halo or not, and what their origins are, and hopes to give these people the opportunity to change the world.

“We seek to see if there is social value in doing this, and whether it can affect a group of people, a generation, or even everyone, that is what we want to do most.” Xu Rongfeng said.

Question 2: What are the entrepreneurs doing again?
Undertaking the value level, Li Xin, secretary of the board and operation director of Yao Xin Micro, said that it depends on how others give you a bowl of rice, how to take it, how to eat it, how to cook it, or whether this bowl of rice is stable or not. Even though the social value may not be there, the economic value is still there.

Yao Xinwei’s idea is to hope that the domestic alternative tickets can lead itself to form a good product back and iterate quickly. In this way, the product can really achieve the parallel of technological value and economic value, and seize the opportunity of the times brought by domestic substitution. After all, the opportunity of domestic substitution is very obvious in the next process of reglobalization.

“We are not quite pursuing the red sea, our biggest advantage is to be able to production-oriented design, as well as the serialization of all products, we hope to feed the blue sea with the red sea, so that on the one hand, thanks to the support given by your investors, and on the other hand, we hope to form a self-cycle. No matter who is rewarded for this bowl of rice, we hope to eat this bowl of rice well.”

Ms. Wu Jin, the founder and CEO of Xunxin Micro, who financed the Pre A round in 2019 and the A round in 2020 and is starting the B round, said that Xunxin has been continuously developing the key core chips of the national neck, and with the continuous development and improvement of the domestic IC industry chain, it also hopes to be noticed by more capital and industry players. After all, when Xunxin can be widely advertised in major media it shows that the independent control of the domestic IC industry chain has really arrived.

XiZhi technology COO Zhang Hong also felt the cold and warm changes in the process of their own business, “I feel the cold and hot of the semiconductor in this process, because this industry will always be affected by uncertain external factors, the current gust of wind to help us, but also brings a great challenge.”

Zhang Hong said that no matter what, the company’s goals and positioning will not change, “We have revolutionary technology and our target market is high-performance computing, such as the direction of AI computing and big data processing. We are currently in the pre-commercialization stage, and strive for the first commercial application of the product can be launched in the near future.”

As for the more cutting-edge brain-like chip, Qiao Ning, CEO of TimeSense Technology, hopes that we do not just know that the bicycle will go on its own, more hope that brain-like technology on the end of the intelligence, the technology taken from the biological level, used on each end, to do the end of the intelligence, and to solve the end of each sensor how to integrate into the processing problem, which is also to the market deliver the problem solved by the prototype.

In Qiaonin’s view, the current smart device terminal relies too much on large computing power, while the terminal sensor type is relatively single. And in the subsequent robot era, such as drones, unmanned vehicles, robots of the bionic intelligence scene, a computing terminal to serve hundreds of different types of sensors. Therefore, on top of the terminal device, a human-like brain is needed to complete end-to-end multimodal sensing information processing in real time, which is the problem that brain-like technology needs to solve.

Xiaohua Xu, Vice President of Finance of HANBO, also observed two interesting phenomena. Recently, when I attended the Semiconductor Summit, I felt for the first time that the entrance of the men’s restroom was so tense that there was even a long queue, while there was no one in front of the women’s restroom, a situation that does not occur in all other venues.

Another phenomenon is that we encounter the same group of people on all occasions, and it is a very small circle of people who play around, so we are very happy that some other investors such as USD fund are joining us.

As for the chip that Hanbo is making, it is providing a total solution of AI+video, which is its chosen entry point.

“Many people ask how big is your market? The whole data center inference chip, the data in 2025 may be 60 billion RMB scale, and the people who buy behind this 60 billion are often the Internet giant companies, they are more accepting for the emerging things. At the same time, because the threshold of entry for AI chips in data centers is relatively high, they will not face a very fragmented and highly competitive situation, so Hanbo has found such a scenario for entry and layout.” Xu Xiaohua said.

Ni Wenhai, chairman of Gammaxin, said that Gamma is in the track of smartphone chip and RF chip, and the benchmark is Jusheng Micro. Now Jiamei has crossed a hill and gone through the most difficult period, the future is a high-speed growth period. “Our weakness is that the company has been doing it for a long time, and not as smart as others, considered more cautious inside the industry. But our characteristics are that the technology is accumulated for a long time, the team is gradually tidy and professional, and there is a high hunger for success. 2020 in March, because of the epidemic many investors are afraid to invest, even the third-tier brands, investment institutions are very cautious. Deep Venture Capital’s Liu Bo total quite discerning, they invested in the 8 reversal after the September and October sales all up, and even some chips in short supply.”

Also therefore, from their own point of view, Ni Wenhai said that the next three years, probably each year can do more than three times the growth rate, so now not too worried about the next two or three years can grow, but in thinking about what kind of blue ocean market Carmax Core wants to do three years later.

“In this industry for so many years, things still have to be done very carefully, it is best to have very landed applications, such as the use of cell phones is particularly large, although the competition is strong, but once solid, is a very good vertical field. System chip, digital chip is more and more solidified, but the RF front-end chip is a very exciting track, it is more and more modes, frequency, bandwidth is also getting higher, so the number of chips add up to quite a lot of shipments. At present, in addition to the excellent performance of Josun Micro in the science and technology board, the second and third place in the market is also becoming very opportunistic.”

Regarding the amount of valuation of the enterprise, Wu Jin said that the valuation is not the most important factor for the entrepreneurs themselves. At present, financing is relatively easier, and many founders feel that doing a high valuation is a success. “But the business to return to its nature, must have a strong profitability, capital comes in only to help push the enterprise forward, can not say that the enterprise to achieve 10 billion valuation even if successful, because it only represents the value of the enterprise and does not really reflect the profitability of the enterprise, so that the 10 billion is false, the real reflection of the success of the enterprise is the product you do in society or What is the value of your products in the society or industry, and what contribution the enterprise can make to the industry or the country.”

Currently in the start of the B round of financing Wu Jin said it will pay more attention to strategic investment, “our business is in a rapid growth phase, the product in the first few years after iterative polishing, now has reached the batch stage. I hope that investors will come in to help us connect with industry and market resources, and through the resources of investors we can match customers more efficiently and quickly occupy the market, which is what I value most.”

Hu Qing, vice president of Pat Byte, also said very honestly, “I do not know how to invest, our whole team is from the industry, so we think every day is how to make the product, how to do a good job of reliability, how to improve the chip yield, and these are no shortcuts to speak of. So how to let you investors earn money? Very simple, we do things well. As an investor, I will vote for myself.”

Therefore, Li Xin said, entrepreneurs ten years ago on behalf of the integrity, reliability, now many entrepreneurs are taking investors’ money in doing, but for more engaged in engineering, technical origin of the team, or in a very cautious attitude to do things. Of course, with their own strength to do well under the premise, certainly still need the help of investment.

“We hope to be able to self-loop, so that when it comes to financing, you can have more and broader options, rather than financing for the sake of financing, and not because there is no money on the account to finance, we instead want to see if there is a corresponding help, as well as the possibility of other in-depth cooperation.”

In conclusion, Ni Wenhai concluded, “We should not be so anxious, do not feel too good about ourselves, but also do not be pessimistic, do it steadily, and operate solidly, because the trend of the times is very favorable to us, and time is on our side. The whole investment, the whole flow of money will encourage hard technology, we do it well, do not rush, do not be impatient.”

Question 3: What kind of cases should be invested in the end?
And after the enterprise, in fact, more institutions should consider is, under the status quo, in the end, how else to invest in the case?

Liao Chengzhou, Managing Director of China Merchants International Capital, said, “We can only say that we consider how to balance, to be clear about what can be done and what can not be done, this discipline must be adhered to, which is also known as the unity of knowledge and action. Many times, there are things that we all know are wrong and unreliable, but for various reasons still do, which is the same as not knowing; we have a strict Stop doing list. for example, do cloud big chip projects, both inside and outside the project, absolutely do not touch.”

What is the reason? Chengzhou Liao mentioned that because he is from the industry circle, the perspective and logic will be different when judging the project. “For example, why is the cloud-based big chip mentioned earlier resolutely not touched? The logic lies in: cloud big chip is good to do? The big chip itself is a very high technical threshold, great investment, and the tool chain ecosystem, application scenarios are highly relevant, so this field, there is a demand for large companies are doing their own, the rest of the market, not to mention how your things do, how do you use the NV ecology while going to compete with NV?”

However, Wang Fuyu said that he partially agrees with Liao Chengzhou’s view, but also partially disagrees, the reason is that the overall environment has changed, the institutions are making money from the cognitive difference, but the cognition of each institution will not be exactly the same.

As for the changes in the external environment now, in the past, semiconductors were global semiconductors, customers were global, suppliers were also global, and companies competed with each other to see the global competitive dynamics. Therefore, in the global environment, semiconductor is considered a sunset industry, the U.S. VCs do not even look at the BP.

But now thanks to China’s national luck, China from the second largest economic volume approaching the United States economic volume, this process, for various reasons, the semiconductor market was forced to do a cut, this cut may be tangible barriers, or invisible barriers, but in short, there will be a Chinese internal circulation market, Chinese customers are more willing to find a local supplier, and Lee Capital is also willing to believe that Chinese companies will Hutchison Capital is therefore willing to believe that Chinese companies will have the opportunity to make a breakthrough.

Xiong Wei, on the other hand, said from the basis of his own investment in the project table combing, these years of AI, GPU and other projects have not invested, such as the game AI application scene is relatively narrow, and fierce competition, coupled with Tencent itself to do more, the valuation is relatively conservative up. Of course, some other scenarios, the core technology can be done under the domestic alternative, there is its own value of existence, and therefore there will be related investment layout.

“Most of the projects have to look at how much space to do, for example, Lanqi technology currently has a market value of 100 billion, its upside is very small, but to achieve the leading industry segments, but the upside becomes not so important, after all, it did achieve the champion in the field of segmentation technology. Of course, influenced by the science and technology board, after that there will be more companies choose to go public or merge and acquire.”

Wang Zhi also mentioned the year of investment in Weir shares, “when the investment institution I was in looked at Weir, the valuation was about 1.4 billion, but unfortunately the investment committee discussed for half a day, and finally did not invest because of the small gap in performance, missing the big opportunity to earn a hundred times. Weir’s acquisition of Howell is a good example of the combination of local market orientation and Silicon Valley technology capabilities, making Howell’s new products more in line with and even guide market demand. The image sensor track is good, there is still a lot of room for growth, and it brings a lot of investment opportunities from the industry chain integration perspective, we are still relatively lucky.”

Lu Jiaqing also hit the nail on the head, in the investment market, it comes down to the balance of risk and return. Each VC has different ideas, after all, the valuation is expensive or up, the impact factors are very complex, but in the end it is the VC to pay, or to rely on the mountain to eat the mountain.

“I recently invested in Huazin Semiconductor, doing advanced packaging, is the project of the backyard of the Chinese Academy of Sciences. A while ago went to see the Shanghai Microelectronics, I went to kneel and asked for investment share but did not squeeze in. But then, for example, we now want to invest in a certain light source, do is the only light source for lithography, as well as the Chinese Academy of Sciences system under a few exclusive technology components companies, such projects can still be invested in.”

Of course more investors are relatively cautious when it comes to investment. Wang Fuyu to invest in time knowledge technology as an example to illustrate, “At that time we selected six experts, interviewed three hours circuit, but also ran to the University of Zurich in Europe to do a week of due diligence, it was a lot of effort.”

But at the same time, “we hope to be able to invest in some of the world’s best technology, tangibly make some changes. Of course, many companies are now doing the future of the product, so there is no way to benchmark the history, and its 0-1 process is the most difficult, 1-2, 2-3 process is relatively simple, but also bear the greatest risk to do things. Also therefore, to do the investment process, everyone has a yardstick of their own, such as the ideal company scoring how many points, track scoring how many points, the product scoring how many points, a comprehensive down to make an investment.” Wang Fuyu said.

In response, Lu Xiaobao, Managing Director of CSCI, summarized the investment style or strategy of his own organization, CSCI, and called it “bold, but also timid.” What does that mean? It means that when it comes to early-stage projects, especially when it comes to projects that people do not realize but have the opportunity to change the society and the industry in the future, but the windfall has not yet arrived obviously, the investment will become more aggressive.

But on the other hand, CST is more resistant to the windfall. “If this thing is not yet hot, this time to do this thing, must be in this field for a long time, his accumulation, resources, cognition is probably the most reliable in this industry, this time to see the three have the opportunity to find the strongest.”

Lu Xiaobao said that when the windfall once it comes, it may be nationwide and worldwide to look at 300, and even the top 10% cannot be discharged, CST instead will be a bit more cautious. At the same time, assuming that many projects have run to the late side, when revenue and profit have risen, instead, they are less likely to grab such projects.

Wang Zhi also mentioned some subtle changes in the investment of some investment institutions, such as the current industry awareness, especially in RMB funds, not only GPs have knowledge threshold of the semiconductor industry, LPs also do the same, which creates a conflict between the short duration of the current fund and the long project growth cycle of the semiconductor industry. In addition, many companies in the industry chain, also prefer to choose the industrial background of investors, because the latter can bring them more market or other aspects of cooperation.

Zhu Qianqiang, general manager of the new generation of information technology of China Holdings Fund, also suggested that in the next 5-10 years or even longer cycles, the trend of independent and controllable in the semiconductor field is established, and the hot domestic primary and secondary markets also show that people are generally optimistic. For domestic semiconductor companies, is to seize the opportunity, first in China’s market window of opportunity to gain a foothold, and finally grow up in the global-oriented market competition, can seize industrial opportunities, take advantage of the capital dividend, which is also the market behavior, there is no excuse. However, it is also recommended that semiconductor companies more aware of the high threshold of industrial development, long cycle, do not be impatient.

For investment institutions, most institutions are taking LP money to serve the enterprise, depending on which stage you eat, the current market situation, nothing more than more money, less money, which is not the most important. The most important thing is to look at the right industry segment, choose the right enterprise, choose the right team, choose the right point in time to cut into, the limited capital allocation up. The enterprise can grow bigger is the fundamental, see when you are willing to accompany the enterprise growth, willing to accompany how long, in addition to capital, can also help the enterprise which, as to earn twice, ten times, a hundred times, but become after the water to the thing, professional institutions will eventually tend to match the risk of return.

The fundamental question involved, Wu Yu, executive general manager of the equity investment department of Yuexiu Industrial Fund, pointed out that the basis of all discussions on the proposition lies in the fact that investors believe that in China to invest in semiconductors or IC chips in the end how long the cycle of investment? If the cycle is very short, or a cycle is over, those who catch up make money, and those who catch up late just lose money. Without the qualification of investment cycle, it is meaningless to discuss any problem.

In Wu Yu’s opinion, from an industrial point of view, semiconductors in China have at least ten years of cycle to do, under this premise, the investment criteria are more or less the same, summarized in three points: one is to respond to market demand, the second is to improve product supply, and the third is to go to the original technology. Behind the real implementation of how to do, the strategy varies from family to family.

So in the final analysis, Lu Xiaobao said, “the price of the project must be on the core value of the up and down, then, all projects have to ask themselves: how big is the market you are facing, how fast is the growth rate? Is there a pain point in the market you are facing? How strong a scarcity do you have in the end?”

Liang Zhao, vice president of investment of Jinpu Investment, who just switched from the head of semiconductor foundry, said that after arriving at the investment circle, he found that money is pouring into the industry here, but sometimes by investors a speculation, the enterprise immediately became very hot, the valuation went up. Therefore, when investing in chips, although it is invisible and inaccessible, it is still necessary to professionally judge the technical hard strength of the enterprise.

In addition, “the board is up, the valuation is very high, as if it is a feast for capital or semiconductors, but in turn, it needs to be a little rational, it is impossible for all semiconductor companies to be listed on the board. Within a reasonable range, the industry can do well and the investment can also do well, and the two are best balanced and not aggressive. Now many companies are chatting with valuations that are open and not as high as a few months ago, indicating that the industry has started to become rational.”

The 2½ in-depth closed-door salon aims to build a “closed-door heroes’ meeting”, gathering professionals with strong voice at both the industry and investment ends to discuss real industry topics in depth, and to spread the industry insights of the participating guests in depth while focusing on facilitating investment and cooperation opportunities.

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