According to international statistics, the three main reasons why the “unicorn” companies failed to come out are the lack of market demand, broken capital chain, and improper management team. For example, Jawbone, the once popular smart bracelet company, Value financing had reached 3 billion U.S. dollars, but it has now closed down. The main reason for its failure is that the short-term advantage of technological application has not been able to open the gap with the right hand, and the rapid occupation of the market requires the implementation of the ability to land.
Zhang Wei also stated that the cornerstone of the cornerstone capital unicorn investment lies in two points: the growth of the company and the rationality of transaction valuation. Among them, the growth lies in three aspects:
The first is the demand side: The unicorn enterprise must have huge real demand in its field, and the market size of the company's market segment is huge, and it will not touch the ceiling in the short term, such as consumption upgrades (popular entertainment, consumer goods, medical and health, etc.), Upgrades (such as the scale of the world's largest Chinese manufacturing industry upgrade), import substitution (electronics, automobiles and other industries from the developed countries to China's constant transfer);
The second is the moat: Through the technology and product advantages built on continuous investment in R&D, through the commercial advantages of brand building and channel construction, through the continuous improvement of internal and external operating efficiency, the company built a continuous investment in the talent team. Student original ability;
The third is commercialization: At the same time continue to construct the moat, it will transform various technical advantages, operational advantages, brand advantages, cost advantages into efficient profitability and matching cash flow.
The rationality of trading valuation lies in that the core of valuation of unicorn enterprises is not the absolute valuation of trading time points, but more importantly, as the rapid growth of the company brings about the growth of the business, the valuations are quickly repaired, and they are short. Allow time for investment and trading to have a sufficient margin of safety.
The following is a speech record:
Two unicorns
The unicorn is a new semantic since November 2013 in the investment community. It was proposed by Aileen Lee, founder of Cowboy Ventures, a well-known American seed round fund. BATJs are listed overseas and domestically missed the peak of the so-called unicorns. According to Deloitte According to statistics, there are more than 200 unicorn enterprises in the world, of which China and the United States are the main ones. The rest of India and Germany are very few. Among these unicorns, there are more service-oriented enterprises, mainly in the United States and China. More is the e-commerce and financial industry. China basically has a unicorn distribution in various industries, especially in the financial services sector. There are 3,518 A-share listed companies, and the market value of 1,837 listed companies is less than 1 billion US dollars. It's more than half. So you can be a unicorn. It's actually quite amazing.
The Ministry of Science and Technology and Zhongguancun jointly released a list of Chinese unicorns this year. Two of them are cornerstone capital investment companies, one is Shangtang Technology, and the other is Rouyu Technology. Shangtang Technology and Rouyu are also star companies. They are characterized by world-class, platform-level technologies, and they are technologically advanced. Most of their teams are Dr. Stanford and Dr. MIT. Both teams are very smart scientists in entrepreneurship.
The bosses of these two companies have worked at IBM. I think IBM is very talented. And they were world-class technologies at the beginning. So I am sorry for IBM from inside. Such a company must have reserved a lot of talent. They did not retain these talents. IBM only had three outstanding CEOs. Ten years passed after Guo Shina left. IBM's market value dropped from 160 billion yuan to 130 billion yuan. Therefore, companies like IBM are neither short of technology nor There are no shortages of systems and talents, but why aren’t the days so good? I myself think that some companies still lack good CEOs and CEOs with outstanding entrepreneurial spirits. This is something that very few unicorn companies can continue to grow. Because enterprises do not have these organizational systems or entrepreneurial spirit, relying on a certain business model and technological advancement, they have achieved a peak value of valuation at one stage, but have not been able to continue to go on, thus forming a market scale.
Shangtang Technology has been working side by side with the world's top companies in the field of deep learning and artificial intelligence. Including companies like Google and Facebook. Shang Tang’s income was only over 10 million in 2015. Last year it was 6 billion in operating revenue. This year, with an expected revenue of 2 billion yuan, this company has already raised 1.5 billion U.S. dollars. Last year he obtained a Honda Motor Co., Ltd.'s $100 million R&D contract for smart driving. The company also counted as a star in Shenzhen. We voted for them for two rounds. The company has accumulated 3 billion yuan in financing, and it has not yet formed a large-scale revenue. Many people have not yet understood that this company is also controversial, but we think it is a platform-based world-leading technology company. Therefore, we Rouyu has also made successive rounds of investment. Shang Tang and Rou Yu are not unicorns, they will grow into giant elephants! Why? If you can't understand it two years ago, you may not be suitable for investment.
The three major causes of failure
Unicorns have their own halo. Most of the time we don't understand it. We're also confused. Is it everyone's imagination? Or is it really a new species in the capital market? This species is a unicorn. Is it a flash in the pan? Or is there a lot of public blindness to follow? Because in the capital market, the masses are easy to blindly follow the trend. In fact, many of our peers are also following the trend, and have not been very in-depth, independent thinking.
The unicorn market is developing rapidly. One of the reasons behind this is that the liquidity of the private equity market is high. There is a phenomenon that flour is more expensive than bread. Not only is flour more expensive than bread, but also inferior flour is more expensive than high quality bread. Many companies are like this.
The second is the change of new technologies. There were not many original technologies in China 17 years ago. Most of the drugs are generic drugs. Only a few companies like Hengrui Pharmaceutical have been through more than ten years of long-term R&D and investment. An outstanding R&D enterprise that can independently innovate becomes a giant elephant. However, more than ten years ago, China did not have such a company. The information field is also. Lenovo has always been squalor without too many core technologies. Lenovo used to be ahead of Huawei, but Huawei has grown into a giant elephant after decades of investment!
The third is that the participants in the private equity market have also changed. Many large state-owned companies and big companies include the government. They are all good and rich, so you don't vote for others.
Fourth, the supervision is also relaxed and encouraged, including the exchange of the Shenzhen and Shanghai stock exchanges to discuss how to quickly and quickly help them to go public.
Many unicorn enterprises have a lot of halo, but not every one can take a good step, just like all kinds of shared bicycles. Even bicycle colors are not enough. Finally, only a few people can come out. Some of the needs are actually pseudo-demands. There are shared charging treasures, Do you think this game will have real market demand? Some people have summarized the different reasons for these startup companies' failures. The first three points are: No market demand, capital chain cut off, team failure.
During this period, there are many unicorns in the new energy automotive industry. It is said that there are 500 people. They have planned more than 20 million capacity, traditional cars have basically overcapacity, and every traditional automobile company has carried out the field of new energy vehicles. A lot of accumulation and preparation, they are ready to kill, just waiting for the right time, this time is to use the battery more economical than using fuel, making new energy vehicles more profitable than fuel vehicles, this is the real picture of the war .
There are 500 new car builders. Do you think they have a show? How can we possibly need so many car makers? You can use Internet thinking to run and share trips, but you can't simply use Internet thinking to build cars. The car does need to accumulate. So Tesla was still a loss for 15 years, and the production capacity was only 100,000. What are the 500 new car manufacturers claiming that Tesla's business model can be copied? So I believe many companies will soon die The capital is fractured. The new builders are slow to die, they are good at financing, and they are not good at financing. The Tesla's valuation logic is plausible, but the imitators who flocked to it cannot capitalize on the capital market. Give it a high valuation.
Why do we have many pits in this era, because this era is getting more and more exciting. For those who do venture capital, we are careful not to avoid walking into the pit. Essentially, as a unicorn, we must die completely (bankruptcy). It is a small probability event, but the valuation of a considerable number of unicorns declines, and even a significant decrease in exiting the unicorn ranks is a high probability event. The ultimate business model is to make money without burning money, or to have large-scale quality For the revenue, the capital market finally only recognizes this point. If you are not listed, there will be no new financing within two years and basically it will start to decline.
Statistics show that the time between two financings of these unicorn enterprises is usually not more than two years. There are many famous companies that once were dazzling unicorns, like Jawbone, which was also very useful. Once it reached $3 billion, this kind of company still lacks originality. Unless it is able to quickly carry out heavy volume in products and market terminals, it will soon occupy some markets, otherwise your technological leadership, your business model leading degree is very limited, It is the characteristics of many of these institutions. Outstanding institutions have all gone through a tortuous path. In 1998, Google almost closed the door and did not find his business model until 2001. They hired a professional CEO, through search advertising. To make money. Google has also taken a lot of roads that others don't understand, such as the force on the map. Many people think he's crazy, but people do. Amazon is also like this, it took a long time to find its business model. Not many companies can compete with Google, Amazon, and most unicorns are inevitable.
Five investment principles
Talk about the principles of our cornerstone investment. First, we never cast hotspots, but from time to time we also waved on the bar. We are actually willing to pay attention. The logic of the capital market is that most projects can only obtain mediocre revenue. Meaningful trading opportunities, heavy investment in key projects, this is the responsibility of the company's top management. Williams divides his hitting area into 77 big squares of baseball, only when the ball falls on the best grid. Will swing, this is our style.
Second, the invested company needs uniqueness, space, and tension. We don't want it to go with the flow of people. We don't want to plagiarize the business model of others.
Collaboration based on division of labor is a powerful force of the company. Only in this way can an efficient organization system be established. These things show that running a business cannot be achieved by simply relying on business models and new technologies.
Third, the company’s continuous growth comes from high-level perceptions of management. Many companies die because of management problems. Sometimes cakes don’t do it. They fight for unfair distribution. Collaboration based on division of labor is a powerful force for the company. Only in this way can an efficient organization system be established. These things show that running a company cannot rely solely on business models and new technologies to achieve success. It is necessary to think systematically about its own management issues, because companies are not independent of the mind. The world, in Drucker’s words, is a true, objective image of people’s free will.
Fourthly, for cornerstone capital, we look more at entrepreneurship, corporate governance and organizational systems. Without these things, we cannot go long. Ren Zhengfei said that 20 years ago, Huawei entered the communications industry because of ignorance, but at that time it was not. Knowing that Lucent, Cisco, and Ericsson are so powerful. Why Huawei's success is worthy of everyone's praise, because Huawei does not simply come to the scale of today in the case of a closed LAN, unlike Baidu, which is protected and does not allow Google to come in.
Huawei far exceeds them in the well-known areas. Huawei had sales revenue of 600 billion last year. It is China's largest investment in R&D. Last year, 80,000 people invested 80 billion, so more factors that determine the future of the company come from In these areas, you seem to be abstract in these aspects. In fact, they can be observed and evaluated. This is also the basic practice of the foundation stone.
Fifthly, usually we don't chase after the wind, we can't catch up, and we don't have this ability. The air outlet is easy to change. The track is crowded. We give birth to entrepreneurs and people. Why is a professor like Tang Xiaoou rare? Is a serial entrepreneur, he experienced failure, he knows how to ground gas, is to actively consider the realization of cash, consider the financial health of the company, not always burning money.
We have invested in some relatively traditional enterprises. If a company can intensively and intensively, there is hope in the regional market. A company is not simply copying the simple model, but intensively, perhaps it is also a play. We like the three-sixty-five net we vote for this The company, after listing, quickly reached a valuation of 6 billion, so it seems to be traditional, in fact, it is also a unicorn. Sanliuwu.com is a real estate portal. At that time, it has a soufun, focus, and Sina.com The Internet industry is one of the best in the world. Actually, this is not in accordance with the principles of industrial economics. Actually, many people have not seen it until now. It has been 10 years since the real estate website companies have not found a mature business model until today. , Still looking for new ways to cash out.
The unicorn's growth lies in the fact that there is a real demand on the demand side, there is a moat, continuous technical investment and operational landing. We also look at the rationality of trading valuations, we are doing a primary market investment, first look How much is it worth, how much growth it has, and if it's too expensive to be worth it, it's a bubble.
I sum up our key investment areas. We don't chase the wind. We need to invest in companies that have a clear moat system. We have also invested some unicorns.
From an investment perspective, we are optimistic about three major areas:
1. Cornerstone capital is optimistic about integrated circuits, breakthroughs in key areas such as semiconductors, such as Powerway Technology.
Second, Cornerstone Capital is optimistic about the chain pharmacy, the increase in industrial concentration, and the opportunities for pharmaceutical e-commerce O2O. We made a chain pharmacy acquisition, invested billions, and attracted billions of external funds, and acquired 1,500 pharmacies across the country. Sales will reach RMB 5 billion this year. Now its financing is financed by RMB 7 billion. In just three years, we have also built a unicorn enterprise. It is only traditional, but there is still room for it. The pharmacy has 440,000 couples, most of which are not chained, and the largest is only a few thousand. Industrial efficiency is far from enough. So we found this opportunity to invest billions of dollars through holding investment.
3. Cornerstone Capital Entertainment Investment: Starting from changes in user needs, investment channels and content.