Traditionally, venture capital is investing capital in the research and development of high-tech and its products with the risk of failure, and promotes the commercialization and industrialization of high-tech achievements as soon as possible to obtain high capital gains. However, there are also venture capital institutions that have taken a different approach in project selection and embarked on a path different from traditional VCs. Intel, Apple, and Google are behind the technology giants that influence the times. As a venture capital institution for innovative technology business incubators (VC/ PE), such as Sequoia Capital, KPCB and Anderson. The Horowitz Fund has contributed. With the entry of foreign venture capital institutions into the Chinese market in the 1990s, and Internet companies such as Sina, Tencent, and Baidu have successively landed in the capital market, terminology such as angel investors and GP/LP have gradually become familiar.
Following the state subsidy run Generally speaking, the entire process of the venture capital institution's operation project mainly includes four stages, namely, fundraising, investment, management and exit. For venture capital institutions, how to choose the right project is the focus of their consideration.
In the choice of investment projects, we are more inclined to the strategic emerging industries such as energy conservation and environmental protection, new generation information technology supported by the National Twelfth Five-Year Plan, and companies in the industry that are expected to form core competitiveness. Such projects are in line with the general trend of economic restructuring and upgrading, and can enjoy certain financial subsidies and other benefits, and the exit expectations are relatively optimistic. Jiang Yu, Investment Director of Lihe Qingyuan Venture Capital Management Co., Ltd. said that the project investment should be based on the trend.
Taking the LED lighting industry as an example, in recent years, LED street lamp procurement bidding, semiconductor lighting 12th five-year plan and other favorable policies frequently occur. The “National Basic Public Service System Twelfth Five-Year Plan†issued in 2012 proposed to arrange 2.2 billion yuan subsidy funds to support the promotion. Energy saving lamps and LED lights. For a time, various venture capitals have entered the LED industry.
At that time, we were interested in the entrepreneurial companies in the LED lighting industry. On the one hand, under the guidance of the government's industrial policies, their financial subsidies could have a substantial positive effect on improving the company's performance. On the other hand, at the time, such enterprises also had comparative advantages in listing. Conducive to the value-added cash after the exit of the investment project. An insider at a PE agency said.
According to statistics, in the first quarter of 2012 alone, there were 8 LED companies such as Maoshuo Power Supply, Changfang Lighting and Jufei Optoelectronics, which were listed or ready to go, which is more than the total number of LED companies listed in 2011. PE institutions such as Tongchuang Weiye, Baoteng Venture Capital and Changfei Investment, which have laid out LED enterprises in advance, have earned a lot of money.
Li Ling, an analyst at the China Investment Group, said that although government financial subsidies are an effective way to support the development of start-ups, venture capital should focus on its profit model when investing, and those companies that rely mainly on government subsidies and government orders. The uncertainty is greater.
For industries that are more affected by the policy, we will carefully analyze the proportion of government subsidies in the company's revenue. If more than 70% of the profits come from various forms of government subsidies, the company's profitability is limited, and such enterprises are generally not considered. The above PE people said that even if they rely solely on policy-oriented projects, VCs will think about whether the industry will face overcapacity in the future.
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