Editor Nie Kai
This is a great era of change.
In the past two years, the popularity of internet traffic growth has gradually disappeared, and industries such as technology and high-end manufacturing are becoming hot topics frequently discussed and sought after by the industry, and have evolved into a brand-new and extremely important proposition in the venture capital circle.
The reason behind this is that technology and high-end manufacturing are becoming the "main battlefields" for the layout and wrestling of various countries, which may reshape the global power pattern. Based on this, since 20 15, China has successively issued and revised "Made in China 2025", "People's Republic of China (PRC) Science and Technology Progress Law" and other important documents to support the development of science and technology and high-end manufacturing from the policy level.
However, many investors find that it is not easy to change tracks: technology and high-end manufacturing are not like the Internet, with large R&D investment, long investment cycle, high barriers to professional knowledge and high risks. More importantly, the underlying logic of the Internet is traffic. As long as the flow is known, there are many possibilities for realizing it, and the profit turning point of the enterprise is also predictable. However, there are many categories of technology and high-end manufacturing, and the underlying logic seems unclear. This has become a resistance for institutions that want to invest in cross-fields.
Under such circumstances, Fengnian Capital, founded on 20 14, was laid out before the upsurge, and successively won the "invisible champion" in the fields of science and technology and high-end manufacturing such as Big Dream Database, Dali Cape, Silicon Semiconductor and Ke Sheng Nano. The names of these enterprises may be far less famous than those of Internet industry projects, but they are the heads of their respective vertical segments.
Behind the ultra-high hit rate, how did Fengnian Capital accurately capture the new forces of science and technology in China? What is its core investment capability? What do you think of the whole industrial ecology? With these questions, 36Kr had a detailed discussion with Zhao Feng, a partner of Fengnian Capital.
0 1 Betting on local science and technology industries in advance, opportunities and challenges coexist.
"Competitive investment institutions in the future must be industrialized and specialized, and focusing on technology and high-end manufacturing is our active choice." Zhao Feng, sitting across the desk, said, "Fengnian is positioned as an institution that can better understand business and help technology enterprises to cross the growth gap from 1 to 10."
This is the scene when we met with Zhao Feng, a partner of Fengnian Capital, in the Fortune Financial Center of Beijing East Third Ring Road and the headquarters of Fengnian Capital. Different from the financial management style of most investors, Zhao Feng is more like an entrepreneur, who speaks slowly and quickly.
When faced with the question of why Fengnian Capital 20 14 chose technology and high-end manufacturing when it was founded, Zhao Feng said frankly: Compared with TMT, medical care, consumption and other fields that many institutions compete for, the "gene" of Fengnian team is more suitable for technology and high-end manufacturing.
More importantly, around 20 14, Fengnian Capital had a clear understanding of the development of science and technology and high-end manufacturing in China based on the international environment. This makes Fengnian Capital intensively investigate and invest in head projects with independent innovation and import substitution characteristics in the fields of military industry, science and technology and high-end manufacturing before most investment institutions perceive the evolution of the wave. You know, at that time, the excitement of the venture capital circle was still concentrated in the TMT field, and technology and high-end manufacturing were still a field that was almost out of touch with flowers and applause.
"Being able to gain insight into the trend in advance is essentially because we are deeper in this land of China." Zhao Feng said.
The obvious change of wind direction is after 20 18.
From the policy point of view, China leaders pointed out during their inspection tour in Shanghai on October 20 19 that "hard-tech" enterprises represented by high-end manufacturing industries should be supported and encouraged to go public. This marks that a minority concept created by scientific and technological personnel has officially entered the official discourse system of the country. Since then, many top technical talents and scientists have participated in the entrepreneurship of science and technology and high-end manufacturing.
For a while, a large number of entrepreneurs and investors poured in, only to find that this field is not so simple: the development of science and technology and high-end manufacturing can not be solved by throwing money at people, and it seems that it has little or no effect in the TMT field.
The core problem behind it is that the * * * pain point faced by most domestic technology and high-end manufacturing enterprises is the growth gap from 1 to 10.
"After the technology and products mature, these enterprises often encounter the bottleneck of growth and the pain of' heavy volume'." Zhao Feng said that whether this pain point can be solved is the key to a foothold in this field.
For example, at the time of initial layout, Fengnian Capital invested in many emerging technology enterprises, and found that although some enterprises had good products, they encountered obvious growth bottlenecks when their revenues reached tens of millions.
"Often when the number of employees reaches several hundred, founders who are mainly technical talents or scientists begin to struggle in the management and commercialization of the company. This is because the scale of enterprises exceeds their personal management boundaries, so they must be managed in a systematic way. " Zhao Feng said, "This is the biggest difference between enterprises and enterprises, and it is also a hurdle that an enterprise must cross to become a world-class enterprise."
In the investigation of Fengnian Capital, the founders of different domestic high-tech and high-end manufacturing enterprises have great differences in their management capabilities, and there are more or less problems in strategy formulation or implementation, process construction, team building, cost control and so on. Once these difficulties are broken, it will help enterprises solve the bottleneck of rapid development.
It is aimed at the huge value growth space of enterprises in management empowerment and growth promotion, and Fengnian Capital decided to continue to focus on technology and high-end manufacturing.
The key point of empowering the growth of local science and technology enterprises is the breaking and establishment of strong capital.
In the venture capital circle, there has been a popular debate about whether investment is art or technology.
In terms of art, innovative projects have great uncertainty, even precise investment prediction may lead to investment failure, and successful projects are often because investors have a stronger perception of people and the track; Zhao Feng is more inclined to technicalism. "Fengnian Capital still regards investment as a special technology, because institutions must have their own' barriers' for long-term development, and they must be organized and systematic, so as to ensure the sustainability and reproducibility of output results."
Based on this, Fengnian Capital is different from most other institutions in that it is more about enterprise thinking. "In terms of institutional culture and team composition, we have incorporated many industry genes, so we are deeply influenced by many business thinking. For example, Jack Welch's best principle (BeNo. 1 or No.2-or be gone) requires enterprises to be the best leaders in every business field, which is also an important reason why we initially chose to invest in technology and high-end manufacturing. "
Fengnian Capital regards enterprise thinking as an important basis for their investment in science and technology, and enterprise thinking and in-depth industry management experience also give Fengnian Capital a unique perspective on the industry. Zhao Feng said that Fengnian Capital's deep digging into the industry and understanding of enterprise management enabled it to directly point out the pain points and difficulties encountered by enterprises at the first meeting and give valuable suggestions. "Since its establishment, we have not only tried to become one of the best investment institutions in China, but also tried to explore the best practices in the business world and become the best management promoter of science and technology enterprises in China."
The management empowerment of science and technology enterprises has always been the most valued and respected concept of Fengnian Capital. In this regard, Fengnian Capital has been deeply studying Danaher since its establishment, and several senior executives in the team are Danaher people. Danaher's lean management thoughts and methods are of great reference value to China's scientific and technological enterprises: as the king of global industrial mergers and acquisitions, Danaher acquires enterprises with excellent product technology but poor operating efficiency through the two-wheel drive strategy of "investment+management", and makes them have the first-class competitiveness in the industry after multi-dimensional empowerment.
To this end, Zhao Feng made several special visits to Danaher's headquarters in China, and had in-depth exchanges with senior executives in Danaher's China district. "We found that Danaher's DBS system is very suitable for technology and high-end manufacturing. It is divided into more than 80 modules, which has been quite mature in the accumulation of more than 30 years and can solve almost all the problems faced by an industrial enterprise. "
Of course, oranges come from Huaibei. In the past five years, Fengnian Capital has formed its own unique methodology of investment and post-investment empowerment, while learning from the experience of international industrial giants, combining the objective development stage of domestic science and technology industry and relying on a deeper understanding of the local market. Through continuous practice, the "Harvest Management System" (HMS) has been gradually established. Rich-year capital system is more suitable for China's local scientific and technological enterprises.
In 2022, based on the enterprise operation ability and industrial empowerment ability built over the years, Fengnian Capital's middle office empowerment team was upgraded from "Fengnian Management Office" to "Fengnian Management Center" (HMSC) to fully empower China science and technology enterprises. The "Fengnian Management Center" is composed of full-time teams with rich industry backgrounds, such as Danaher and General Electric, which further empowers science and technology enterprises to form systematic management capabilities, and provides systematic tools for science and technology enterprises in the fields of management, finance and capital markets, human resources and brand promotion to help them continuously improve their management capabilities from the practical level. Fengnian School of Management, established by Fengnian Capital, holds regular courses every year to help enterprises form better management concepts and methods, including lean management, entering the capital market, strategic planning and deployment, benchmarking trip and other courses and activities.
"We have a colleague from Danaher. When I first went to the company we invested in for counseling, I found on the spot that my previous experience was not applicable. " Zhao Feng said that the enterprises invested by Danaher generally have experience in modern management, while the management mode of most domestic enterprises is relatively extensive and the foundation is poor, so the challenge of upgrading and empowering is even more arduous. "But this is exactly what China's science and technology industry needs, and it is also the most valuable at this stage."
Empowering and promoting business management has also become the most important lever at the turning point of many technological unicorns.
Take a semiconductor enterprise invested by Fengnian Capital as an example. 202 1, the order of this enterprise increased greatly, which directly increased by four or five times. However, the sudden increase of orders also makes the delivery pressure increase sharply, the production capacity faces certain challenges and the quality fluctuates. The impact of this is that once the product cannot be delivered or the product quality has problems, it will inevitably affect the growth of enterprise income and profit, as well as market reputation and even strategic card position.
In view of this, Fengnian Capital specially sent a project team to work on the spot for half a year to solve the problems faced by this enterprise. "From the overall thinking, one is to improve the delivery ability of enterprises, and the other is to reduce the unqualified rate of product quality. This has a mature management system abroad, but domestic enterprises are still managed by indigenous methods at the income stage of 200 million yuan. " Zhao Feng said.
Therefore, on the production side, the first thing Fengnian Capital did was to diagnose the whole production process in detail and reorganize the value of each link. "There are about 30 projects to be checked one by one to sort out the whole value chain and find out how the various values in the chain flow. After understanding it clearly, you can see which links are wasted and which places can be streamlined. "
The next step is implementation. To this end, Fengnian Capital spent several months on the spot to guide enterprises to improve through special tools. For example, there are two links with the most serious waste. Fengnian Capital will help enterprises reorganize and re-engineer their processes, eliminate core waste points or card points, and then rearrange their operational processes. Finally, about three months later, the company doubled its production capacity and reduced its space by 50% without adding any personnel and equipment.
"This system has management concepts, tools and specific implementation details," Zhao Feng said, but the most important thing is to sort out the positioning problems with the invested enterprises on the spot and eliminate them, so that enterprises can really learn and get used to scientific management methods and get on the right track slowly. "We don't just want to treat the symptoms, but to continuously improve the systematic management ability of enterprises."
Using this system and method, Fengnian Capital has empowered the invested enterprises in many aspects and achieved good results. Ke Sheng Nano, a leading domestic semiconductor analysis and testing enterprise invested by Fengnian Capital in 2020, is the absolute leader of semiconductor failure analysis track in the Asia-Pacific region. According to the post-investment data, from 20 19 to 202 1, the income and profit of Ke Sheng Nano have doubled several times.
Another example is Wuhan Dream Database, a national key software enterprise with complete independent intellectual property rights. After Fengnian Capital invested 20 19, the business of this enterprise has continuously made new breakthroughs. According to "2020-202 1 China Platform Software Market Research Annual Report" published by CCID Consulting, a third-party research institution, in the domestic database field, Wuhan Dameng Database will rank first in the domestic database market of China database management system in 2020.
It is precisely because of the empowerment of enterprises in the 1- 10 stage that Fengnian Capital is not limited to seeing whether an enterprise is an angel wheel, a wheel or a wheel, but mainly at the substantive node of enterprise development. "When we invested in Qiangyi Semiconductor, we were the first institutional investor with a relatively large investment amount and investment ratio. At that time, many institutions were hesitant about this project, thinking that the company was unprofitable and had a high valuation. So the outside world is very strange, why are we the first to rush in and bet on the institutional investment in the early stage? " In Zhao Feng's view, Qiangyi Semiconductor, established three or four years ago, has taken root in the subdivision of probe cards, entered the stage of production and delivery of small-batch products, and is in a leading position in self-control. "Their team is excellent. They are all international manufacturers and have great growth potential."
Not only that, Fengnian Capital will also make enterprises not blindly chase hot spots. For example, in the face of the current digital wave, the industry has increased the intensity of digitalization and informatization. Zhao Feng believes that it is easy for enterprises to fall into a misunderstanding: digitalization can cure all diseases. "Without a deep understanding of the management process itself, digitalization is almost impossible. Therefore, I will tell the invested enterprises that if they want to go to ERP (an information system), they first need to deeply sort out the management processes and combine them. "
In Zhao Feng's view, technology and high-end manufacturing enterprises must find their own core competence and base areas. "With good technology, good products, good management and adhering to the core strategic direction, such enterprises can gradually run out in the long-term deep cultivation and precipitation."
Focusing on management empowerment, a narrative sample of the rise of China's science and technology industry
From Qiangyi Semiconductor to Silicon Semiconductor, and then to Ke Sheng Nano, Fengnian Capital's investment mode is more focused, with fewer projects but high success rate and more generous returns. However, this path is very different from the traditional investment style in TMT field, and it also tests the ability of investors to accurately explore and focus on empowerment.
"It turned out that the US dollar fund mainly invested in the Internet track. They may choose to cast a brand-new scene and bet on the fastest, thus taking the lead. The status quo of technology and high-end manufacturing enterprises is that most areas are still backward compared with Europe and the United States and belong to the role of chasers. " Zhao Feng said that this requires investors' patience and ability to help them break through the bottleneck and grow. At the same time, they need a large proportion of shares to achieve moderate concentration and spend enough resources and time on each enterprise in a down-to-earth manner. "Our in-depth understanding of technology and industry is also the basis for us to dare to hold heavy positions."
Under the industrial empowerment of Fengnian Capital, those enterprises at the stage of 1 to 10 can get relevant development support, enter a process of rapid volume growth after obtaining investment, and further improve the success rate of the project.
"The thinking of dollar funds is generally innovative, ambitious and explosive, so they will regard continuous financing as a good thing. For technology and high-end manufacturing, due to the objective characteristics of technology research and development itself, it is difficult to achieve rapid breakthroughs from the beginning, but there will be different development curves and development laws. " Zhao Feng said.
From this perspective, investment in science and technology and high-end manufacturing requires investment institutions to be able to withstand "loneliness", have a deep understanding of the law of industrial development, and continue to go deep into the industry and accompany them for a long time. To this end, Fengnian Capital has built three important capabilities: first, research and insight into the industry; Second, the operation and management of the industry can improve its own ability and empowerment; The third is the ability to acquire, collect and integrate industry information resources. The long-term strategy of Fengnian is to lay the foundation of these three abilities deep enough and solid enough to occupy an important position in the track.
On the other hand, with more and more investment institutions entering the market, the competition between technology and high-end manufacturing is becoming increasingly fierce. This makes it far from enough to just invest "money" in the project. How to provide unique help for enterprises has become the differentiated advantage of various institutions.
In this case, both US dollar funds and RMB funds began to integrate in two ways, learning from each other's ideas and ways of playing. For example, US dollar funds should learn to understand the A-share market and understand the logic of China's industrial policy; Renminbi funds should also learn from the deep industrialization of dollar funds.
This means that in the medium and long term in the future, the venture capital market will continue to surge in more intense competition, and investment institutions with distinctive characteristics and sustainable evolution will win in the future.
Of course, we should be more aware that the more changes, the more opportunities: at present, China is at the key node of industrial transformation and upgrading, and both the national and industrial levels are vigorously promoting the development of science and technology industries, which provides fertile growth soil for investment institutions that better understand the local situation. According to the data released by the Ministry of Science and Technology of China, the total social R&D investment in China increased from 1.42 trillion yuan in 20 15 to about 2.4 trillion yuan in 2020, of which the basic research expenditure nearly doubled compared with 20 15 years, and exceeded15 billion yuan in 2020. Behind the absolute figures is China's determination to keep building barriers in the field of hard science and technology.
Therefore, for local institutions represented by Fengnian Capital, it is the grand narrative of the rise of China's science and technology and high-end manufacturing industry that gives such investment institutions and enterprises excellent development opportunities. With the rise of more and more scientific and technological enterprises, a brand-new industry is slowly unfolding in the future.