After Cheng Siwei and other scholars put forward the "No.1 Proposal" by the National People's Congress, various forms of funds entered the industry in large quantities, just like the spring breeze overnight, blowing away pear trees. But looking back on China's venture capital road, perhaps the pain is more than the joy of success. In the early 1990s, the government put forward the concept of venture capital, and established the first venture capital company with government background-China Venture Capital Company (hereinafter referred to as Zhongchuang). However, after several years of tossing and turning, the losses were serious, and finally the State Council had to close it down, which led to the infamous "Guangxin Bankruptcy". Although there are many improvements in the operation of local venture capital companies in China at present, due to the company law, the most effective organizational form of venture capital-limited partnership has not been established in China. This paper will analyze the current situation of various departments engaged in venture capital in China, so as to reveal the problems that China's venture capital industry is currently facing.
At present, venture capital companies in China can be divided into the following levels.
1. Venture capital company with government background
1997 Asian financial crisis made many Asian countries wake up from their dreams of prosperity and understand that extensive economic growth is unsustainable in the long run. The problems exposed in the financial crisis have made governments all over the world strive to explore the driving force of long-term rapid economic growth. Ten years of economic growth in the United States has made people see the power of high technology, and the model of Silicon Valley has become more deeply rooted in people's hearts after the financial turmoil. China has always been a government-led economy. In the absence of powerful private enterprise groups, it is natural for the government to directly intervene in the establishment and capital supply of venture capital companies. Statistics show that the total amount of funds raised by venture capital in China is above10 billion, and funds with government background account for a considerable share. For example, several venture capital companies established in Beijing, Shanghai, Guangzhou and Shenzhen are undoubtedly the best in China at present, ranging from several hundred million to more than one billion. Among them, Shenzhen Innovation Technology Investment Co., Ltd. has hired Kan Zhidong, former president of Shen Yin Wanguo, to take the helm and strive to reach the scale of 5 billion in three years. At present, the company is in the forefront in both talent and strength.
Without exception, these companies adopt the form of corporate system in organizational form. Under the current situation in China, it is still unknown whether they can control operating costs well, establish an effective incentive mechanism and control investment risks. Government-backed venture capital companies have learned a painful lesson in the United States. Although the small business investment company established in the United States in the 1960s funded the development of many enterprises at that time, it caused huge losses to the government. In two venture capital companies in Guangdong province, the main managers are still appointed by officials, which is completely different from the quality required by venture capitalists. In foreign countries, the general partner of venture capital fund is a compound talent with technical, financial, market management and other backgrounds, which has very high requirements for people and is also the most fashionable occupation of MBA in famous schools. The defects in talent selection of venture capital companies with China government background are very obvious.
Government-supported venture capital companies generally use the slogan of supporting high and new technology, but they have not formed a very clear direction in the investment direction. Generally speaking, they are large and comprehensive, investing in biomedicine, new materials and other industries, and investing in Internet, information technology, software, communications and other industries is relatively weak. Although it has a history of several years, it is still lacking and successful cases are rare, which inevitably makes people doubt the operational ability of these companies.
2. Strategic capital of large domestic enterprises
After 20 years of reform and opening up, many large enterprise groups have grown up in China, such as Lenovo, Stone, Founder, Hongtashan and Shanghai No.1 Department Store. Many of them are powerful listed companies or enterprises in specific monopoly industries. However, in the development of enterprises, an important problem is how to obtain new profit growth points of enterprises. For example, Shanghai 100, although large in scale, is located in a very limited industry, but it is very dangerous to implement the company's diversification strategy. Therefore, it is a better way to invest in emerging high-growth industries in the form of venture capital (or industrial investment) to obtain capital appreciation income, and the risk is controllable. At the beginning of the year, Lenovo was divided into three parts. Among them, Liu Chuanzhi personally took the helm of Lenovo's venture capital department, and his strategic intention was very similar to Intel's-investing in start-ups in the IT industry and looking for new trends in the future development of enterprises.
There are two kinds of successful venture capital abroad-limited partnership venture capital fund and industrial venture capital department of large enterprise groups. The former relies on the genius and experience of general partners in investment, while the latter is based on the experience accumulated by large enterprises for many years, which contains the intention of strategic development of enterprises. Generally speaking, such investment will be much more stable. The author thinks that the establishment of limited partnership companies in China does not meet this requirement in the short term, and the experienced general partner team has not been formed. In this case, the strategic capital of large enterprise groups is very important for the growth of high-tech enterprises in China. However, when selecting fund managers, we should break through the traditional phenomenon of focusing on financial personnel and change the concept of management, because financial indicators are not the most important or even important when evaluating start-up projects. Many foreign research results have proved this result, which is particularly important for the analysis and evaluation of enterprise management team, enterprise technical content and market prospect.
The Background of Several Venture Capital Companies in China
Beijing Science and Technology Venture Capital Co., Ltd. is a joint-stock company with a registered capital of 500 million yuan. Beijing International Trust and Investment Co., Ltd., Beijing International Electric Power Development and Investment Co., Ltd. and China Youth Travel Holdings Co., Ltd. each hold 25%. The other 25%. high-tech enterprise
Guangdong York Venture Capital Group Co., Ltd.; That is, Guangdong Venture Capital Group has total assets of 654.38+0 billion yuan and net assets of 700 million yuan. Wholly state-owned companies mainly support the development of high-tech and its industries. Guangdong Science and Technology Venture Capital Co., Ltd./Guangdong Science and Technology Venture Capital Co., Ltd., Guangdong Cai Yue Trust and Investment Company and Guangdong Overseas Chinese Trust and Investment Co., Ltd. mainly focus on electronic information, optics and machinery.
Integrated application, new materials, bioengineering, fine chemicals, new energy and high technology, as well as energy saving, environmental protection, nuclear applications and other patented technologies.
Guangzhou Science and Technology Venture Capital Co., Ltd. has a registered capital of 300 million yuan, which will reach 654.38 billion yuan by 2003. The municipal government organizes various channels to raise funds. In the future, we will actively absorb a large amount of private capital investment, seek cooperation with foreign venture capital institutions to set up Chinese-foreign cooperative venture capital companies, and tilt towards industries such as digital mobile communication industry, software development industry, bioengineering, modernization of traditional Chinese medicine and agricultural modernization.
Shanghai Venture Capital Co., Ltd. is 600 million yuan, a wholly state-owned company funded by local finance, with high-tech innovation and industrialization.
Wuhan High-tech Industry Venture Capital Co., Ltd. has a registered capital of 3 1 10,000 yuan and a total investment of 1 100 million yuan. Wuhan High-tech Industry Investment Guarantee Co., Ltd. and Wuhan Science and Technology Exhibition Co., Ltd. jointly invested in the establishment of high-tech project development, achievement transformation, knowledge and technological innovation.
Shenzhen Innovation Technology Investment Co., Ltd. has a registered capital of 700 million yuan, and the shareholders' meeting decided to increase its capital and share to 654.38+06 billion yuan. The municipal investment management company invested 500 million yuan, and other shareholders are powerful enterprise groups and listed companies, mainly investing in high-tech industries such as information technology, biomedicine and new materials.
3. Foreign venture capital
From different media, we all know that foreign venture capital funds are generally optimistic about China's market prospects, and have expressed their desire to seize the venture capital market in China. IDG has made it clear that it will invest more than US$ 654.38 billion in China. In fact, the situation is not so optimistic. IDG's current investment is only $6543.8+$400 million. Most venture capital funds entering China are not the best in the industry. Take IDG as an example. China people regard it as a representative of venture capital. It is not an American venture capitalist, but a company mainly engaged in market research. Other venture capital companies entering China are only second-rate and third-rate venture capitalists in China, so it is difficult to gain a foothold in the crowded market in terms of capital scale and word of mouth. It is undoubtedly their best choice to enter the China market and get some first-class projects. Softbank is undoubtedly the most famous venture capitalist in China. However, due to its management problems, Softbank ranks only 12 among the top 50 venture capitalists this year. The market value of Softbank dropped from $654.38+09 billion at the beginning of the year to about $23 billion now, a drop of nearly 90%. The company's current profits are still mainly from software sales. The investment ideas of Softbank branches are very different. Except Yahoo, most Internet investments are not so successful.
Top Ten Venture Capitals in the World in 2000 10 Liquidity of Venture Capital (USD billion) Growth Rate of Venture Capital (USD billion) Total Funds (USD billion)
CMGI 30 290 934% 49
Credit Suisse First Boston Bank
T . a . associates 25 800 2 12% 50
4. Joint venture of new enterprises 20 580 244% 25
5. Spectrum Equity Investor 17.5 650 169% 27
6. Emerging market partners16.7150011%46
7、Accel Partners
8. Technology-crossing enterprises16712124% 25
9. Red Dot Venture Capital15.26001kloc-0/3.40%19.5
10, partner of vantage venture capital 15 unknown unknown 35
Although foreign venture capital companies are very optimistic about China's huge market, they still have to face cultural differences when entering China. Many entrepreneurs in China may lack the background of graduating from famous foreign universities, but the management team's deep understanding of the local management model in China is the key to the success of enterprise management. Taking the Internet as an example, we can see that many "turtle" international students, with a model that can be collectively called C2C(COPY TO CHINA), are not necessarily more successful than entrepreneurs in China. When these foreign venture capital companies evaluate entrepreneurs in China, how to better overcome cultural differences is very important for the accurate evaluation of the project.
4. Venture capital in Greater China Economic Circle (Hongkong, Taiwan Province, Singapore, etc.). )
Venture capital from the Greater China Economic Circle originates from a cultural identity and is also restricted by these local economies. Take Hong Kong as an example. Although the business environment in Hong Kong is very free, its economic capacity is limited. There are many well-run companies in Hong Kong, such as Hutchison Whampoa and Cheung Kong Industries in Li Ka-shing. These companies are mainly engaged in finance and real estate, and investment bankers have predicted that the growth of these industries will be very limited in the coming decades. Under such pressure, big consortia are trying to find new growth directions, and Hutchison Whampoa, New World and other groups are actively entering emerging industries such as telecommunications and IT. Li Zekai's PCCW actively explores broadband networks and the Internet.
Although these groups are implementing internationalization strategy, it is still the top priority to compete for such a huge market as China. This year, New World Group injected 65 million dollars of venture capital into wireless internet company PR Newswire, making it the largest venture capital in China so far. Due to the close cultural division, the investments of these consortia will enter China more easily than those from Europe and America, and will develop very well. There are not many consortia in Greater China, such as Lee's family business, Acer and New World. The financial support provided by other small groups is relatively limited, and they may not have the ability of long-term strategic investment and are much more speculative.
5. Foreign strategic venture capital
With the approach of WTO, more and more multinational companies are looking to China market. Finance and telecommunications will be the two fastest-opening industries. At present, many large enterprises have made a preliminary exploration of the China market, one of which is to invest in start-ups in China. These investments mainly come from two industries, finance and IT. Previous investment banks, such as Morgan and Goldman Sachs, invested in China's technology enterprises, which was an innovation in financial services. At the same time, we can establish good relations with these enterprises and provide them with financial services such as overseas listing and mergers and acquisitions. Financial capital has a very clear strategic intention to extend its financial service chain in this way. Although a well-known investment bank like Goldman Sachs is unknown in the venture capital world, it still enjoys it for the simple reason. The second type of strategic investment comes from multinational companies, mainly IT companies, such as Intel, Yahoo, News Corporation, Samsung and so on. Recently, Keda also announced that it will set up a venture capital fund of US$ 654.38 billion to invest in science and technology enterprises in China. For traditional companies, their own innovation may not keep pace with technological progress. The only way is to invest in the most innovative enterprises and get the source of long-term development. Strategic venture capital will be an important source of enterprise growth in China, and economic globalization is an unchangeable trend. The investment of these funds is also a good opportunity for the global development of local enterprises in China.
6. angel investment
We can classify some investments made by individuals at home and abroad as angel investments, mainly private investment arrangements made by relatively wealthy individuals. Sohu and both started from foreign angel funds, while domestic angel investors are Wang Xianxian, Mao Daolin of Walden Lake, Su Qiqiang of the Federation and Wang of 8848. Angel investment is generally limited to enterprises in the seed stage, and the investment amount is relatively small, so the judgment of the project depends entirely on personal feelings. The existence of angel investment is undoubtedly very necessary for innovation, and many professors at MIT have funded the growth of many seed projects. The affluent class in China has basically formed, but the concept of angel investment has not yet formed due to the limitations of its own quality and concept. Therefore, the amount of angel funds from China will not be large in the near future. For most local entrepreneurs, it is even more difficult to get angel investment from abroad.
Through the analysis of all levels of venture capital in China, we can't help asking a question: Who will invest in the Internet industry in China? Venture funds with government background dare not set foot in this industry, while the overall quality of foreign venture funds entering China is not high. It will be very dangerous for domestic internet companies to follow the baton of this second-rate and third-rate venture capital. They often invest only according to the analysis reports of Wall Street securities analysts, but the opinions of securities analysts are always inconsistent, and most of them need 2 or 3 years of MBA, so their grasp of the development of the industry is not always so correct. The rise and fall of Nasdaq can be said to be the success of Xiao He and the failure of Xiao He.
Generally speaking, the author thinks that the way to get venture capital in China is not very smooth, and the development of high-tech enterprises in China, especially the Internet industry, will face greater difficulties. In the near future, venture capital will not become the leading force to promote industrial development, and the entry of industrial strategic investment is the biggest driving force to support the development of an emerging industry. When the Nasdaq stock market plummets, mediocre venture capitalists will shrink back. In fact, they prefer speculation to real investment. It is not terrible for venture capital to leave, and it is even more terrible for a promising industry to be abandoned.