The fiery investment market is undoubtedly very attractive to hungry small and medium-sized enterprises, and some high-quality enterprises with great market potential have become "hot potatoes" that investors compete for everywhere. As a result, people in the industry began to worry: will the overheated market raise the price of investment? Should some high-quality SMEs consider what kind of investment is suitable for them? Is the amount of financing as much as possible? Besides bringing money, what value can venture capitalists bring to small and medium-sized enterprises? In this issue, the entrepreneurial circle will conduct in-depth discussions around these focus issues. Confusion 1: How much is the best? Question: Every enterprise needs funds, but a good enterprise often meets several investors. At this time, does the enterprise accept whoever gives more money to invest? How should enterprises determine the amount of financing? Tips: When you have the opportunity to choose, you must choose like-minded investors. In addition, the valuation of the enterprise should not be too high, otherwise it may affect the subsequent rounds of financing, and the company will lose its right to speak because of too many diluted shares. Jiang Guoping: There is a price to pay for taking money from venture capitalists, such as equity transfer. This is actually a process of exchange and bargaining. Generally speaking, SMEs will not choose investors as long as they can give money. Of course, there are exceptions. For example, some enterprises involved in core technologies will not sell to overseas companies, because this may affect the reputation of national brands and other issues. Li Dacheng: Investors and enterprises are actually the relationship between Party A and Party B, and there is no definite standard for the price of venture capital enterprises. When making a plan, venture capitalists will generally make a comprehensive investigation according to the business structure, business model and what equity to sell (for example, the price of preferred stock may be different from that of general equity). However, the price of enterprises packaged through intermediaries will be higher. It's still an old saying: "You get what you pay for", which is also true for enterprises. The higher the price, the better. Funds are also divided into three grades and have brand value. The most professional people must have platform support, take the money from brand funds and graft a platform to serve you. Of course, enterprises should not blow it too much, otherwise the price will be too high and the pressure will be even greater. If the development of enterprises can't keep up, it may be "harming others and harming themselves". Sun Taoran: For SMEs, a reasonable valuation is very important. Enterprises can get as much money as they need. If they raise funds in excess, they will be idle and reduce efficiency, because fund investment is about return. The more they get, the higher the requirements for enterprises will be. Venture capitalists often have their own models to measure risks, and they will also consider them comprehensively according to the market value of enterprises. Many times, a major reason for unsuccessful financing is that the business model of the enterprise itself is not perfect. In addition, it is also important to choose like-minded investors. The unity of purpose is the vision of the enterprise, what the enterprise should be like, the goals of both parties should be the same, and the harmony of methods is to achieve consistency in the business philosophy and values of the enterprise. Puzzle 2: What is the "value" of value-added services? Question: Investors often say that besides money, we will bring extra value. But what exactly does this extra value include? What are the most important values of SMEs? Tips: The presence of venture capital institutions will be of great help to the corporate governance structure, management level and market expansion of enterprises, especially financial supervision and capital operation. This is the specialty of venture capital institutions, and they can help enterprises. However, due to the uneven level, enterprises can't get lost when they get the scarcest money, and the key to enterprise development lies in themselves. Li Lixin: At present, there are not many professional fund managers. Pre-IPO projects can be done in the short term. In the long run, you need an experienced team to judge the technology and bring value-added help to the invested enterprises. Overinvestment will certainly bring problems and troubles. I think more importantly, if an enterprise has the opportunity to screen investors, it depends on the background of the fund, what it has invested in and what it has done for these investment enterprises. Of course, the most important thing is whether the views and ideas are consistent. After all, the consistency of ideas will reduce a lot of friction in the company's major development decisions and communication. Yugong: The attraction of well-known venture capital lies in value-added services, including: First, preparing for the listing of investment enterprises. Whether it is joint listing or packaging listing, these institutions are far more familiar with the capital market than enterprises. The second is to help enterprises establish a modern corporate governance structure. With the expansion of small and medium-sized enterprises, management structure should be adjusted accordingly. Third, the recognition of enterprises by well-known VC will add points to the integrity of enterprises and be more easily recognized by the public. In addition, investors will help enterprises build teams, markets and channels, and judge industry policies. He Xiaofeng: Venture capital can indeed bring many value-added services to enterprises, such as bringing international vision, professionals and a series of help in the process of listing. Because venture capital and enterprises are the same fate, helping enterprises achieve a win-win situation, which is different from securities funds. Jiang Guoping: The basic function of venture capital is to provide funds, which others can do, and small and medium-sized enterprises that can't do it themselves. The owners of small and medium-sized enterprises have a deep understanding of enterprises and industries, and what venture capitalists can do is to help enterprises go better. In fact, there are too few venture capitalists with this ability, so don't be too harsh on venture capitalists. This mainly depends on whether the fund manager has rich knowledge, enterprise management experience and the ability to control the industry dynamics of the invested enterprises. When he has these abilities, he will help enterprises in many aspects, such as improving management level, expanding management level, looking for new structures and new partners, and helping enterprises to carry out mergers and acquisitions in the industry. All these require venture capitalists to have a unique vision, not just money. Yu Zhenhua: It is understandable that some enterprises try to pull orders through investors, but enterprises need to establish their own business capabilities before investors can help. If the enterprise itself can't find the order, it means that there is something wrong with the enterprise itself. In fact, investors are generally very busy, that is, influencing and helping enterprises at the board level. If they take up too much time, the influence of enterprises on investors will weaken. Therefore, the key issue is that enterprises must first have a clear strategy, so that investors can prescribe the right medicine and provide better value-added services. Puzzle 3: How to sign the gambling clause? Problem: Equity financing is a way to solve the financing difficulties of small and medium-sized enterprises, and not all enterprises are suitable for equity financing. Under what circumstances do SMEs need to introduce such investment? How to reduce possible risks? Tips: First consider whether it is suitable for equity financing, and then keep your eyes open when looking for venture capitalists or consultants, which is likely to affect the financing progress. In addition, after the introduction of investment, we should be psychologically prepared to lose part of the right to operate. Jiang Guoping: As investment targets, SMEs accept funds. As long as someone gives money, SMEs will not care about the moral level of investors. It is worth noting that enterprises should be particularly cautious when signing gambling agreements with investors. Recently, some well-developed enterprises have emerged, but after introducing PE investment, they have fallen into crisis and even ended in bankruptcy. Prince's milk is an example. PE is a double-edged sword, which can be used by anyone. Once it is used for other purposes, its destructive power is enormous. Sun Taoran: Venture capitalists must quit when they come in. If the company doesn't want to go public, it can be ignored. In addition, venture capitalists will also have great decision-making power and one-vote veto in management. When venture capitalists come in, they will have high expectations for the development of enterprises and may have contradictions. In addition, gambling clauses are generally unfavorable to the development of enterprises. Enterprise is a complex. Using one or two financial indicators to demand enterprises will cause the deformation of enterprise actions. Even if it is realized, it may not be conducive to the long-term development of enterprises. When an enterprise should exert its strength, it has its own rules to practice internal strength. Therefore, enterprises that are not ready should not consider introducing venture capital first. Li Dacheng: I was involved in the case of Taizi Milk. I can't say too much, but what I can say is that enterprises should consider their original development reasonably when introducing investors, and don't be blindly optimistic. In addition, enterprises are facing new difficulties in choosing investors. At present, there is no boundary between GP (general partner) and LP (limited partner) in China, which is very confusing, except for some large institutions and many small companies with unprofessional partners. This is mainly because there is almost no threshold for domestic investment except angel investment. But angel investment also needs to accumulate experience and establish its own reputation. At present, the market is full of the phenomenon that consultants occupy too many shares of enterprises, which not only fails to get the money, but also delays the operation. Yu Zhenhua: For risk prevention, my experience still needs to choose investors carefully. Gambling clauses do not appear in early high-tech companies supported by VC, and the effect on gambling clauses is not very good at the risk stage, which will lead to many implementation problems, and PE investment will be used more. There is no gambling clause in Puneng's three rounds of financing. Unless the enterprise's asking price is too high or the enterprise management team is not very professional and needs to overcome some weaknesses, investors in the venture capital stage may not sign gambling agreements in a compromise way. Otherwise, both investors and financiers may suffer undue losses. Band-aid "investors" also need to be investigated. Different from state-owned enterprises, private small and medium-sized enterprises naturally face the dilemma of "lack of money" when they start. Especially in the process of development and growth of small and medium-sized enterprises, the more they develop, the greater the pressure of lack of money, which is almost a common phenomenon. And as long as you want to "ask for money", there will be risks. Wang Qijun, a partner of Peking University Zongheng Management Consulting Company, believes that among the risk factors that SMEs may face in the process of financing, the risk that is most easily overlooked is the risk of changes in equity structure. After investors enter the enterprise, they often make new agreements on the ownership structure, thus forming a "trap" for the development of small and medium-sized enterprises. For example, an enterprise needs to change in the process of development, but if there is a clause in the agreement that "minority shareholders disagree", the enterprise change will become a difficult problem. Sometimes, in order to achieve the goal of "asking for money", small and medium-sized enterprises often do not consider some restrictive conditions, thus making the business process of enterprises "confront" with equity. For example, after investors enter, they often let the "corresponding" personnel enter the company's management, which may lead to different business strategies in the development of enterprises, thus forming management contradictions, which is obviously a resistance to the positive development of enterprises. For example, after the investment contract or contract comes into effect, investors will propose to reorganize the management because of the needs of the competitive situation or investor strategy. For entrepreneurs, if it is serious, it may even be in danger of being "out". In this regard, Meyer Stadtman of Santa Clara University in the United States suggested that enterprises can look at the enterprises that investors have invested in before introducing investment. Investors are relatively safe investors if they don't react violently to the occasional growth slowdown of these enterprises, or if they don't interfere too much with the original founders. Gu, executive director of China Merchants Technology Group, also suggested that small and medium-sized private enterprises should look for two types of investors, one with entrepreneurial experience in their own industry or sub-industry; One is the most lacking person in the company's current development. A large number of new angel investors are emerging in China. Many of them have business or marketing experience, and each of them has certain wealth. Many people are in their prime. They know more about China enterprises than international investment institutions, and it is easier for them to provide more practical experience and skills for local enterprises.