Venture capital Brief Introduction


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Brief Introduction of Venture Capital

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Venture capital Brief Introduction

  1. 1. <ul><li>V enture C apital </li></ul><ul><li>The entrepreneur behind the entrepreneur </li></ul><ul><li>Ideal TMC, Big Money, Big Talk. By Robin Han </li></ul>
  2. 2. What is the common point of the following companies? VC
  3. 3. In Oct, 2000, Softbank invested USD20m to Alibaba in just 6 mins In April 2004, Softbank invested another USD60m to Alibaba In 2007 Alibaba listed in H.K. Stock Exchange, Softbank’s ROI reached 1000%
  4. 4. What is VC? <ul><li>Venture Capital </li></ul><ul><li>A fund management company leaded by a group of professionals, most of them have successful entrepreneurial experience, or from investment banks </li></ul><ul><li>They manage a huge sum of money from millions of USD to multi-billion USD </li></ul><ul><li>VC normally don’t have money, they just manage money, the money belong to many millionaires, bankers, oil tycoons, or government social security fund, pension fund, etc. </li></ul><ul><li>They charge management fee for the fund </li></ul>
  5. 5. Why this world needs VC? <ul><li>Because now is the era of entrepreneurship, everybody wanna be boss of themselves </li></ul><ul><li>The fact however is we are poor, most of us doesn’t born with a silver spoon, so we need money to start up a business or expand business </li></ul><ul><li>The nature of capitalists is greed, what else they can make more money beside stock market and real-estate? Company! </li></ul><ul><li>After you bring a company to Nasdaq, or you have been sick and tired to be a CEO or chairman, what else can you do? To become a VC! </li></ul>
  6. 6. Different kinds of VC <ul><li>Star-up stage: angel investment </li></ul><ul><li>Early stage: Seed fund </li></ul><ul><li>Grow-up stage: VC </li></ul><ul><li>Pre-IPO stage: PE </li></ul>
  7. 7. Angel Investment <ul><li>For start-up company </li></ul><ul><li>Normally RMB 0.1m-0.5m </li></ul><ul><li>The investors are normally your friends, colleagues, relatives, classmates, etc </li></ul><ul><li>They are just like an angel give the life of your business </li></ul><ul><li>The risk is the highest </li></ul><ul><li>Normally ask for 30% shareholding </li></ul>$
  8. 8. Seed Fund <ul><li>For early-stage company </li></ul><ul><li>Normally RMB 0.5m-5m </li></ul><ul><li>The investors are normally those VC who focus on early-stage companies </li></ul><ul><li>They provide water, earth, air, sunshine and other key element for your business growing up </li></ul><ul><li>The risk is very high </li></ul><ul><li>Normally ask for 20-30% shareholding </li></ul>
  9. 9. Venture Capital <ul><li>For developing-stage company </li></ul><ul><li>Normally RMB 5m-30m </li></ul><ul><li>The investors are normally professional VCs who focus on investment of bottle-neck-stage of the company </li></ul><ul><li>They provide a ladder to level up your business from one level to another level </li></ul><ul><li>The risk is high </li></ul><ul><li>Normally ask for 20-30% shareholding </li></ul>
  10. 10. Private Equity (PE) <ul><li>For pre-IPO company </li></ul><ul><li>Normally RMB 30m-100m </li></ul><ul><li>The investors are normally fund management companies, their money are from organizational investors </li></ul><ul><li>They provide huge money to make sure your company can list in stock market </li></ul><ul><li>Low risk </li></ul><ul><li>Normally 10-20% shareholding </li></ul>
  11. 11. What is the criteria VC select companies? <ul><li>Basically follow the principle of BTM </li></ul><ul><li>B – Business & Market </li></ul><ul><li>T – Team </li></ul><ul><li>M – Model (Business Model) </li></ul><ul><li>B: high growth rate, high potential market such as IT, Internet, biotechnology, clean tech, etc. </li></ul><ul><li>T: Invest a company is actually invest people, the management team! Are they passionate, committed, responsible, dedicated and capable? </li></ul><ul><li>M: How you make money? </li></ul>
  12. 12. What role a VC can play <ul><li>An Angel </li></ul><ul><li>A mother </li></ul><ul><li>A wife </li></ul><ul><li>A teacher </li></ul><ul><li>A doctor </li></ul><ul><li>A headhunter </li></ul><ul><li>A couch </li></ul>
  13. 13. Does VC always make money? <ul><li>6-7 investments out of 10 are failed </li></ul><ul><li>2-3 investments out of 10 breakeven </li></ul><ul><li>1 out of 10 maybe successful, but this 1 will normally is a big shot! </li></ul>
  14. 14. How VC get return of their investment? <ul><li>IPO of invested company </li></ul><ul><li>Invested company is merged and acquired </li></ul><ul><li>Other VC/PE come in and buy your share </li></ul>
  15. 15. Some famous VCs in China
  16. 16. <ul><li>Thank you! </li></ul>