People's Daily: The hot "inflection point" of Internet investment has arrived

Tencent has surpassed traditional Chinese companies such as PetroChina and Sinopec to become the largest company in Asia's market capitalization. After the B-round financing of Ant Financial Service, the valuation is as high as 60 billion US dollars, which directly tracks the market value of Baidu. The new company with the merger of Didi and Uber is estimated to reach 350. Billions of dollars... The emergence of the Internet "unicorns" has made capital crazy.
However, since the middle of last year, many entrepreneurs have found that while many high-quality targets frequently set new highs, some investors are no longer spending a lot of money. Internet investment, despite the fiery heat, has already revealed a turning point.

Investment from boiling point to hot spot
Formed a high valuation, high efficiency, investment and investor scale, the "three high" symptoms O2O, Internet finance, network big IP ... With the rapid development of the mobile Internet, there is always a hot word in the Internet field Screen. However, entrepreneurs and increasingly cautious investors who are getting more and more difficult to get money have told us that although the Internet industry is very hot today, it is no longer "high fever."
The "honeymoon time" of the Internet and capital can be described as a local money-burning love: from 2012 to the end of the year, to the "window period" from 2014 to the first half of 2015, all the funds madly burned money, so that formed " Three high symptoms.
The valuation is high. Fang Haotian, manager of Bohua Capital, recalled that in the Internet field, $3 million was considered a high investment in 2000, and in 2014 and 2015, “the investment of hundreds of millions of dollars is not new.” Zeng Yingzhe, a partner of Mingshi Capital It is emphasized that regardless of whether the project is good or bad during the “window period”, its valuation is far higher than its actual value.
efficient. “When the 'window period' is completely a capital chasing project, on average, 3-5 investors chase one project, and everyone is scrambling, and the investment speed is extremely fast, lest the next second project be seized by other investors.” Zhang Liang (a pseudonym), the investment director of the fund, said. Fang Haotian recalled that before 2012, it would take 2-3 years for a project to come to a round of financing. In 2014-2015, it is often the beginning of the year to greet the A round of investment, and by the end of the year there will be B and C rounds of investment.
The amount of investment and the size of investors have reached record highs. In the “window period”, the funds flooded in all directions. In 2014, it set a new record for the amount of venture capital in China. Logistics Dashun SF opened “Shunfeng Hacker” to enter the O2O field. Wanda teamed up with Tencent and Baidu to launch the online e-commerce platform, Wal-Mart. The company has acquired the e-commerce business of No. 1 shop in China... Many traditional industrial enterprises have entered, and hope to use the Internet to create new growth points and share a piece of it; more famous projects have begun to burn money frequently. For the circle of customers, there is a great momentum of “losing money to earn money”.
Taking micro-carpooling as an example, in December 2014, it got the first investment of 4 million yuan with a valuation of 80 million yuan. In January 2015, it got a second investment of 7.5 million yuan, with a valuation of 150 million yuan. Subsequently, including a large number of investment institutions such as CITIC Capital and Shanda Capital, the valuation was changed from 150 million yuan to 300 million yuan, and from 300 million yuan to 500 million yuan and 800 million yuan to 1 billion yuan. yuan.
However, since the second half of 2015, the first batch of investors who started to “cold down” appeared in the market. Compared with the enthusiasm of "having money and money, people are required", many Internet investors now seem to have entered the "vacation" mode: financing scale, valuation level is declining, frequency is also slowing, investors tend to be rational .
“From the middle of 2015, the amount of financing is gradually decreasing. Even in areas with more potential, such as artificial intelligence, although financing continues, it is not particularly smooth.” Lu Yinkun, senior analyst of Hanergy Investment Group, said that the market is lacking. Significant hotspots, previous online education, O2O, Internet finance, etc., have caused heated discussion and attention, but the current industry has not formed any major direction. “There are not many projects that can be seen. Many partners of the US dollar fund have gone overseas for vacation.”

Investors tend to calm down
Short-term and fast-revenue attracts capital to enter, but the lack of hematopoietic function and the follow-up of the trend have caused the industry bubble capital to enter the Internet field on a large scale, even at the expense of “downside”.
The overcapacity in the traditional industry, and the “short and fast” return on investment in the Internet industry is undoubtedly the root cause of investment. “From 2014 to 2015, the growth of traditional industries is weak. The company has completed 350 days in 365 days a year, with a net profit of less than 10%. The investment will be at least three to five years, and the Internet investment may double in one year. It may grow to 10 times and is absolutely attractive to capital." Zhang Liang said.
The trend of following the trend has added fuel to the investment boom. “Taking O2O as an example, after the public comment and the success of the US group, various O2O models such as door-to-door manicure, door-to-door car washing, and home-based tutoring have emerged. Some of them are just needed, and some of them have uncertain market prospects, but in the hot period of the storm, everyone It is often followed by the wind." Lu Yinkun said.
"It is the pursuit of the Internet for capital, so that the valuation level and financing scale of the company are constantly rising. The high valuation in turn attracts more capital, and eventually the snowball is getting bigger and bigger." Zhang Liang said.
However, such high valuations are also prone to form an industrial bubble.
"Internet +" integration is not easy, many traditional companies are trying to use the Internet to transform, but have not found a business model that suits them. Wal-Mart once expected the No. 1 store to bring online and offline integration, but in less than a year, it was only reluctant to resell the No. 1 store to JD. It is also expected that the online and offline integration of Feifan E-commerce is not warm. Fire, Wanda Plaza's huge offline resources have not brought great growth to it. Now Tencent and Baidu have announced that they will no longer vote with them, leaving only Wanda one.
After the investment logic is redefined, the hematopoietic capacity of the project itself is neglected, causing the industry to be uneven and instantly puffy. Different from the valuation model of traditional industries based on net profit, the valuation of Internet companies is often based on indicators such as traffic, number of users, and turnover. Internet companies are not profitable when they grow at a high speed, and they need to continue to finance and support infrastructure investment and normal operations. However, when investors find that capital investment is like a bottomless pit and can't see the future profit, it will inevitably reflect on the investment logic and thus reduce the project valuation. "This round of Internet companies generally need to burn money in the market, and lack of hematopoietic capacity, requiring investors to continue to transfuse blood. When the blood transfusion is unsustainable, the blood transfusion chain is broken, and enterprises have closed down." Zhang Liang said. After the micro-carpooling, after burning the money, it completed the journey from a valuation of 1 billion yuan to a collapse in 3 months. In this context, investors will inevitably reflect on and the project will gradually decrease in heat.
The lack of original follow-up projects is particularly prone to the negative effects of the collapse. When too much money and entrepreneurs flood into the same industry, disorder and excessive competition are inevitable, and companies that have not been tested by business models can only fail. Still taking O2O as an example, continued car washing, rushing to wash cars, cloud washing cars, kung fu car wash and other door-to-door car wash services have closed down, the tide of bankruptcy has also spread to the car-raising field, even the Boao car that has valued as much as 600 million US dollars is also this year. The bankruptcy was announced in April. "It can be said that about 90% of O2O has failed." Zhang Liang said.
“Unlike the wealth effect of early successful projects, the tide of closures is a negative effect. When investors find that 10 projects are losing money in nine and a half, they will calm down,” said Wu Ronghui, founding managing partner of Tongdu Capital.
Profit-seeking and hedging ultimately caused Internet investment to cool down from overheating. Innovative workshop co-founder Wang Hua said that investors are not without money to invest, but everyone is in the precipitation period. The judgment of the project pays attention to the number of users, returns to the commercial essence, and pays attention to profitability and trends. “There is no investment, everyone is just looking for a truly reliable business model, or a company that can do big companies in the future.”

What investment left behind by the capital boom has a strong role in promoting the incubation, cultivation, development and maturity of the industry.
What has the enrichment of the capital boom brought to the Internet and the real economy?
"Capital attention is always good, from seeds, angels, VCs, PEs to mergers and acquisitions funds, which have a strong role in promoting the incubation, cultivation, development and maturity of a company or even an industry, and perhaps a certain future. The new growth point of the economy lies in it.” Zhang Liang said that the economy has cyclical changes, the industry also has a cycle, and the Internet is no exception.
After the wave of mobile Internet, although many companies have closed down, they have left behind the US group, hungry, Didi, Alipay, WeChat payment and other enterprises that truly change people's lives and truly create value.
In addition, after the current wave, the ability of the Internet to transform traditional industries is also impressive. "The most wonderful thing about the Internet is that it is digital. The digital nature of the Internet has laid a solid foundation for the meticulous operation of the economy. It can promote the optimization and upgrading of the entire economic structure: from the original high energy consumption, high input, high pollution. Extensive growth, towards an intensive, efficient, and sustainable growth model." Zeng Yingzhe said.
What kind of "Internet +" do we need in the future? How do the Internet and traditional industries combine? The winners highlight the ability of the Internet to become a goldsmith. The losers also remind practitioners that the Internet is not a versatile golden finger and is not prepared. The combination of the two may be "1+1<2".
"Some traditional industries and the Internet have combined with 'water and soil disapproval', in the final analysis, it is still a question of thinking." Zeng Yingzhe said that many times traditional companies only regard the Internet as an online sales channel and communication channel for advertising and socializing. But in fact, behind the Internet, it is the values ​​of freedom, sharing and collaboration. "Traditional industries want to borrow the 'Internet +' Dongfeng, you can't understand this 'net' too simple, think that investing in marketing is all right. Money should be spent on user experience and product quality, so that the two industries The fusion of development '1+1>2'."
Wang Hua said that in the future, the transformation of the Internet to improve the efficiency of the real economy will not stop. In addition to the current e-commerce, O2O, enterprise applications, B2B, Internet finance, the future of generalized automation, including intelligent hardware, is a very important trend.
Investors are still waiting for new investment “winds”. Liu Qin, managing director of Morningside Capital, believes that the previous wave of technology climax has slowly passed, and the next wave of new things such as AI, VR, deep learning and big data are hot, but have not yet formed a mobile Internet. Big waves. "The cycle of technology takes a period of calm platform, slowly accumulate a certain amount of power, and then suddenly there is a sudden factor on one day, prompting the emergence of the main rising wave, to the climax, bubble, burst, and then lurking again. Our technology The cycle of change is still gestating, and capital is always chasing the next 'wind vent.'"

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