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