In the industry has a "first silly," said IDG, last year was named the most successful investment companies, venture capital market once quiet are becoming pervasive.
This year, the major venture capital (referred to as VC) companies have been very active: Softbank Asia to set up a 643 million U.S. dollars of the fund, IDG in China has established two total sum of about 5 million venture capital fund; Kleiner PerkinsCaufield & ByersKPCB , Accel Partner, MatrixPartner three international venture capital end of this year also will be stationed in China. Thus it was predicted that parts of the world in 2005 may wind up investment in China planted a year of silver.
The different way the mainstream VC
Five years, 120 million in costs, the return of several times in close proximity, this is the magic of venture capital. Hand-held wand that is what the little IDG.
In fact, IDG is a specialist in the United States investment in print media and online media companies, venture capital can only be called on to do third-rate.
But it "the wall flower wall incense," IDG China or from both well-known success stories of view, are regarded as the mainstream VC. From Ctrip, Baidu Tencent to, IDG invested several hundred thousand to a million or two seed funds, access to the huge returns.
To Baidu, for example, in 2000 IDG invested 1.2 million U.S. dollars as seed money to account for 4.6% of Baidu's shares, according to the current market value of Baidu, IDG's investment returns to seven or eight times.
"High holding, low cost", with little cost to enter the early stage start-ups, this is the IDG in China's major investment strategy. This makes IDG's are mine generally small. So far, HC International, 1999, into 800 million, received 17.40% of its shares, as IDG's largest single investment in the country.
IDG Chairman McGovern promised before the end of 2005, investment in the Chinese high-tech market, one billion U.S. dollars, from its inception in 2001, but 300 million U.S. dollars investment.
Another venture capital - on the very different style of Softbank, or do not vote, to vote on several of millions of dollars at every turn. Softbank even have an investment philosophy: every single investment should not be less than 500 million.
Softbank now in China there are three forces, namely, Softbank Group, Softbank China and Softbank Asia. Finally entered the Softbank Asia, in less than 5 years to invest more than 20 high-tech enterprises in China, an average of more than 10 million U.S. dollars investment.
Behind the high input is relatively low return on investment. To 40 million U.S. dollars investment in a grand, get more than 560 million U.S. dollars in return, this can be considered the most successful in China, Softbank is a single, but the investment return rate is only 15 times. Prior to IDG in Baidu, the investment reached 60 times the financial return on investment.
Baidu search for other areas and grand
Although the chairman of IDG Asia, said Hugo Shong, about the success of venture capital, there may be dozens of projects is a failure. However, data show that in recent IDG return on investment in China averaged more than 45%. From this year, active venture capital organizations, and also can infer our lucrative.
Information Consulting Co., Ltd. Beijing and Qing dynasties introduced the "2005 China Venture Capital interim investigation report" shows:
First half of 2005 to complete a total of seven new and fund-raising and fund-raising total to 1.651 billion U.S. dollars fund, and fund-raising for the amount of 699 million U.S. dollars last year, more than twice.
From the industry point of view, IT is still the most attractive business venture capital industry, accounting for 63% of the total amount. This year the most active of the Internet, but the amount of view or from the largest communications.
Softbank, IDG or both, are active areas of IT. IDG long-term focus on early stage IT venture enterprises, while Softbank has formed an Internet system of empire, from Yahoo to the grand, to Alibaba, the Internet every single model has injected funds Softbank.
But now they seem to look for other areas of Baidu and grand.
Just a month ago, Softbank, Carlyle Asia bring together the Tianjin Sunco (China) Investment Network Real Estate Group, 45 million U.S. dollars. Softbank is also the first time involved in real estate, it makes the Softbank Asia become the largest amount of domestic investment, venture capital firms, investment has exceeded 300 million U.S. dollars.
Since 1998, IDG has invested in China, more than 150 companies, Internet companies account for almost half, even relatively low in 2001-2003, the Internet, the Internet project has been maintained at a total investment of more than 60% of the project. However, according to IDG list of investment projects this year, the number of Internet businesses accounted for only 30% -35%.
IDG has clearly indicated that you want to attack a number of new areas, such as biopharmaceuticals. 5% success rate of Internet businesses in the past, no doubt felt the pressure to VC. According to the report of the company and Qing dynasties, the current bio-tech industry accounts for only 0.4% of the total venture capital.
Capital prefer to grab?
And a flood of venture capital is relatively higher than that, good investment projects is rare. High-tech, media, telecommunications, referred to as the TMT field almost all VC attention.
Now not only focus on the field, the investment of time have tended to converge. A few years ago, many venture capital companies are more willing to do upfront investment, and now 70% -80% of the venture are concentrated in the middle and late, hoping to avoid risks. Generally will not choose the latter, but in the first round of financing will enter the IDG began to change their investment strategy.
In mid-August, one of the world's top five venture capital firms Accel Partners announced that it will enter the Chinese market, and investment 250 million U.S. dollars and IDG VC together form a total 500 million U.S. dollars in investment funds. Wind investment amount will be the principal responsible persons of 3721, founder and former Yahoo China president Zhou Hongyi.
Some analysts believe that, IDG is trying to follow a low-cost, low risk investment in the road industry.
Information Consulting Co., Ltd. Beijing Branch of the Qing Chen Qiang, director of analysis, there are two main reasons why such a change. First, China lacks originality core technology. If a startup is really the core technology, VC would be more willing to invest, because it is likely to bring huge returns. But China is not easy to have a breakthrough technology.
Second is the lack of good entrepreneurs, the credit system, coupled with greater pre-existing laws, policies and other aspects of risk.
Focus on investing in mature businesses Softbank, although not a particularly high return on investment, but investment in the market, brands, marketing channels and so have been in place, relatively less risk, the overall rate of return would be higher.
Softbank Asia Fund invests in enterprises, the establishment of the time almost 5 years, while China and Shenzhen Ming Wan blog so very few start-up enterprises, they generally have a strong strategic partner.
In fact, like Yahoo, QQ, etc. are facing in the early stage venture capital scarce, the time when they most need it hard to attract money to the VC. Zhou Hongyi that the vote should not be the most fundamental is that there is no innovation. Therefore, the choice of investment projects, Zhou said that the most promising home-grown original model and the model of China, are not optimistic about the pattern copied from the United States.
"There is definitely a good project so everyone is struggling, do not vote this month, a little hesitant about, other VC Jiugen up, or business valuation will go up." Said Chen Qiang, a direct result of this venture capital business costs, profit margins become smaller and smaller.
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