Like many other industries, talent is the key factor to determine the competitiveness of venture capital companies, and the venture capital industry also has specific requirements for the ability structure of talents. In fact, this is also a question that many colleagues and I often ask ourselves. What is a good VC? Or what abilities should a good VC have? To put it simply, I think it can be divided into the following parts: first, the ability to find a good project. This is the root of everything; Second, good business judgment. Some projects look good, but there are great risks hidden in reality. Without experience, it may take a long time to realize the problem, or even make a wrong decision without seeing it clearly. There are still some projects that seem difficult to understand, but if you analyze them carefully, you will find that they contain huge investment value. If you don't have good judgment, you will miss an investment opportunity. Therefore, whether you have good business judgment is one of the most important factors to decide whether you can become an excellent VC. Good business judgment is innate, but it is also cultivated in practice to a great extent; Third, let the project party be willing to cooperate with you first. Investment is a two-way choice process, especially in today's hot money environment, it is almost impossible to know which good project is only you, but the contact time may be early or late, and enterprises will not only talk to one investment institution, but will choose to contact several at the same time. In this case, how to make enterprises willing to cooperate with you is actually a challenge to investors. Although some enterprises take price as the main measure, the most competitive enterprises and the most farsighted entrepreneurs ultimately choose investors not on the basis of price, but on the basis of tacit understanding, coincidence of ideas, mutual respect and the value that investment institutions can bring to enterprises except capital; Fourth, investment can provide practical and effective help for the development of enterprises. Most VC-invested enterprises are early and medium-term enterprises, and they often need external support in the formulation of management system, market expansion, talent recruitment and follow-up financing. If VC can help in these aspects, it will undoubtedly give effective support to the development of enterprises and bring higher returns to investment institutions themselves.
Combining the above four abilities, it is not difficult to understand why most VC practitioners are composed of three backgrounds:
(1) People who have had successful entrepreneurial experience, especially entrepreneurs who have taken venture capital and finally led the company to successfully go public or merge. Shao Yibo, another co-founding partner of our fund and a very popular "big-headed prodigy", belongs to this category. He successfully founded Yi Bei in the early days of Internet development in China, and gained the support of venture capital in the process of starting a business. Finally, the enterprise was acquired by Yi Bei for $250 million. In this process, he has a deeper understanding of venture capital and can understand the mentality of entrepreneurs when dealing with investors, so it is easy to communicate with enterprises as investors. And for some problems encountered in the process of enterprise development, he will also give effective solutions according to his past experience;
(2) Have a deep understanding of an industry, including technology, market, contacts, etc., have a certain understanding of investment, and have good logical thinking ability and judgment. The example I want to give here is another colleague of mine, David Su (Xu Chuansheng). He has worked in the IT industry for many years, and once served as the managing director of Greater China in IBM/Lotus Company, responsible for managing the overall operation of the business in Greater China, and led the team to achieve outstanding results. After entering the VC field, it has successively invested in a series of world-class leading enterprises such AAC AAC AAC, Baidu (Enterprise Library Forum), Alibaba (Enterprise Library Forum) and P-Cube (acquired by Cisco System). His success in the investment field is intrinsically related to his IT background. His technical and management background makes it easier for him to judge whether an enterprise is suitable for investment from all angles than ordinary investors. At the same time, he also understands the general development trend of IT-related industries, and can obtain information of early start-ups with good development momentum in some industries through accumulated contacts, laying a good foundation for finally finding good investment projects.
(3) People with financial background. Including investment banks, consulting companies, four major accounting firms, financial consulting companies, etc. People who have worked in the above industries will have wider contacts and more sources of projects. At the same time, the training of international companies will make them more acute, broaden their horizons, have a deeper understanding of the capital market, assess the risks they intend to enter the industry in combination with the global market, and provide effective guidance for enterprises to go public or merge. I worked in an investment bank before I became a VC, which belongs to this category. Realistically speaking, in the process of working in VC, my work experience and accumulated contacts in investment banks really benefited me a lot. I participated in the M&A and listing process of Focus Media (Enterprise Library Forum) and the M&A project negotiation of several invested but unlisted enterprises. Although the process was complicated, it all succeeded in the end. I play a limited role in some projects, but I am familiar with the whole process, so that I can always help enterprises deal with these things with a calm mind. Coincidentally, the three GPs of our fund just represent the three VC backgrounds I summarized, which I really didn't think of before. For young friends who have just entered the business, they are unlikely to have a very successful entrepreneurial experience (if they have good entrepreneurial opportunities, have a clear self-orientation, and can comprehensively consider various factors of entrepreneurial success, I suggest starting a business first, and then consider doing VC later), basically the latter two backgrounds are the main ones.
But after several years of practice in China market, I don't think these two backgrounds are suitable for VC, and I don't think international work experience is necessary for VC. Because to invest in China, you must have a good understanding of China market and culture, so today I trust local talents more. If local talents have the above abilities, they will be more competitive and have the possibility of success in the long run.
How to change from a beginner to a good VC
With the above background, it can be said that it has laid a good foundation for engaging in VC career. But if you really want to be a good VC, you need to be able to do a good job in many aspects. I went from an investment manager (assistant manager) step by step to today. Looking back on the past, I think it is more important to regard the investment manager as a partner now:
(1) has a strong curiosity about new things. Venture capital sees many industries, and you can hear and see things that you have never touched before almost every day. Without the intrinsic drive of curiosity, it is difficult for you to dig out valuable investment opportunities and become a successful VC. I am convinced of this;
(2) initiative, positive and diligent in thinking. This is an attitude, and attitude will guide your behavior. When I was an investment manager, I always tried to stay ahead of my partners. For example, when the partners have a meeting and listen to the report, I will take the initiative to print out the relevant materials for their convenience. This kind of thing is very small, but it will provide them with some convenience, and they often don't have time to think about these things themselves, so as an investment manager, I have to think about it. I don't think I will give such an investment manager a high score if the partner needs to remind him of everything and the investment manager will only do it.
(3) Implementation and control of details. Simply put, it is the task given to you by the partner, which can be completed on time with good quality and quantity. In fact, it takes a lot of ability to complete a task. For example, we should be able to grasp the key points and handle the dialectical relationship between work quality and speed; Pay attention to details, details often determine the outcome; Be hard-working and professional. Being a VC may involve frequent business trips and sometimes overtime, which may conflict with the schedule of personal life. Be good at communication, including communication with entrepreneurs and internal colleagues, and establish a relationship of mutual respect and trust with entrepreneurs, even if they can't cooperate in the end. Let colleagues know what you are doing and provide corresponding support or suggestions. Sometimes communication skills have a certain relationship with personal character. It is difficult to define what kind of personality will suit VC. The key is to see if you can effectively communicate with entrepreneurs and related personnel in practical work, establish a tacit understanding, and finally get things done. Some time ago, I cooperated with one of our investment managers on a project, and the investment manager executed it very well. At that time, several VCS were in contact with this project at the same time, and several were willing to invest, so the enterprise took the initiative. Our investment manager communicated with entrepreneurs repeatedly, established a good relationship with entrepreneurs, and sought my advice in time, and finally successfully established an investment cooperation relationship with this enterprise.
(4) Innovative thinking. This is a point that I particularly want to emphasize. Whether in the investment field or in the industry where VC-invested enterprises are located, there will be competition, which is the law of the market. In order to win the competition, innovative thinking is sometimes very important. For example, when we negotiate with the invested enterprises, sometimes both sides hold their own opinions and are deadlocked. If it continues, the result is often that the two sides cannot reach cooperation. At this time, if we can creatively come up with some alternative methods, it is possible that both sides will accept them and eventually both sides will benefit. From the perspective of investment managers, according to their own work experience, they often put forward some innovative ideas, which will inspire the team whether they are adopted or not;
(5) Broad vision and in-depth analytical ability. Investing requires a wide range of knowledge and timely access to the latest information, especially in areas where "subversive innovation" may occur, because such areas often produce great companies such as Microsoft and Apple Computer, and the best time to invest is just in the bud. It is necessary to widely understand experts and entrepreneurs in the industry, obtain necessary information through various media in a targeted manner, lay a solid foundation, and create opportunities for finding projects and possible future cooperation. On the other hand, once it is determined that there may be investment opportunities in a certain field, it is necessary to clarify the industry in the shortest time, including the composition of the industrial chain, the technical principles and business models of the links to be invested, the status of leading enterprises at home and abroad, and comprehensive competition analysis. This industry may be a brand-new industry for investors, who need to collect information, sort out information, make comprehensive analysis and then put forward their own opinions. If the investigation and analysis are not deep enough, it will be difficult to provide strong support for decision-making and increase the risk of decision-making. Therefore, this puts higher demands on investors. With the increase of working hours and experience, excellent investment managers will gradually become partners. Correspondingly, they also put forward higher requirements for your ability. In addition to investment-related matters, you need to improve your management ability, formulate a fair and effective incentive mechanism, establish a democratic and centralized scientific decision-making system, and lead the team to face various challenges.
The above is my understanding of the ability structure needed to engage in VC industry, hoping to inspire the new forces interested in venture capital. If you really want to join this industry, you can make some preparations for yourself in advance and lay a good foundation. At present, the investment environment in China is generally good. Not only more and more overseas funds have entered China, but also domestic funds have developed with the gradual improvement of the domestic capital market system. CYZone, Zero2IPO, China and other websites are frequently visited by venture capitalists. There are many introductions and comments about VC companies and individuals. Before applying for a job, you can go to these websites to learn about the characteristics of each company, such as key investment fields, investment stages, investment scale and investment style. And take the initiative to contact them selectively in combination with their own specialties and hobbies. Some people may think that the VC ability structure I summarized requires higher requirements, and they are worried about whether to try it. In fact, there are only a few venture capitalists who can do well in all aspects, including some venture capitalists I am familiar with who have invested in classic successful projects, and some places that I think are not good enough, but this does not deny that they are talents in the field of venture capital. I think as long as you have a certain foundation, heart and hard work, this industry will have many opportunities to prove your ability.