Chapter 18 Venture capital is not a good way to go

Now that venture capital has paved a broad road to profit, can Wenzhou Capital throw money into this field without restraint? No!Venture capital is not a good way to go. Venture capital also has a name called "venture capital".As the name suggests, this is a very risky investment project.Because for investors, you have to find the right project. If the project is not selected properly, you may lose all your money.In addition, investors have to negotiate and negotiate with the company. The two parties clarify each other's rights and obligations, specify their respective responsibilities, and finally sign the contract.This is a very complicated process, including the personality of the entrepreneur, which is the object of comprehensive investigation by investors. If you are not careful, there may be dire consequences.

However, for Wenzhou Capital, these are not the biggest difficulties for venture capital.Difficulties come from within the Wenzhou people. Although Wenzhou people are good at investing and have abundant capital, for a long time, Wenzhou people themselves have a kind of investment thinking that is almost "defective". These "defects" make it more difficult to do Wenzhou-style venture capital. Disadvantage 1. It is not easy for Wenzhou people to trust others. Among Wenzhou people, they trust each other very much. There is no need for IOUs to borrow money from fellow villagers, and there is no need to sign a contract to raise money through the chamber of commerce. Everything depends on the consciousness of Wenzhou people and their reputation to get what they want.

But for non-Wenzhou people, Wenzhou people are not so generous. An entrepreneur who received investment, Mr. Wang, heard that Wenzhou people were very interested in venture capital, so he came to Wenzhou with his own project proposal. Only after he came did he realize that he could not win the favor of investors at all.It's not that the project itself is not good enough, but that I am not from Wenzhou. Under the guidance of others, Wang found out that there are already many entrepreneurs like him who came to Wenzhou to seek financing across the country, but very few successful people.The reason is that it is difficult to win the trust of businessmen in Wenzhou. Unless the entrepreneur can find an influential business leader in Wenzhou or the company also participates in his investment project, other investors will follow up and invest.

Even entrepreneurs who have successfully obtained financing cannot let go of what they want to do, because people in Wenzhou will call every few days to inquire about the progress of the project. Those Wenzhou bosses who built up their capital bit by bit, in fact, look down on the management style of entrepreneurs at all. Hearing this, Wang had no choice but to return, no longer holding on to Wenzhou Capital. In fact, no matter whether it is the harsh conditions that require the participation of business leaders or enterprises, whether it is calling every day to inquire about the progress of the project, or looking down on the team of entrepreneurs, there is only one fundamental reason-Wenzhou people do not trust outsiders.The consequence of doing this is that either you can’t find a company to invest in, or you don’t have a heart-to-heart relationship with your partners. Both of these results are not conducive to the development and growth of Wenzhou Capital.In the end, the helpless Wenzhou people had no choice but to take money to invest in their own enterprises. Wenzhou capital only developed within a small area of ​​Wenzhou people, and the growth rate was naturally very limited.

Therefore, I think that if Wenzhou people want to make a career in the field of venture capital, they must first overcome this "distrust of outsiders" thinking and try to open their arms to outsiders.Only in this way can Wenzhou Capital invest in a wider field and go further on the road of venture capital. If you are really worried about the reputation of a foreign company, you can conduct a comprehensive inspection of the company in advance to understand the development of the company, and inquire about the reputation and even the family situation of the entrepreneur.In this way, you can have a relatively comprehensive understanding of your own investment projects, and the risks of future cooperation will be lower.Besides, if you know yourself and your enemy, cooperation will go smoothly.

However, the premise of this kind of cooperation, which is determined by multiple investigations, is still to trust the other party and give the other party a chance. Don’t just shut them out as soon as they hear that it is a foreign company. Chance. Defect 2. Wenzhou people have the problem of "quick success and instant benefit". Looking back at the family history of Wenzhou people, I found that Wenzhou people have a characteristic of doing business: they are engaged in industries that are small commodities but have a large market. For example, shoes are still the most important industry in Wenzhou.This business is small, and the money made by a pair of shoes will never exceed the profit of a computer, but it has a larger market than a computer.Although modern office is inseparable from computers, compared with shoes, its popularity is far less than that of shoes. This is the so-called big market.

The biggest feature of this industry is that it has a large market and quick profits, which is also determined by the nature of daily necessities.By extension, the same is true for other businesses of Wenzhou people. Buttons, lighters, clothing, electrical appliances, etc. are very close to people's lives. The market space is relatively large, and Wenzhou people can quickly make profits. Later, with the strength of Wenzhou capital, Wenzhou people invested in a wider range of industries, including coal, housing, oil and so on.These relatively "big" industries, Wenzhou people value them not because of hobbies or interests in a certain industry, nor because they have no thought of making this industry bigger, but because of a high-profit thinking.

A typical example is the German Karl Benz, who invested in the automobile industry because he was interested in automobiles, so he invested in this industry for a long time, and this is how Mercedes-Benz is today.People in Wenzhou do not have such an investment thinking, at least from the current situation, it is difficult for Wenzhou to have an "oil king" or "coal king".When the investment fails, you may lose the desire to continue, and directly switch to other more profitable fields. Whether it is a small commodity or a large industry, Wenzhou people have only one investment thinking: everything is aimed at profit.This way of thinking, on the one hand, has transferred a large amount of wealth to Wenzhou people, but on the other hand, it has also restricted the process of Wenzhou people from continuing to make their business stronger and bigger. It can be said that it has become a "bottleneck" of Wenzhou capital.

All aiming at profit will inevitably lead to eagerness for quick success. In the long run, it will inevitably lead to the destruction of some more valuable things in the long run by Wenzhou capital for profit.This is taboo in the field of venture capital. Venture capital is a long-term investment. It usually takes seven or eight years or even 10 years from investment to profit.But for Wenzhou bosses who value profits very much, they may only have a year or two of patience.During the one or two years, some impatient bosses may also urge the person in charge of the project.This will only lead to three results:

1. Forcing the person in charge to do some internal illegal transactions, resulting in corruption of the price-earnings ratio; 2. The person in charge cannot achieve the goal and is forced to flee (with money) and terminate the contract between the two parties. 3. Forcing the person in charge to speculate in equity, which deviates from the original intention of cooperation. These three outcomes, no matter which one, will bring capital damage to investors. Therefore, if there is no long-term plan, if only short-term profits are considered, I suggest that the bosses in Wenzhou should not get involved in the field of venture capital lightly, and do not want to follow suit when others make money in the field of venture capital.After all, venture capital has high profits and high risks.

In addition to these two major flaws, I would like to talk about another thing that I also pay attention to when I am a venture capital investor: to increase contact with peers. As the saying goes, peers are enemies, so some investors may not bother to associate with peers.But there is another saying in the art of war, which is called "know yourself and know the enemy, and you will never be imperiled in a hundred battles." Investors should keep in touch with their peers, and sometimes they may get unexpected gains. A Wenzhou boss surnamed Jin, he is a shareholder of an investment company, responsible for private equity investment, which is also a form of venture capital.Talking about his partner, Mr. Jin said unceremoniously: "If I hadn't been on strict precautions, he (the partner) would have fled with the money." How could a partner do such a thing that violates the spirit of the contract? In the face of everyone's doubts, Mr. Jin did not hesitate to produce evidence: "He has been blacklisted by more than a dozen venture capital companies before. Maybe he doesn't know that we have many close relationships with venture capital companies. I am I didn’t investigate him comprehensively at the beginning, but I saw that his project was not bad, so I invested directly.” What's next?Mr. Jin also didn't want the two sides to get too tense. Either the other party would automatically terminate the contract and compensate him for his losses, or he would perform each other's responsibilities as stipulated in the contract, otherwise he would not want to get a penny from himself. Boss Jin’s example fully demonstrates the need for frequent communication between venture capital companies. Although everyone may compete on some projects, maintaining frequent contact makes it easy to obtain news in this field, and can also avoid conflicts to the greatest extent. risk. In addition, in addition to these three factors affecting venture capital, there are other influences, such as the adjustment of national policies, market speculation and so on.These sudden factors will increase the difficulty of venture capital investment. Investors must have a strong psychological endurance and be prepared for a long-term "war of resistance".If you don't have full confidence and enough funds, I suggest not to invest in this field lightly.