Chapter 82 Section 6 Famous venture capital firms
Just as Wall Street has been equated with the US financial industry, in the eyes of entrepreneurs, "Sand Hill Road" (Sand Hill Road) is synonymous with venture capital companies.Sand Hill Road is located in Menlo Park (Menlo Park) in the north of Silicon Valley, at the exit of a highway north of Stanford University.It is only two or three kilometers long, but there are more than a dozen large venture capital companies.At least half of the tech companies listed on Nasdaq are backed by venture capital firms down the street.The most famous ones include Sequoia Capital (Sequoia Capital, known as Sequoia Venture Capital in China), KPCB (Kleiner, Perkins, Caufield & Byers), NEA (New Enterprise Associates), Mayfield and so on. Although NEA was born in Baltimore, the "ancient city" in the United States, its business activities are mainly in Silicon Valley. It has invested in about 500 companies, one-third of which were listed and one-third were acquired. The investment accuracy is much higher than that of its peers.It is also the backing company of Northern Light Venture Capital in China. Mayfield is one of the earliest venture capital companies. Its legend is that it has successfully invested in the world's two largest biological companies, Genentech and Amgen (these two companies account for half of the world's total market value of biological companies. about).In addition, it has also successfully invested in technology companies such as Compaq, 3COM, SGI and SanDisk.Among all venture capital firms, Sequoia Ventures and KPCB are the most worthy of special mention.
Sequoia, a California redwood tree, is the largest (and possibly longest-lived) organism on Earth.This redwood tree can be as high as 100 meters, with a diameter of 8 meters and a life span of 2,200 years. In 1972, investor Donald Valentine (Don Valentine) founded a venture capital firm in Silicon Valley, named Sequoia Capital after the unique redwood tree in California.After the company entered China, it was named Sequoia Ventures.
Sequoia Ventures is by far the largest and most successful venture capital firm.The companies it has successfully invested in account for more than one-tenth of the market value of the entire NASDAQ-listed companies, including IT giants and well-known companies such as Apple, Google, Cisco, Oracle, Yahoo, Netscape and YouTube.It has about fifty partners in the United States, China, India, and Israel, including the company's founder, Valentine, and Michael Moritz, known as the king of venture capital because of his successful investment in Google.
Sequoia Ventures invests in unlisted companies at all stages of development, from the earliest stage to companies that are about to go public.Sequoia Ventures internally divides these companies into three categories:
(1) Seed incubation stage (Seed Stage).This kind of company usually only has a few founders and some inventions, and the things to be done have not yet been made. Sometimes the company has not yet been established and is in the stage of angel investors' investment.When Sequoia Ventures invested in Cisco, Cisco was at this stage, and the product had not yet been developed;
(2) Early stage (Early Stage).Such companies usually have proven their concepts and technologies, and have produced products, but they have not been commercially successful. When it invested in Google, Google was at this stage.At that time, Google.com already had a lot of traffic, but it hadn’t made any money yet;
(iii) Development stage (Growth Stage).At this time, the company already has a turnover and even a profit, but in order to develop, it still needs more funds.Investment at this stage is icing on the cake, not a timely gift.
The investment amount of Sequoia Ventures in each stage differs by an order of magnitude, which are ten to one million, one million to ten million, and ten million to fifty million.
Compared with other VCs, Sequoia Ventures prefers to invest in fast-growing companies (rather than quick profits), even if it is riskier.Companies such as Apple, Google, and Yahoo all have this feature.So how to judge whether a company has development potential?According to my understanding of Sequoia VC, it roughly has two criteria:
First, there must be a jump in the technology of the invested company (in Sequoia Ventures’ own words, it’s called Sudden Change), which is what I often call a qualitative change or revolution.Of course, how to judge whether a technology is truly revolutionary or just a general innovation requires the help of professionals to check.Because Sequoia Ventures is well-known and well-connected, it is easy to find good experts;
Second, it is best for the invested company to be in an industry that no one else has tried, that is, the first person to eat crabs.For example, before Apple, the microcomputer industry was blank, and before Yahoo, there were no portals on the Internet.Such an investment method is very risky, because no one has been able to prove the commercial potential of the new field before, and of course, the return is also high.This kind of investment requires the vision of the general partner to be very accurate.Relatively speaking, the partners of Sequoia Ventures have experienced many things, and their vision is good.
Sequoia Ventures has some basic requirements for new start-up companies looking for investment
1. The company's business needs to be able to explain clearly in a few words.Investors from Sequoia Ventures will give you a business card and see if you can write clearly on the back of the nameplate.Obviously, a business that even the founders can't explain clearly will be difficult to sell to others in the future.
2. As I said earlier, if the company's business is not a billion-dollar business, there is no need to visit.
3. The benefits of the company's projects (inventions, products) to customers must be clear at a glance.
4. Needless to say, there must be unique skills.
5. The company's business is to spend a small amount of money to make a big business.For example, Cisco invested in Cisco because it could design routers without hiring a few people.Let Sequoia Venture Capital invest in a steel plant, it will never do it.
For founders, Sequoia Ventures also has some basic requirements
1. Open minded, flexible mind, able to prove that they are better than their opponents.
2. The genes of the company and the founder are better.Of course, this does not refer to biological genes.Sequoia Ventures believes that the DNA of a company is formed within three months of its establishment, only an excellent founder can attract an excellent team, and an excellent team can lay the foundation for a good company.
3. Act fast, because only in this way can it be possible to beat the existing big companies.The competition between a newly established small company and a multinational company is no different from a baby fighting a giant. To win, it must be fast and flexible.
Readers who are interested in starting a business can remember the contact information of Sequoia Ventures:
USA 3000 Sand Hill Road4-180, Menlo Park, CA94025 Tel: 650.854.3927, Fax: 650.854.2977
Room 2408, Air China Building, No. 36 Xiaoyun Road, Chaoyang District, Beijing, China 100027
Room 2808, Tower 2, Plaza 66, 1366 West Nanjing Road, Shanghai, China, 200040
Before seeking Sequoia Venture Capital, entrepreneurs must prepare a set of materials, including
1. The purpose of the company (clear in one sentence).
2. The problem to be solved and the solution, especially the benefits of the method to the user.
3. To analyze why you start a business now is to prove that the market is mature.
4. Market size, once again, don't look for Sequoia if there is no billion-dollar market.
5. To analyze opponents, one must know oneself and the enemy.
6. Product and development plan.
7. Business model, its importance is not much to say.
8. Founder and team introduction, if the background of the founder is not strong enough, you can recruit some celebrities as directors.
9. Finally, and most importantly - how much money do you want, why, and how to spend it.
In the venture capital industry, only KPCB, which was also established in 1972, can compete with the Sequoia Ventures Chamber. KPCB is the initials of its four founders Kleiner, Perkins, Caufield and Byers.In recent years, it has even surpassed Sequoia Ventures.
KPCB has successfully invested in famous companies such as Sun Corporation, America Online (AOL), Compaq Computer, Gene Technology, Google, Ebay, Amazon (Amazon) and Netscape.It invests in one-tenth of the top 100 Nasdaq technology companies. The high investment efficiency of KPCB is jaw-dropping.Its most successful investments include:
(1) Invested US$12.5 million in Google at a price of about US$0.5 per share in 1999, and the return on this investment is nearly a thousand times today;
(2) In 1994, invested 4 million US dollars in Netscape to obtain 25% of its equity, with a return of 250 times (calculated based on the price Netscape sold to AOL);
(3) In 1997, it invested 8 million US dollars in Cerent. Only two years later, when Cisco acquired Cerent, the investment made a profit of 2 billion US dollars, which is also 250 times.This may also be the fastest time it has recovered its large-scale investment;
(iv) In 1996, he invested 8 million US dollars in Amazon and obtained a 12% stake in the latter. The return on this investment was two to three hundred times.
Its early successful investments, including Sun Corporation and Compaq Computers, etc., had a rate of return not lower than the above-mentioned cases, but the US Securities Regulatory Commission did not provide online records and could not calculate the exact return on those investments.From these successful investment cases, it can be seen that it is entirely possible for venture capital firms to pursue a 50-fold return.
Another feature of KPCB is that its partners are very well-known and well-connected. In addition to active investors John Dole and Brooke Bayes (B in KPCB), they also include former US Vice President Al Gore, former Secretary of State Powell and the Sun Company co-founder Bill Joy et al. KPCB uses their influence in government and industry to foster new industries.For example, since Gore also served as a director of Apple, KPCB set up a special fund of 100 million US dollars to cultivate Apple's iPhone software development company.Considering the global demand for green energy in the future, KPCB also supports the fund invested in green energy chaired by Gore, and has raised 400 million US dollars to establish a special fund. In this way, KPCB exerts influence on the formulation of energy policy by the US government. This approach of KPCB is something that ordinary venture capital companies cannot learn.
In addition to green energy, KPCB's main investments are concentrated in the fields of IT and life sciences.In the field of IT, KPCB focuses on the following six directions:
communication
Consumer products (such as online communities)
Enterprise-level products (such as enterprise data management)
information security
semiconductor
Wireless communication
Readers who want to start a business can find good business topics from it.
As the largest and most successful venture capital firm in the world. KPCB still keeps the good tradition of "Corporal Courtesy". KPCB partners, including Dole himself, often attend seminars at Stanford's "Investment Corner."Dole himself assured the young entrepreneurs that he would definitely read the business plans and emails these entrepreneurs wrote to him, although he might not have time to reply one by one. KPCB’s requirements for entrepreneurs are similar to those of Sequoia Ventures, and the preparations for finding KPCB are also similar to those of Sequoia Ventures, so we won’t repeat them here.China is the only country where KPCB has an office outside the United States. It has branches in Beijing and Shanghai. The contact address is:
Beijing 100738
Room 503-504, Block C, Oriental Plaza, No. 1 East Chang'an Street, Beijing
Shanghai 200031
Room 2505, Jiahua Center, 1010 Huaihai Middle Road
Finally, I would like to add that in addition to Sequoia Ventures and KPCB, Japan’s SoftBank Group (Soft Bank) is the most famous venture capital firm in Asia. It has successfully invested in Yahoo and Alibaba, and has a controlling stake in Yahoo Japan. Although IDG is not well-known in the United States, it was the first to enter the Chinese market, and it was more successful than Sequoia Ventures and KPCB in China.
Although the purpose of venture capital is to pursue high profits, these high profits are their due rewards.My respect for venture capitalists is much higher than that for Wall Street, because venture capital has a great positive impact on society, while Wall Street often plays a negative role (the recent financial crisis in the United States and the surge in oil prices are caused by Wall Street).Venture capital is usually a timely help for entrepreneurs. Regardless of whether the venture is successful or not, they are promoting technological progress and industrial structure renewal.What Wall Street does is often put money from one pocket into another pocket and make huge fortunes from it.
Venture capitalists are behind-the-scenes helpers for entrepreneurs, but they cannot replace entrepreneurs to perform on the stage.The key to starting a business is the entrepreneur himself.
Sequoia, a California redwood tree, is the largest (and possibly longest-lived) organism on Earth.This redwood tree can be as high as 100 meters, with a diameter of 8 meters and a life span of 2,200 years. In 1972, investor Donald Valentine (Don Valentine) founded a venture capital firm in Silicon Valley, named Sequoia Capital after the unique redwood tree in California.After the company entered China, it was named Sequoia Ventures.
Sequoia Ventures is by far the largest and most successful venture capital firm.The companies it has successfully invested in account for more than one-tenth of the market value of the entire NASDAQ-listed companies, including IT giants and well-known companies such as Apple, Google, Cisco, Oracle, Yahoo, Netscape and YouTube.It has about fifty partners in the United States, China, India, and Israel, including the company's founder, Valentine, and Michael Moritz, known as the king of venture capital because of his successful investment in Google.
Sequoia Ventures invests in unlisted companies at all stages of development, from the earliest stage to companies that are about to go public.Sequoia Ventures internally divides these companies into three categories:
(1) Seed incubation stage (Seed Stage).This kind of company usually only has a few founders and some inventions, and the things to be done have not yet been made. Sometimes the company has not yet been established and is in the stage of angel investors' investment.When Sequoia Ventures invested in Cisco, Cisco was at this stage, and the product had not yet been developed;
(2) Early stage (Early Stage).Such companies usually have proven their concepts and technologies, and have produced products, but they have not been commercially successful. When it invested in Google, Google was at this stage.At that time, Google.com already had a lot of traffic, but it hadn’t made any money yet;
(iii) Development stage (Growth Stage).At this time, the company already has a turnover and even a profit, but in order to develop, it still needs more funds.Investment at this stage is icing on the cake, not a timely gift.
The investment amount of Sequoia Ventures in each stage differs by an order of magnitude, which are ten to one million, one million to ten million, and ten million to fifty million.
Compared with other VCs, Sequoia Ventures prefers to invest in fast-growing companies (rather than quick profits), even if it is riskier.Companies such as Apple, Google, and Yahoo all have this feature.So how to judge whether a company has development potential?According to my understanding of Sequoia VC, it roughly has two criteria:
First, there must be a jump in the technology of the invested company (in Sequoia Ventures’ own words, it’s called Sudden Change), which is what I often call a qualitative change or revolution.Of course, how to judge whether a technology is truly revolutionary or just a general innovation requires the help of professionals to check.Because Sequoia Ventures is well-known and well-connected, it is easy to find good experts;
Second, it is best for the invested company to be in an industry that no one else has tried, that is, the first person to eat crabs.For example, before Apple, the microcomputer industry was blank, and before Yahoo, there were no portals on the Internet.Such an investment method is very risky, because no one has been able to prove the commercial potential of the new field before, and of course, the return is also high.This kind of investment requires the vision of the general partner to be very accurate.Relatively speaking, the partners of Sequoia Ventures have experienced many things, and their vision is good.
Sequoia Ventures has some basic requirements for new start-up companies looking for investment
1. The company's business needs to be able to explain clearly in a few words.Investors from Sequoia Ventures will give you a business card and see if you can write clearly on the back of the nameplate.Obviously, a business that even the founders can't explain clearly will be difficult to sell to others in the future.
2. As I said earlier, if the company's business is not a billion-dollar business, there is no need to visit.
3. The benefits of the company's projects (inventions, products) to customers must be clear at a glance.
4. Needless to say, there must be unique skills.
5. The company's business is to spend a small amount of money to make a big business.For example, Cisco invested in Cisco because it could design routers without hiring a few people.Let Sequoia Venture Capital invest in a steel plant, it will never do it.
For founders, Sequoia Ventures also has some basic requirements
1. Open minded, flexible mind, able to prove that they are better than their opponents.
2. The genes of the company and the founder are better.Of course, this does not refer to biological genes.Sequoia Ventures believes that the DNA of a company is formed within three months of its establishment, only an excellent founder can attract an excellent team, and an excellent team can lay the foundation for a good company.
3. Act fast, because only in this way can it be possible to beat the existing big companies.The competition between a newly established small company and a multinational company is no different from a baby fighting a giant. To win, it must be fast and flexible.
Readers who are interested in starting a business can remember the contact information of Sequoia Ventures:
USA 3000 Sand Hill Road4-180, Menlo Park, CA94025 Tel: 650.854.3927, Fax: 650.854.2977
Room 2408, Air China Building, No. 36 Xiaoyun Road, Chaoyang District, Beijing, China 100027
Room 2808, Tower 2, Plaza 66, 1366 West Nanjing Road, Shanghai, China, 200040
Before seeking Sequoia Venture Capital, entrepreneurs must prepare a set of materials, including
1. The purpose of the company (clear in one sentence).
2. The problem to be solved and the solution, especially the benefits of the method to the user.
3. To analyze why you start a business now is to prove that the market is mature.
4. Market size, once again, don't look for Sequoia if there is no billion-dollar market.
5. To analyze opponents, one must know oneself and the enemy.
6. Product and development plan.
7. Business model, its importance is not much to say.
8. Founder and team introduction, if the background of the founder is not strong enough, you can recruit some celebrities as directors.
9. Finally, and most importantly - how much money do you want, why, and how to spend it.
In the venture capital industry, only KPCB, which was also established in 1972, can compete with the Sequoia Ventures Chamber. KPCB is the initials of its four founders Kleiner, Perkins, Caufield and Byers.In recent years, it has even surpassed Sequoia Ventures.
KPCB has successfully invested in famous companies such as Sun Corporation, America Online (AOL), Compaq Computer, Gene Technology, Google, Ebay, Amazon (Amazon) and Netscape.It invests in one-tenth of the top 100 Nasdaq technology companies. The high investment efficiency of KPCB is jaw-dropping.Its most successful investments include:
(1) Invested US$12.5 million in Google at a price of about US$0.5 per share in 1999, and the return on this investment is nearly a thousand times today;
(2) In 1994, invested 4 million US dollars in Netscape to obtain 25% of its equity, with a return of 250 times (calculated based on the price Netscape sold to AOL);
(3) In 1997, it invested 8 million US dollars in Cerent. Only two years later, when Cisco acquired Cerent, the investment made a profit of 2 billion US dollars, which is also 250 times.This may also be the fastest time it has recovered its large-scale investment;
(iv) In 1996, he invested 8 million US dollars in Amazon and obtained a 12% stake in the latter. The return on this investment was two to three hundred times.
Its early successful investments, including Sun Corporation and Compaq Computers, etc., had a rate of return not lower than the above-mentioned cases, but the US Securities Regulatory Commission did not provide online records and could not calculate the exact return on those investments.From these successful investment cases, it can be seen that it is entirely possible for venture capital firms to pursue a 50-fold return.
Another feature of KPCB is that its partners are very well-known and well-connected. In addition to active investors John Dole and Brooke Bayes (B in KPCB), they also include former US Vice President Al Gore, former Secretary of State Powell and the Sun Company co-founder Bill Joy et al. KPCB uses their influence in government and industry to foster new industries.For example, since Gore also served as a director of Apple, KPCB set up a special fund of 100 million US dollars to cultivate Apple's iPhone software development company.Considering the global demand for green energy in the future, KPCB also supports the fund invested in green energy chaired by Gore, and has raised 400 million US dollars to establish a special fund. In this way, KPCB exerts influence on the formulation of energy policy by the US government. This approach of KPCB is something that ordinary venture capital companies cannot learn.
In addition to green energy, KPCB's main investments are concentrated in the fields of IT and life sciences.In the field of IT, KPCB focuses on the following six directions:
communication
Consumer products (such as online communities)
Enterprise-level products (such as enterprise data management)
information security
semiconductor
Wireless communication
Readers who want to start a business can find good business topics from it.
As the largest and most successful venture capital firm in the world. KPCB still keeps the good tradition of "Corporal Courtesy". KPCB partners, including Dole himself, often attend seminars at Stanford's "Investment Corner."Dole himself assured the young entrepreneurs that he would definitely read the business plans and emails these entrepreneurs wrote to him, although he might not have time to reply one by one. KPCB’s requirements for entrepreneurs are similar to those of Sequoia Ventures, and the preparations for finding KPCB are also similar to those of Sequoia Ventures, so we won’t repeat them here.China is the only country where KPCB has an office outside the United States. It has branches in Beijing and Shanghai. The contact address is:
Beijing 100738
Room 503-504, Block C, Oriental Plaza, No. 1 East Chang'an Street, Beijing
Shanghai 200031
Room 2505, Jiahua Center, 1010 Huaihai Middle Road
Finally, I would like to add that in addition to Sequoia Ventures and KPCB, Japan’s SoftBank Group (Soft Bank) is the most famous venture capital firm in Asia. It has successfully invested in Yahoo and Alibaba, and has a controlling stake in Yahoo Japan. Although IDG is not well-known in the United States, it was the first to enter the Chinese market, and it was more successful than Sequoia Ventures and KPCB in China.
Although the purpose of venture capital is to pursue high profits, these high profits are their due rewards.My respect for venture capitalists is much higher than that for Wall Street, because venture capital has a great positive impact on society, while Wall Street often plays a negative role (the recent financial crisis in the United States and the surge in oil prices are caused by Wall Street).Venture capital is usually a timely help for entrepreneurs. Regardless of whether the venture is successful or not, they are promoting technological progress and industrial structure renewal.What Wall Street does is often put money from one pocket into another pocket and make huge fortunes from it.
Venture capitalists are behind-the-scenes helpers for entrepreneurs, but they cannot replace entrepreneurs to perform on the stage.The key to starting a business is the entrepreneur himself.