"Jiahe Hard Technology Catcher" is a new column launched by Guoke Jiahe in 2020, which mainly focuses on the underlying thinking mode, industry observation and experience of hard technology entrepreneurship and investment.
We will not only share representative venture capital cases and research experiences here, but also combine the characteristics of hard technology projects to explore the challenges and methodologies from scientists to entrepreneurs, from laboratory technology to industrialized scale production.
Hard technology is not sexy, nor can it get rich quickly, but it is the weight of the country and is ushering in its own era. On the track of creating the future, we hope to share what we see and think along the way with more partners.
The following is the fourteenth issue of this column.
Guokejia and CASH Capital.
"First of all, the main points:
Recently, "Black Wisdom", a vertical media under "Entrepreneur &i Dark Horse", interviewed GuoKejia and managing partner Chen Hongwu, and conducted an in-depth communication around scientific and technological innovation and the group of technology-based entrepreneurs represented by scientists.
As a hard technology private equity investment institution, Guoke Jiahe has always played a leading role in the investment of technology capital in the field of hard technology, accumulating hundreds of growth samples of hard technology enterprises.
Chen Hongwu believes that technology-based enterprises can be divided into four stages: early stage, growth stage, expansion stage and mature stage. Enterprises at each stage present different characteristics, and there are also special contradictions that need to be resolved at each stage.
The note was edited by the reporter based on his oral content and gave the article to several technology entrepreneurs, who believe that the content mentioned in the interview can be used as a guide to the growth of hard technology companies in some way. ”
Dictation: Chen Hongwu
Wen | Ma Jiwei Ma Ninghao
There is a common misconception about China's scientific and technological innovation. Two of these misconceptions stand out.
Myth 1: Compared with foreign countries, China lags behind in the field of basic research.
China has been following Europe and the United States in the field of basic research, but it has not lagged behind much. Europe and the United States have accumulated in the basic field for more than a hundred years, and China's real investment has only been thirty or forty years, especially in the past 20 years.
Statistics of different calibers show that at present, the number and quality of papers published by Chinese scholars exceed those of the United States. As early as 2018, the number of papers reported by the media exceeded that of the United States. This year, the Science and Technology Index 2021 released by the Institute of Science, Technology and Academic Policy of the Ministry of Education, Culture, Sports, Science and Technology (NISTEP) in Japan showed that China surpassed the United States for the first time in the number of "papers of interest" that were cited by researchers in the top 10%. China ranks first in five areas: materials science, chemistry and engineering.
In CNS journals, under the comprehensive evaluation of indicators such as quantity, quality and number of citations, the Chinese Academy of Sciences has won the first place in the world for 6 consecutive years, far surpassing the second place Harvard University.
Misconception 2: Compared with foreign countries, China's scientific and technological achievements conversion rate is relatively low.
In fact, the success rate of the industrialization of scientific and technological achievements in the United States is not high, about 3% to 5%. China is slightly behind, about 2%-3%. China's 2%-3% is based on the disadvantage of being a latecomer, that foreign countries have occupied easily conquered territory first. From this point of view, Europe and the United States do not have so-called institutional advantages and significant transformation efficiency in the transformation of scientific and technological achievements.
China is a catch-up, an all-round catch-up.
At present, the industrial status of our country is in the second and third camps in the cutting-edge field. But in individual cutting-edge areas, it has come to the top spot. In the low-end field, especially the low-end field, China has achieved comprehensive surpassing, far surpassing the second place.
Perhaps the memory of being beaten when you are backward is too deep, and our country seems to have a stress response to backwardness, stuck neck, etc., and always feels that this is not okay, that is not OK. I always feel that the shortcomings are backward, and the backwardness is dangerous, so we must quickly make up for it. In fact, mistakes come out of busyness, and the development of the industry, like the crops in the field, has its own laws, and it cannot be promoted by picking seedlings. It also takes time to fill in the gaps. On Protracted Warfare is valid in any era. One step in place, an epiphany, a leap in a short period of time, is neither possible nor realistic.
This is the current social background for the growth of technology-based enterprises. High-tech innovation projects with technical barriers have always been the type of enterprises that Guokejia and focus on investment. Technology-based enterprises are also the main body of business discussed in this article. Before you begin, you need to make a simple definition of this type of business to frame the scope.
For technology-based enterprises, the definition of Guoke Jiahe is: having a world-class original technology, and creating a series of patent matrices around the technology - the patent moat is deep enough to be difficult to be overcome or imitated.
In view of the limited number of domestic enterprises that meet these two conditions, in the actual inspection process, "domestic first imitation" has also become one of the important measurement criteria for the technical side. Especially in the field of medicine, "domestic first imitation" is also particularly important.
In China, there are relatively few world-class original technologies. Among them, Many of guokejia and invested by guoke quantum, zhongke hai sodium and Yikang gene are companies with world-class original technology.
Guoke Quantum is an innovative enterprise initiated and controlled by Chinese Academy of Sciences Holdings Co., Ltd., jointly with the University of Science and Technology of China, relying on the technical advantages of Academician Pan Jianwei's team. Academician Pan is extremely diligent, invests a lot of time and effort, and promotes its industrialization;
Zhongke Haina is the first and one of the few high-tech enterprises in China that focuses on the research and development and manufacture of sodium-ion batteries, and the technical leaders are academician Chen Liquan of the Institute of Physics of the Chinese Academy of Sciences and Hu Yongsheng, chairman of the board of directors of Zhongke Haina and researcher of the Institute of Physics of the Chinese Academy of Sciences;
Led by Professor Xie Xiaoliang, a famous scientist and academician of the American Academy of Sciences, Yikang Gene is the founder of single-molecule enzymology and one of the founders of single-molecule biophysical chemistry. Its company's main business is to develop and apply single-cell whole genome amplification technology, and provide precision medicine detection technology products for eugenics and early diagnosis of tumors.
These companies are original technologies created by world-class scientists through long-term cultivation and long-term technical accumulation.
Even the enterprises where scientists sit, in the process of development, still have to respect the law of their development. Early-stage technology companies often encounter several major problems.
First, the problem of defining the product form.
In the early stages, although the technology company had its own unique skills, how to turn it into a product that can meet the needs of the market and solve real problems at a low cost is still a difficult task. Technology entrepreneurs will inevitably have the paranoia of "holding a hammer to find a nail", disregarding market demand, making products according to intuition, and then holding products to find the market. The results can be imagined. Chen Hongwu's biggest concern is that technology-based companies skip verification.
In his view, technology entrepreneurs need a careful plan to make products, and it is clear that this stage of proofing, the next stage will begin to small tests, pilot tests, mass production, and then large-scale market promotion. Enterprises should learn to "dialogue" with the market and constantly run into the market during the testing process. In the process of testing and running-in, adjust the business strategy, only in this way can we reduce the probability of failure.
Second, the team problem.
Technical talents, especially scientists, are full of the spirit of free exploration, and when they first established a company, they often came up with many innovative ideas, but the reality is that a company still has a long way to go from birth to really solving the "card neck" problem.
From the perspective of the market, what the company needs to do is to be able to combine the scene at one point, carry out business expansion around customer needs, and make up professional marketing and sales personnel in the process.
Third, the issue of organizational management.
Achieving the set goals requires a management system. To clarify the company's strategy, we must first clarify the mission and vision of the company, determine the company's strategic goals on this basis, and reasonably build a team with complementary knowledge structure, inclusive and harmonious knowledge structure according to the company's specific business situation.
Fourth, the issue of incentives.
Incentives are part of organizational management. The reason why it is brought out separately is because it is the most core thing of any scientific and technological innovation enterprise. Ren Zhengfei once said: "If the money is divided well, the problem of management will be solved." "Tech entrepreneurs need to learn to divide the money reasonably. Truly do what can be done to work more, work more and get more. Unreasonable distribution of benefits, it is difficult to attract the best people, but also can not retain excellent people
Technology companies in the growth stage have crossed the "death valley". The farther away from Death Valley, the healthier the business. Enterprises in the growth stage generally have three characteristics: the basic stereotype of the product, the basic construction of the team and the basic establishment of the business model. Growing businesses will still deal with problems encountered in the early stages, but they will be more difficult and their focus has changed.
At this stage, self-hematopoiesis is an important symbol of growing enterprises. A company that relies on external blood transfusions and cannot survive on its own is still in its early stages, far from the growth stage. In essence, this type of enterprise is still a "baby", a "giant baby" with a larger body.
Growing enterprises can see clear customer needs, increase sales efforts, market investment can measure the return. In this case, it is valuable to expand reproduction; it is also valuable to consider how to reduce costs and improve efficiency. Companies need to ensure that every sales or operation can bring positive cash flow. Only by doing this can we accumulate and become bigger and bigger.
In order to become bigger and stronger, it is inevitable for early enterprises to move from niche markets to mass markets, and product adjustments are also inevitable.
For example, the cost of Guoke Quantum's quantum communication products is relatively high, it has not yet been finalized, and the technology still needs to be improved. Its products have been launched and handed over to customers. However, the customer market is still relatively small, and most of the customers come from key industries protected by the state. Fortunately, the needs faced by Guoke Quantum are clear, and in the short term, there is no need to consider cash flow problems, and only need to polish products and overall business forms with the expansion of its customer base.
But it is not realistic to keep the business model of a growing business enterprise the same. As mentioned earlier, the basic stereotyped products should change according to demand, and the business models of growing enterprises should also be constantly tested and adjusted in the process of dialogue with the market. This "adjustment" is a reasonable fine-tuning, not a big bend or a sharp bend.
GuokeJiahe once invested in an AI education company. It was originally a technology company, but due to teacher training and education and slow business form, it became a technical service company. The technical attribute is diluted by the downstream service attribute. Its changes and the characteristics of its technology companies are also in line with the changes in the market, and it is now doing a good job.
This shows that when the operating environment of the enterprise changes greatly, many times the product model of the enterprise is not necessarily optimal, and the enterprise should be keenly aware of the changes in the market and itself, and make changes to maximize the value within the boundary of ability.
Compared with growth technology companies, technology companies in the expansion stage have four hallmark characteristics: 1) cash cows; 2) word of mouth; 3) competitive advantage; and 4) loyal and stable teams.
Specifically, technology companies in the expansion phase need to have a very clear "cash cow". This business can not only support the normal operation of the enterprise, but also accumulate resources. In a certain field, the enterprise has a certain status in the jianghu and has won the reputation and recognition from customers.
Compared with competitors, companies have a competitive advantage that distinguishes them from their competitors. This advantage may be a cost advantage, a technical advantage, a sufficiently high market share, or a comprehensive advantage that combines multiple advantages. In addition, technology companies in the expansion phase should have a loyal, stable and sound executive team.
EDoor Information is a successful example of diversification in Guokejia and enterprises.
Yidao Information was the earliest to do the oem of mobile phones and notebooks, the amount of OEM business is large, the profit is good, but the gross profit margin is very low, and there is no value in capital. After stabilizing the foundry business, EDW Information began to make highly reliable equipment such as waterproof, dustproof, collisionproof, and anti-static, and used it in industrial scenarios. This move has led to a rise in gross margins from 10-15% to 50-60%. With the increasing resources at the disposal of EDO, we have begun to build highly reliable devices for the new scenario of the Internet of Things. Now, its product line is more and more, and its coverage is getting wider and wider.
A hidden clue behind the diversification of EDW information is that these highly reliable equipment and foundry businesses share software technology and supply chain. The new product is the optimization and adjustment of the software and hardware of the original product. Overall, they are a new product line that has grown up in the FOUNDRY business.
Diversity is not chaos. Expansion is also not All in.
It is not advisable to cultivate a new direction with all the family foundation. Gambling-style changes often lead to disaster. This is also the most common problem in the process of diversification. Overextending, overinvestment, when there is a problem with cash flow planning, the company can easily collapse all at once.
In addition, some opportunities can not be seized if they want to, and enterprises face many resource constraints in the process of development. Enterprises should be both forward-looking and optimistic about cash flow, and reserve certain safe resources. In general, enterprises need to start from their own development, start from the situation at that time, and choose the path according to competitive advantage. Because the specific circumstances of the enterprise are different, no method is necessarily right, and no method is necessarily wrong.
Enterprises in the mature stage should put social responsibility first. In the order of importance of entrepreneurs, social responsibility precedes sustainable profitability and sustainable management. In essence, no matter how big or small the enterprise is, it has a strong social attribute. This is true even for 100% of private enterprises. Many times, if the company only emphasizes personal ownership, overemphasizes the pursuit of profits, and does not consider social value, it is difficult to become bigger, stronger, and long-term.
The operating environment of enterprises is always in dynamic change. Business operators should maintain a keen sense of touch and learn to adapt to the adjustment of the market.
For any enterprise that aspires to have a long-term foundation, it must conform to the mainstream values of society. Only in line with the mainstream values and in line with the value expectations of the society for the enterprise, the enterprise can be long-lasting.
"There is nothing new under the sun", although different stages of technology companies have different main contradictions, they must be based on the market conditions at that time, the perfection of the company's own management and other aspects and the needs of self-development, as far as possible to combine the more factors conducive to success, the better.