The author | Blue Lotus wonderful
"Just now, the arms race of domestic Internet manufacturers is over." A friend of the Internet industry made such an exclamation in the community of Chopped Pepper TMT.
Today, it is reported that byteDance's strategy and investment department was dissolved, and the original no. 1 Zhao Pengyuan transferred to the president's office with 5 people to be responsible for the company's overall strategy. The entire strategic investment department is partially transferred to the business line to do strategy, and part is please go.
ByteDance responded that the company took stock of and analyzed its business at the beginning of the year, decided to strengthen its business focus, reduce investment with low synergy, disperse the employees of the strategic investment department into various business lines, and strengthen the cooperation between the strategic research function and the business. Planning discussions are also underway for the business and teams involved.
"For the first time, I felt so close to being optimized, and I almost went to the Byte Financial Investment team half a year ago, and I could feel that they were working hard to do something valuable." A friend lamented.
"In the future, I will no longer have to worry about grabbing projects with Byte." A primary market investor sighed: "At present, at least it is good for VCs, big factories have money and resources, and VCs can't compete for projects at all."
In 2021, ByteDance acquired VR company PICO for 9 billion, which has triggered heated discussions in the industry. According to media reports, before ByteDance's contact, the valuation of PICO was about $1 billion, or even lower.
Selling to large factories with money and resources has once been the most ideal destination for countless startups.
The Internet factory is also known as "startup harvester" and "the strongest CVC on the surface" because of the investment layout throughout various industries. On the statement of each quarter, even if the main business revenue is not satisfactory, it can always rely on the investment business to deliver a beautiful performance.
But now, such an era may be over.
This is not a bad thing. Areas where big factories previously relied on investment to maintain their advantage will become fertile ground for new startups to fully compete.
"In the past, it was difficult for small companies to make a difference in games, online music, search, e-commerce and other fields, and eventually they could only enter the ecosystem of large factories and work for large factories, and in the future, there may be more opportunities to grow into new giants." An Internet industry practitioner said.
Decoding Byte Investment Department: War Investment + Financial Investment, "Crazy Grab Project"
"I've heard that the war investment team may have an internal transfer strategy, if it can't afford to set up a new fund for a while." It is true that the people who invest in the money have no place for them. A former employee who worked at ByteDance told Chopped Pepper TMT.
According to the above-mentioned employees, byte's investment department is mainly divided into two departments, one is strategic investment and the other is financial investment.
Strategic investment is mainly based on byte's business layout to make investments, for example, after launching the free online text platform Tomato Novel in 2019, Byte has continuously invested in 5 online literature companies including Tower Reading Literature and Dingtian Culture, etc., such a layout is to provide a content library for Tomato Novel.
Financial investment pays more attention to financial returns, which may not be directly related to the business development of Byte itself. The goal is to preserve and increase the value of cash assets through investment.
In January 2021, Byte once invested in the health instant food brand Shark Fit, shark fit founder Qiang Xiaoming once said in an interview that the important premise of ByteDance's investment in Shark Fit is to be optimistic about the healthy diet track for young people, and Shark Fit is the head brand of this track.
ByteDance Investment Infographic, Deadline: August 2020
However, after the investment, Byte will also provide support for these brands on their own platforms. According to Qiang Xiaoming, after the financing was completed, Byte docked a special e-commerce team for Shark Fit for business assistance.
In addition, the investment of brands such as Half, Empty Card, and Manner Coffee belongs to the business actions of the financial investment department.
When the employee was in the summer of 2020, the financial investment department was still a small branch under the strategic investment. At that time, Byte's war investment department had more than 80 employees, half of whom were interns, and then the war investment department began to stand independent.
Later, in the March 2021 report, it was mentioned that Byte's financial investment department has 12 employees, of which 3 focus on consumer project investment, and 2 employees will also cover other areas when looking at the consumer field, the head of the department is Yang Jie, who was the vice president of Sequoia Capital.
Different from the hierarchical levels of other departments, the structure of the byte war investment department is very simple, "The person in charge of the byte war investment department is Zhao Pengyuan, the superior is Zhang Yiming, and the subordinate is our beater." The byte former employee said.
The "era of standing in line" may end
The so-called strategic investment is actually to help Internet companies quickly enter related industries through mergers and acquisitions. This is also the best choice for many Internet companies to enter the new track.
When Alibaba laid out local life, it completed the acquisition of the takeaway service platform "Hungry". In 2016 and 2017, it invested in Ele.me twice, with a total investment amount of US$2.25 billion, and in 2018, it was wholly owned by Ele.me at a price of US$9.5 billion. After that, Ali acquired Baidu takeaway, adjusted it to Ele.me Star Selection business, and then merged with word-of-mouth to establish "Ali Local Life Service Company".
After a series of investments and mergers and acquisitions, Ali completed the business layout of his local life.
ByteDance's current most trafficked product, Douyin, is also through mergers and acquisitions.
In November 2017, ByteDance acquired Musically, an American short video platform, and subsequently integrated it with TikTok, an overseas version of Douyin, adding AI data streams on the basis of Musically.
To this day, there are still stories in the industry that Zhang Yiming and Su Hua, the former CEO of Kuaishou, also fancifully intend to acquire, but because the conditions set by the founder of Cheetah Mobile, one of the shareholders of Musically, were more demanding, Zhang Yiming finally accepted the conditions, and Kuaishou also rubbed shoulders with Musically.
Today, Musically's two founders, Zhu Jun and Yang Luyu, are both heavily valued by Byte.
Prior to this, Byte had invested nearly 100 million yuan in the game company code, and this company also carried the aura of the metacosm on its head.
It can be seen that when Internet companies enter the new track, investment and mergers and acquisitions are a good choice. And many startups will also choose to eventually sell to BAT, or through "taking sides" to become companies in the giant ecosystem.
Taking Xinli Media as an example, this film and television company has been queuing for many years, and has hit the IPO three times, but it has failed three times, and in the end, Xinli Media chose to sell itself to Yuwen Group with a valuation of 15.5 billion yuan to achieve a curve listing. At that time, the industry remained optimistic about the acquisition, "Xinli also has a good home, if you continue to wait for the IPO, I don't know when it will last." ”
After the merger into the Reading Group, the entire Tencent ecosystem has formed a closed-loop layout in the film and television field from the source of IP development, to the investment of Tencent Pictures and Penguin Pictures, and then to the production of Xinli Media projects. Xinli Media has naturally become a part of Tencent's ecology.
How crazy is the industrial capital represented by the war investment department of the Internet giant factory?
In February 2019, Tencent ZhanTou disclosed its first report card in 11 years: a total of 700 companies were invested, of which 63 had been listed, 122 had become unicorns with a market value/value of more than US$1 billion, and 16 invested companies had achieved IPOs in 2018, setting a record.
At the end of September, at the Alibaba Investor Conference, CFO Wu Wei released an important data - Alibaba's strategic investment is worth about $83 billion, and so far, Alibaba has withdrawn from more than 50 investment projects, achieving investment income of 18 billion yuan.
At one time, the CVC of Ali, Baidu, and Tencent was the "god" of the entire entrepreneurial circle, and whose investment the founder accepted and did not accept meant taking sides. Even, in addition to these Internet manufacturers, industry leaders such as Lenovo Group, Country Garden, and New Hope have also begun to have their own CVC investments.
After the retreat of the big factories, who pays for the high valuation?
Take this year's hot consumer track as an example. Meituan Dragon Ball 5 billion yuan valuation grabs mo mo dim sum bureau, Tencent sells Film and Sheng Xiang Ting, ByteDance invests in a lazy bear hot pot that seems to be less related to the main business...
High valuation, the most typical is the Mo Mo Dim Sum Bureau, when the number of its stores is only 14, it is rumored to raise hundreds of millions of yuan, and there are even rumors that "the valuation of a single store is nearly 100 million yuan". In the subsequent rounds, the valuation rose from 2 billion to 5 billion, which did not take too long.
Without the giants' war capital, who will pay for these high valuations?
Some people believe that with the retreat of large factories and investment, many projects in the primary market may not get money. Moreover, on the surface, it seems that VC agencies have less competitive pressure, but they also have fewer exit channels.
But in fact, many large factories can set up in vitro funds to invest even if they do not have a war investment department. Previously, iQiyi had jointly established a "Light Arts Fund" with Everbright Holdings; a more well-known in vitro fund may be Xiaomi's Shunwei Capital.
Shunwei Capital is not a fund owned by Xiaomi, but a fund established by xiaomi founder and Singaporean Xu Dalai to invest in companies in the Xiaomi ecological chain. For example, enterprises within the scope of Xiaomi's smart home, such as Huami, Yunmi, No. 9 balance car, and stone sweeping robot, have all received shunwei investment.
I believe that the founders of start-ups who have raised funds have dealt with the problem of VC, if what you are doing now is done by big factories. What do you do? Can you surpass them? For many founders, it's a soul torture. Indeed, it is easy for large factories to build their own moats in a field by investing.
"Invest or M&A first, and then give traffic and resources." Internet entrepreneurs who can't get the resources of big factories will generally have a very difficult time. A VC investment friend said that the withdrawal of large factories is, in a sense, also good for startups.
In addition, with the rise of epitaxial mergers and acquisitions, the scale of goodwill in the A-share market has expanded rapidly in recent years.
Wind data shows that the goodwill of A-share listed companies was 651.1 billion yuan in 2015, compared with 1.31 trillion yuan in 2017, and the goodwill of A-share companies of 1.45 trillion yuan in 2018 hit a record high. Even if mergers and acquisitions and restructuring continue to decline in 2019 and 2020, by the third quarter of 2020, the goodwill scale of all A-shares will still be as high as 1.28 trillion yuan.
Behind these goodwill are often with the corresponding performance bet, once the merger and acquisition of the company can not complete the bet, the listed company will produce goodwill thunderstorms. Some insiders complained that the loss caused by a thunderstorm can buy listed companies 5 times.
The investment and mergers and acquisitions of these listed companies generally have certain strategic significance. This time, Internet manufacturers began to take the initiative to withdraw capital from investment and mergers and acquisitions, which also has a certain warning effect on the mergers and acquisitions of listed companies.