VC/PE group purchase "high P"

Tencent has struck again, this time to a smart hardware company.

According to Tianyan, recently, Beijing Hive Century Technology Co., Ltd. (hereinafter referred to as "Hive Technology") underwent industrial and commercial changes, and a new shareholder, Guangxi Tencent Venture Capital Co., Ltd.

Founded in October 2020, Hive Technology is an innovative hardware company focused on personal consumer electronics. Previously, the company has also obtained two rounds of financing, investors include Xiaomi Technology, Shunwei Capital, Qiming Venture Capital, Genesis Partner Capital, Yunqi Capital, Zhong Ding Capital, Saifu Investment Fund and many other well-known institutions.

Favored by a number of heavy investors, the focus of Hive Technology is really more than the meta-universe concept and the Xiaomi ecological chain. Xia Yongfeng, the founder of Hive Technology, is fundamentally one of the creators of the Xiaomi ecological chain. And along this topic to delve into a step or two, you will find that behind this "group purchase" investment, in fact, investment institutions continue to "hunt" the "high P" crowd.

Aiming at the high P population, in venture capital, especially early investment, it can also be called the most voluminous investment battlefield, and there is no one.

Xiaomi's former executives started their own businesses and won three rounds of financing in more than a year

Hive Technology is a pioneering project of former executives of Xiaomi's ecological chain.

According to public information, Xia Yongfeng, the founder of Honeycomb Technology, joined Xiaomi in 2013, successively served as product manager, vice president of Xiaomi ecological chain, general manager of Xiaomi mobile phone department, is one of the founders of Xiaomi ecological chain, has led the definition of Mijia sweeping robot and other explosive products, and excavated and incubated a number of strategic products and companies.

In 2020, Xia Yongfeng left Xiaomi and founded Hive Technology in October of the same year. According to the official website, Hive Technology focuses on the innovative hardware market of personal consumer electronics, especially the research and development of AR glasses and smart glasses equipment.

It is understood that the first AR smart glasses product of Hive Technology has entered the middle and late stage of research and development, and is expected to achieve mass production soon.

With the continuous breakthrough of underlying technologies such as image processing and optical waveguide, AR smart glasses are regarded as the next generation of personal mobile computing terminals, and the C-end landing scenes are becoming more and more abundant. According to Goldman Sachs forecast, the AR/VR industry will maintain rapid growth, with an average annual compound growth rate of 47% in the market size from 2016 to 2025, and approaching the $100 billion market in the next 3-5 years.

According to the wisdom bud patent database, as of now, Hive Technology has a total of 23 published patent applications, all of which are invention patents and are under review, and the patent layout is mainly concentrated in the fields of headsets, cameras, AR glasses and smart glasses.

As a project for the departure and re-entrepreneurship of senior executives of large factories, Hive Technology has gained the attention of capital at the beginning of its establishment. In May 2021, Hive Technology announced the completion of the angel round of investments in Xiaomi Technology, Shunwei Capital and Zhongyuan Capital, and became a member of the Xiaomi ecological chain. In August 2021, Hive Technology completed the Pre-A round of financing of 10 million US dollars, led by Qiming Venture Capital, and followed by Genesis Partner Capital, Yunqi Capital, Zhong Ding Capital and Saifu Investment Fund.

Coupled with Tencent, which entered the market in this round, Hive Technology was established for more than a year and has won three rounds of financing.

As of now, Qiming Venture Capital holds about 8.6% of the shares of Honeycomb Technology, which is the largest institutional shareholder, and the newly entered Tencent holds 7.33% of the shares, and Xiaomi Technology and Shunwei Capital hold 5.07% of the shares respectively.

VC/PE hunts "high P", and big funds become winners

Xia Yongfeng and Honeycomb Technology are just a microcosm of the departure of executives of large factories to start a business. Prior to this, entrepreneurs from BATJ, Huawei, and Xiaomi have spread all over the industry, and many projects have become head unicorns.

Taking Baidu as an example, the horizon robot founded by Yu Kai, a former Baidu executive and executive director of Baidu Research Institute, is currently the only enterprise in China to achieve mass production of vehicle-level artificial intelligence chips, with a valuation of up to 5 billion US dollars; according to media reports, The Xiaoma Zhixing co-founded by Peng Jun, former chief architect of Baidu autonomous driving, and Lou Tiancheng, former chairman of Baidu Unmanned Vehicle Technical Committee, has a valuation of more than 5.3 billion US dollars and rumors about car-making plans. In addition, Dai Wenyuan of the fourth paradigm and Lei Ming of the Cool My Music Box have also held important positions in Baidu.

Tencent, Tencent No. 18 employee Li Hua founded Futu Securities, the company was listed on the NASDAQ in the United States in 2019, the number of registered users in the world currently exceeded 15 million; Xiaohongshu co-founder Zeng Xiulian is also from Tencent, once in Shenzhen headquarters responsible for policy and government-enterprise cooperation, in November 2021, Xiaohongshu received 500 million US dollars of financing from Temasek and other investments, with a post-investment valuation of up to 20 billion US dollars; in January this year, the former general manager of Tencent AI Lab, The hyperparameter technology founded by T4 technical expert Liu Yongsheng has just completed a B round of financing of 100 million US dollars, led by Sequoia China, followed by Wuyuan Capital and Gaorong Capital, and the post-investment valuation reached 1 billion US dollars, becoming a new unicorn.

With its own "big factory aura", these executives often get market attention as soon as they leave their jobs to start a business, and they also become the target of VC/PE scrambling.

Some media have reported that some head institutions will specifically establish a "giant talent pool" to track the dynamics of senior executives in key positions in key departments of large factories, and once they leave their jobs or have entrepreneurial intentions, institutions will hear the wind and strive to contact them as soon as possible.

For example, the above-mentioned Yu Kai, who founded Horizon Robot in May 2015, two months later, the company received millions of dollars in angel round financing, investors including Wuyuan Capital, Sequoia China, Hillhouse Capital, GSR Venture Capital, Zhen Fund, Linear Capital, Innovation Factory 7 well-known institutions.

According to Yu Kai, Horizon's first round of financing was particularly smooth, "I didn't even write BP, investors sent money over."

An early investor analyzed to the investment network, "The 'high P' of the departure of large factories to start a business has three advantages: first, they are all graduates of famous universities, have rich combat experience in the 'regular army', and their judgment of business will be more rational; second, these departing executives usually have achieved financial freedom, and then start a business will be more relaxed and will not pay too much attention to short-term returns; third, the work experience of large factories allows them to have more resource advantages, which is critical to the survival of start-up enterprises." For investors, choosing such an entrepreneur in the early stage of investment will also have a greater chance of success. ”

According to incomplete statistics from the investment network, in the past year, nearly 10 large manufacturers "high P" have left their jobs to start a business and obtained financing from a number of well-known venture capital institutions.

Through the above table, it is not difficult to find that the first round of investors of these large factories is almost all large funds, such as Sequoia, Hillhouse, Gao Rong, Wuyuan, Yuanjing and so on.

The logic behind it is not difficult to understand. For example, Gao Rong, which was initially positioned as China's Founder's Fund, has a LP that covers founders or core executives of top TMT companies and traditional giant companies, and has a natural advantage in entrepreneurial relationships.

Look at sequoia and Hillhouse. Investment Network once shared the main playing methods of large fund investment in the early days of This Foshan Deep Pocket, A Little VC, and one of the strategies was to seize the stars of various industries high P and strongmen.

An article about the Sequoia Seed Fund also mentioned: "Before sequoia seed investors meet entrepreneurs, the middle and back office departments will cooperate with the former to grasp sufficient background information." Sequoia's data and operations team collects the technical and business dynamics of various industries, the dynamics of various funds, and the new trends of technology bulls and middle and senior executives of large factories. ”

That is to say, the "high P" have been closely watched by large funds before they leave their jobs.

There is another trend worth paying attention to. After the companies founded by these big factory executives became unicorns, new entrepreneurial projects were gradually fissioned internally.

For example, Didi. Didi founder Cheng Wei was the deputy general manager of Alipay's B2C business unit, and left his job in 2012 to start a business and establish Xiao Orange Technology. In 2018, Wang Ying, the former general manager of Didi Uber's business unit, resigned from her senior management position and set her sights on the e-cigarette industry to found Wuxin Technology (RELX main company). Up to now, Wuxin Technology has obtained 3 rounds of financing, and investors include Sequoia China, IDG Capital, Source Code Capital, etc. On January 22, 2021, Wuxin Technology officially landed on the New York Stock Exchange, with a market value of $45.8 billion on the first day of listing.

Not long ago, after Xiaoma Zhixing adjusted the truck department, there were also a number of technical backbones who left to start a business. Among them, Pan Zhenhao, former CTO of Xiaoma Zhika, and Sun Youhan, head of planning and control of Xiaoma Zhika's AMERICAN team, co-founded the self-driving truck company Kinte Zhika, and obtained nearly 10 million US dollars of angel round financing from Wuyuan Capital. Sun Haowen, former senior director of R&D of Xiaoma Zhika, and Ding Fei, former executive director of IDG Capital, jointly established the self-driving truck company Qianhang Technology, and in December 2021, Qianhang Technology completed a financing of about 200 million yuan, with investors being Xiaopeng Motors, SF Holdings, IDG Capital and BV Baidu Venture Capital, with a post-investment valuation of more than 1 billion yuan.

High P investment, the most volume battlefield

Why is it that the competition aimed at the high P population is the most volumeary battlefield for early investment?

First, the logic of early investing is itself based on "people."

You've probably heard every investor talk about a common saying: I like serial entrepreneurs the most. The large factory high P crowd is essentially the same kind of person as the serial entrepreneurs, but the entrepreneurial process is one on the platform and one on the outside, and the ability long board is slightly biased.

Second, the thickness of the high P population is better, and the strategy is more extensible than that of serial entrepreneurs.

For example, last year, Hillhouse and GGV invested in Xiamen's Karent, the founder's label is more layered, Karent is Huawei Kunpeng ecological enterprise, not a simple "big factory high P", but "high P in the big factory ecological enterprise".

Again, this investment strategy is the most worry-free, how to "worry-free"? I will talk about it in three layers.

First, because everyone will grab, then you must be fast, with fast as the premise of the highest priority, the fund does not need a complicated decision-making process, and it is a victory to invest in it, even if it is planted, it is also the judgment error of everyone, and you will not be "more wrong" than others.

Second, this kind of investment communication is efficient. The communication efficiency between dealteam and IC is high, and the communication efficiency between GP and LP is also high. - Sometimes it can be "overdone". For the entrepreneurship of this kind of high P population, LP is also enthusiastic, my colleague Zhang Nan interviewed an investor some time ago said, "LP asked when due diligence you, XX do you have no layout, and then you look confused and say no, and then LP must scare you!" ”

Third, this trick is easy to learn. Doing mapping talents is always faster than doing industry segmentation research one by one, right? Last year, Teacher Cao wrote country garden venture capital analysis, you can see CVC admission to the table, but also from the "strongman" to start. This trick is used by everyone, and everyone says it is good.

Finally, this kind of investment, there is no big player to eat all, you all have the opportunity - more or less.

A very simple example, no recruits came out to start a business, and was also greeted by the market with "crazy robbery", but the first money did not take the giant and the big fund, but chose Yuanjing Capital. How simple the reason is, Yuan Jing has Ali's old friends over there, and people "specialize in Ali system". Again, this type of founder is more inclined to introduce large capital in the later rounds, but small funds have some advantages in the investment of this group of people. And networks, circles, fellow citizens, alumni, you always have the investment opportunities that are bound to your identity, and others can't take away and can't copy it. (Text/Wang Manhua Zhang Junwen, Source/Zhongzhong Network)