Today, another chip design company rings the bell.
The 46-year-old founder, Zhang Liang, graduated from Tsinghua University in his early years and is the "second wave of entrepreneurs" in China's chip industry. Before founding Hengxuan Technology, Zhang Liang worked in a number of well-known semiconductor companies and has been deeply involved in the field of semiconductors. Since then, LI Xiaojun, a partner at IDG Capital, has known him and become a founding investor of Hengxuan Technology.
Plunged into the torrent of science and technology entrepreneurship, Zhang Liang has been determined to be a world-class chip company from the beginning. However, it is not easy to start a business or invest in the chip field - the large investment of funds and the long return cycle have deterred many VCs/PE in the early years. Fortunately, Hengxuan Technology has the support of a number of investment institutions behind it, in addition to IDG Capital, there are also Shenzhen Venture Capital, Qingkong Ginkgo, Yuanhe Puhua, Xiaomi Yangtze River Fund, Alibaba and so on. Today, Hengxuan Technology's earliest investment direction exclusively tells the growth story behind the investment community.
5 years after its establishment, this chip company rang the bell
The market value exceeds 45 billion
Founded in 2015, Hengxuan Technology is a "young" chip company.
However, its founder, Zhang Liang, has been operating in the semiconductor industry for many years. Born in 1974, Zhang Liang graduated from Tsinghua University with a major in microelectronics and went to North Carolina State University in the United States for further study, majoring in electrical engineering and computer science. Later, Zhang Liang worked as a chip design engineer in many well-known semiconductor companies.
It was also during this period that Zhang Liang became acquainted with Li Xiaojun, a partner at IDG Capital. In 2015, Zhang Liang chose to start a business, and he also started a business with his former old comrade-in-arms Zhao Guoguang. At this point, Hengxuan Technology was officially born.
Li Xiaojun accompanied Hengxuan Technology from 0 to 1 and was familiar with the company's entrepreneurial process. He recalled that the initial general direction was to combine the experience of chip design in the mobile phone industry and the concept of future IOT and new wearable devices, and whether it was the founder himself or IDG Capital, he invested a lot of money and energy from the beginning to polish in the direction of segmentation, and finally locked in the research and development, design and sales of smart audio SoC chips.
The positioning of Hengxuan Technology is not the same as most chip companies in China. Due to the late start, a large number of domestic chip companies have cut from making alternative products more than a decade ago and taken the road of cost performance. After years of accumulation, the mainland's own industrial chain and talents have been enough to support the realization of international leading level in some sub-sectors, and Hengxuan Technology has positioned itself as a world-class chip company from the beginning. "They came out of the first generation of chip companies, so what's the point of repeating the previous path?" Li Xiaojun concluded that Hengxuan Technology is a typical second-generation entrepreneur in China's chip industry.
"He's not like the average engineering man." Li Xiaojun commented on Zhang Liang, "Zhejiang people, especially business acumen; responsible for the work is very comprehensive, the market, technology, software are managed... The comprehensive ability is particularly strong, the market sensitivity is also good, and it is particularly entrepreneurial and sharing spirit. Under the helm of Zhang Liang, Hengxuan Technology has developed rapidly, and has successfully sounded the bell of listing in the five years since its establishment, with an opening market value of 46.9 billion yuan.
How the AIoT chip stealth champion is forged
9 months of revenue has exceeded 600 million
Founded 5 years ago to land on the science and technology board, Hengxuan Technology is a dark horse in the industry - only 3 years of establishment to achieve a turnaround, the establishment of 5 years of net profit of more than 60 million. Especially this year, its performance is even more eye-catching - the prospectus shows that from January to September 2020, the company achieved operating income of 669 million yuan, an increase of 40.41% year-on-year; achieved a net profit of 117 million yuan, a substantial increase of 165.39% year-on-year.
What did this chip company, which has not been established for a long time, do it right? In Li Xiaojun's view, "a really good chip company, the founder should be able to achieve the perfect combination of market and engineering." Behind the rise of Hengxuan Technology, it is not only its continuous innovation in technology, but more importantly, it has seized the opportunity of the market.
With the release of Apple's first generation of AirPods, the prelude to a new round of technological innovation in the field of headphones has begun, which has become a perfect entry point for Hengxuan Technology to enter the AIoT industry. Hengxuan Technology's current main business is the research and development, design and sales of smart audio SoC chips, and its products are widely used in smart Bluetooth headsets, Type-C headphones, smart speakers and other low-power smart audio terminals.
Among them, the most worth mentioning is that the BES2300 series of smart Bluetooth audio chips developed by Hengxuan Technology in 2018 has enabled Hengxuan Technology to successfully enter the high-end TWS headset market, directly standing in the same arena with international chip leaders such as Qualcomm and MediaTek, as well as domestic chip leaders such as HiSilicon. It is understood that the chip uses a 28nm advanced process, which not only has a low cost, a small footprint, and the power consumption is far lower than that of other chip giants.
"The entire IoT industry is changing dramatically, and brands are becoming more and more concentrated. And these brands also have simple requirements for suppliers – cost, performance and service. In particular, performance and service are being increasingly valued by the head of the brand manufacturers. Li Xiaojun analyzed.
With leading technology and excellent performance, Hengxuan Technology's products have not only been adopted by world-renowned mobile phone brands such as Samsung, Huawei, OPPO, xiaomi, etc., but also favored by professional audio manufacturers such as HARMAN, SONY, and Skullcandy.
For Hengxuan Technology, gaining a foothold in the headphone industry is just the beginning. With the outbreak of intelligent Internet of Things, intelligent voice interaction scenarios (such as smart wearables, smart homes, etc.) are becoming more and more numerous, lighting, door locks, air conditioners, refrigerators, car brackets and other devices are rapidly voiced, more and more consumers require terminal devices with intelligent voice interaction capabilities. The key behind all this is intelligent voice interaction, still inseparable from the intelligent audio chip, for Hengxuan Technology, this will be an unlimited market.
In particular, the smart speaker, which is considered to be the most indispensable in the smart home system, has attracted many Internet giants at home and abroad to enter the game. But what is less known is that Hengxuan Technology's chips have widely supported the intelligent voice assistants of mainstream manufacturers such as Google, Baidu, Ali, Samsung, Huawei, and Xiaomi, and have become "AIoT chip hidden champions".
IDG Capital has been running for many years, and Shenzhen Venture Capital and Ali have entered the game
Early investors tell the story behind it
Looking back on the past 5 years, Hengxuan Technology is inseparable from the support of a number of venture capital institutions. According to incomplete statistics from the investment community, Hengxuan Technology investors include IDG Capital, Shenzhen Venture Capital, Xiaomi Yangtze River Industry Fund, Qingkong Ginkgo, Yuanhe Puhua, and Alibaba.
Among them, IDG Capital is the founding investor of Hengxuan Technology. As a veteran of the semiconductor industry, Li Xiaojun was the technical backbone of Marvell and Bradcom, participating in and leading the design and development of multiple chips. The experienced Li Xiaojun found that "they (Zhang Liang) see greater market opportunities." ”
"Gamblers, on this one, is enough determination for me." When recalling the investment logic, Li Xiaojun told the investment community, "In such a fierce chip competition industry, Zhang Liang's experience in the industry at the beginning has proved his ability, from this point of view, what direction to do is a secondary factor." What is more rare is that they are repeat entrepreneurs, who have rich experience and customer accumulation before, and want to do something that must go beyond before, and have higher requirements for themselves. ”
In his view, a really good chip company must be a perfect combination of market and engineering, "everyone may have underestimated the chip company's requirements for the ability of the founder before, always thinking that this is entirely the business of engineers, in my opinion, it may not be so." Li Xiaojun further explained that chip entrepreneurship is by no means simply to do a good job, the wine aroma is also afraid of deep alleys, engineering capabilities, customer accumulation and forward-looking feelings for the market, indispensable.
Since 2016, IDG Capital has participated in the only 3 rounds of financing of Hengxuan Technology. According to the prospectus, IDG Capital (the main body is RUNYUANI. and RUNYUANII.) is the largest external shareholder of Hengxuan Technology, with a shareholding ratio of 17.07%.
After the investment, Li Xiaojun still maintained a deep and relaxed communication with the team of Hengxuan Technology, and they often discussed the daily life and confusion about the company when they drank coffee together. Of course, IDG Capital has also brought hengxuan technology other resources in addition to funds.
In addition to IDG Capital, Shenzhen Venture Capital and its Qianhai Wanrong Laterite, which it participates in managing, is also one of the important investors of Hengxuan Technology, which is also the fourth semiconductor listed company won by Shenzhen Venture Capital in 2020. Obviously, with the advent of the semiconductor investment boom in the primary market, the real early value investors have entered the harvest period.
Seventeen years of silent layout,
IDG Capital's most complete chip layout was exposed
With the listing of Hengxuan Technology, IDG Capital's semiconductor layout surfaced.
In 2003, before Li Xiaojun joined, IDG Capital had already begun to lay out the semiconductor industry. As early as 1997, the first listed project won by IDG Capital, Fenghua Hi-Tech, was from the direction of advanced manufacturing, and then laid out in chip design, sensors, integrated circuits, semiconductor equipment and other fields, invested in more than 10 sub-industry head projects, and more than half of the companies have been or will be listed.
In fact, before the identity of an investor, Li Xiaojun's unknown identity was a semiconductor industry practitioner. He was the technical backbone of two publicly traded companies, Broadcom Corporation (BRCM) and Marvell Semiconductor (MRVL), where he was involved and led the design and development of chips. His experience has given him excellent industry sensitivity.
Li Xiaojun said frankly, "There are actually two waves of CHIP investment peak of IDG Capital, the first wave is more than ten years ago, and these two or three years are the second wave." Those chip companies listed today, after ten years, as long as you invest at that point, and then survive, today's earnings will be very good. ”
In fact, Hengxuan Technology is not the first IPO chip company that IDG Capital has won this year. When domestic institutional investors rarely paid attention to the chip industry, IDG Capital participated in the A round of financing of VeriSilicon shares in 2002, which was also the first round of financing of VeriSilicon shares. In August this year, VeriSilicon was successfully listed on the Science and Technology Innovation Board.
In addition, in 2005, IDG Capital invested in Amlogic, a leading TV and set-top box integrated chip company in the industry, and 14 years later, Amlogic was listed on the name of the first proposed company accepted by the Science and Technology Innovation Board, Science and Technology Innovation Board 001.
In 2007, IDG Capital took the lead in investing in the world's leading communication chip company, Retico, and on January 19, 2018, Spreadtrum and Reedico, a subsidiary of Tsinghua Unigroup, officially completed the integration and changed its name to Unigroup Zhanrui. As the core enterprise in the industrial chain of Tsinghua Unigroup integrated circuits, Tsinghua Unigroup has developed into one of the world's top three mobile phone baseband chip design enterprises, China's largest pan-chip supplier, and China's leading 5G communication chip enterprise.
In Li Xiaojun's view, investment chips follow two lines. One is to meet good entrepreneurs, but also a promising market, you must be decisive. But for the chip industry, excellent entrepreneurship has always been a scarce resource, and once discovered, it must continue to be locked. At this point, Li Xiaojun's investment in Aojie Technology and Hengxuan Technology is the same.
Aojie Technology (ASR) is currently the only company in China except HiSilicon that has all Netcom technology, and IDG Capital has bet early on at the beginning of the establishment of Aojie Technology. On August 26, the Shanghai Securities Regulatory Bureau disclosed that Aojie Technology intends to list on the Science and Technology Innovation Board and signed a listing counseling agreement with Haitong Securities, and IDG Capital is about to win another IPO. Li Xiaojun said, "We invested in ASR 5 years ago, which has nothing to do with whether the market is hot or not." ”
Another line is to follow the market, in Li Xiaojun's view, when the market heat is higher and more active, it is normal for investment institutions to spend more energy on attention, and the heat of the market also allows chip projects to have more opportunities to exit. "In the past two years, my personal investment time in chips, including the investment of funds, has indeed increased a lot compared with the past."
As we all know, the chip industry has a high investment threshold, high investment, high risk, and long return cycle, which has deterred many VCs/PE. But now, to promote the localization of integrated circuits, to achieve supply chain security and controllability has been imminent, with the strong support of national policies, in the past two or three years more and more venture capital institutions began to invest in semiconductors.
Li Xiaojun reminded, "Chips are very hot now, competition is fierce and valuations are high. But this is not an industry like To C that can step on the accelerator and move forward, and it is not necessarily possible to produce products with money piles. Therefore, how to find long-term value in this industry is a common challenge for everyone, including investors. ”