Venture capital, big turns

The author | Zhang Jun

Editor| Gao Yulei

In November 2016, news came from a noisy television set that Trump had been elected President of the United States. Xu Chuansheng (shēng) immediately went to Zhang Ying to express a hint of concern.

The year-and-a-half-long campaign speech of the American real estate billionaire has made many people worry that Sino-US relations may enter an unforeseen conflict and even affect the commercial industry.

Throughout 2016, Two of Matrix Partners' (founding managing partners) – Ying Zhang and Xu Chuansheng – faced other challenges. Externally, the agency, which has spent 8 years at this time, rose from the wave of mobile Internet and established a foothold in China's venture capital industry, could have sat back and relaxed; however, some red flags made it impossible for them to ignore.

At that time, more than half of the investment of Jingwei was a mobile Internet project, but under this cycle, the opportunity for model innovation became depressed. What is even more headache is that the entire market has become a competitive game, from O2O to the sharing economy to community group buying, these small waves emerge in an endless stream, and the outbreak is more ferocious and short-lived. A new opportunity has just emerged, everyone has pounced like a swarm of bees, and the industry has become a sea of blood in an instant.

"This so-called disorderly expansion of capital makes us feel from the bottom of our hearts that many things are meaningless," Xu Chuansheng said, "combined with what we felt at the time, we needed to exert more strength in scientific and technological innovation." ”

Now, everything has changed.

This article is based on the fate of modern VCs in two decades, Chinese characteristics, and a big turn from betting model innovation to betting on China's core technology.

| The Wasteland

Before Modern Venture Capital arrived in China, Xu Chuansheng came.

At this time, he had just turned 24, graduated from the computer department of Nanyang Technological University two years ago, joined the software company Lotus (later acquired by IBM), and was a systems engineer.

It was the beginning of the chaos of Chinese enterprise services, with a piracy rate of 99.99%, and local software companies such as Yonyou and Kingdee had just been established. For Lotus, the Chinese market is still in a desolate state, managed by the president of Southeast Asia, and urgently needs a person to reclaim it. Looking around, Xu Chuansheng is the best candidate: not only can he speak Chinese and understand computers, but more rarely, he is the only bachelor on the team.

In the autumn of 1995, Xu landed at the capital airport, which has only one terminal. Singapore was sent to support the newly established Chinese branch for half a year.

Not long after, an unknown private enterprise in Shenzhen caught his attention. Lotus's customers in China are mainly banks, state-owned enterprises, etc., private enterprises at that time to buy pirated copies is the norm, this private enterprise not only buys genuine software, but also a single is thousands of sets, but also hired IBM to do consulting. "What kind of company is this?" So rich? He thought to himself. The company is called Huawei.

In a land of waste, Xu was promoted at a rare pace — from engineer to regional general manager managing hundreds of people in just four and a half years. He has the self-discipline and fighting spirit of professional managers. However, this foreign company job with good remuneration and glamorous appearance began to lose its charm. His eyes were drawn to a chaotic new thing - from 1998 to 1999, Tencent, Ali, Sina, etc. were founded, and the wave of The Chinese Internet came. Many young people from foreign companies are looking forward to the opportunity to start a business in the sea. On the corner of the new century, Xu made a decision: leave large enterprises and join this entrepreneurial tide.

At this time, a Singapore venture capital VC called Huaying Venture Capital, which had just been established for a few years, found him. Singapore was deeply affected by the myth of the American Internet wealth creation in the 1990s, inspiring to create an "Asian Silicon Valley", and the venture capital culture of the United States also penetrated into it. Huaying Venture Capital's investment focus is Southeast Asia and the United States, but they smell the huge potential of the Chinese market. Xu knew nothing about venture capital, but simply thought: "In the past, if you stay for a year or two, you can learn how to start a business and how founders do things." "For some of the first-generation investors, borrowing investment to see the project and enter the business is the original intention of stepping into the VC industry.

However, he could not have expected that standing at the crossroads of the millennium and the beginning of his investment career, the night would suddenly come.

In March 2000, Xu became an investor for only a month and suffered a major crash in the US stock market. The Nasdaq peaked at 5,048, followed by a long and desperate 30-month-long slippery slope. The collapse of nasdaq announced to the world that the Internet bubble in the United States had burst. This is a huge blow to the 29-year-old investor who has just transformed.

He returned to Singapore for half a year, struggled to raise funds in a dismal situation, and worked hard to raise a small amount of money - $30 million. At the end of the year, he went to China for the second time with hard-won funds and chose his office in Pudong. At this time, Shanghai Jin Mao Tower had just been completed and opened for business, and was known as the "tallest building in Chinese mainland". Xu recalled that he also went around the towering building, but soon found that he was really ignorant: "It's too expensive to rent." He rented a small room of 100 square meters and only two conference rooms in the China Merchants Building next to him, and began the investment road with a rather unpretentious five-person lineup.

Blows followed. The first shot is pain and lesson. For $2.5 million, he invested in a company founded by Stanford graduates that makes SMS and MMS management systems. The project has a gorgeous founder resume, a strong returnee and technical temperament, and also a continuation of his own to B software business genes, everything looks perfect. He sits on the board of directors and communicates with the founders every week, like the first newborn in the business field, pouring out his fatherly efforts. Later, the project failed.

The failure of the first investment forced him to reflect deeply: the first is that the water and soil cannot be invested; second, the technology cannot be superstitious, and if the product, sales, and operation lack of offense, the first-mover advantage brought by technology will be lost; finally, it will return to people. The founding team of the project is three classmates, maintaining the brand of the alumni association - the shares are divided equally, and the minority obeys the majority.

Excessive democracy poses a deadly dilemma: no soul. He realized that at least in the entrepreneurial stage of the company, there must be a soul figure. In the face of the dilemma of life and death, there must be a person who has the courage to make decisions against the crowd - the front may be a willow and a dark flower, or it may be an abyss.

He acknowledges a tone in American business development over the past decade that companies that founders continue to dominate have performed best, such as Tesla; if founders are too old or deceased, successors are preferably disciples who have been deeply baptized by the founder's spirit, such as Apple, Cook, a disciple of Jobs for nearly 20 years.

These investment ideas, which now sound commonplace, were learned at the cost of real money. But that's a story for another day.

IDG founding partner Xiong Xiaoge came to China earlier, in 1993. As the first foreign venture capital to enter China, IDG has not withdrawn any projects for 7 consecutive years. These first-generation Chinese investors, who had returned from overseas and wanted to show their might, sowed a handful of seeds on the earth with great expectations, carefully fertilized and waited quietly, but there was not a single green bud on the barren land under black pressure. The loss and haste of the heart can be imagined.

Xu Chuansheng said that for more than two years, the biggest question in his mind was: Did he step on the wrong road? Does Chinese VCs have a future?

| Difficult landing

Hyundai Venture Capital in China dates back to 1998. Mr. Cheng Siwei, who has the reputation of "the father of China's venture capital" and was the chairman of the Central Committee of the China Democratic National Construction Association at the time, put forward "Proposal No. 1" ("Proposal on Developing mainland Venture Capital As soon as possible"), proposing to form a "Nasdaq of China". This proposal opened the curtain for Chinese venture capital to surge in the next 20 years.

Overnight, many overseas VCs all came to China. But this hot current did not last long, the Us Internet bubble suddenly burst, China's just emerged dirt, spitting out a trace of vitality of the venture capital market was implicated, immediately withered. VCs have evacuated.

From 2001 to 2004, the mainland venture capital market was filled with a sluggish atmosphere. Looking around, in the vast land, there are only a dozen investment institutions. In 2001, the first session of Zero2IPO held a VC industry gathering, and all the guests present could only sit at two or three tables. The amount of investment is also surprisingly small, one institution, investing in 2-3 companies a year.

Investors only went on a business trip once a month or two, and most of the time they could go home for dinner. Investors travel either in economy class or on the hard seat of the green-skinned train, encounter situations that cannot be directly accessed, and have to jump from one train to another with a backpack, and arrive at the destination with a sting, and the hotel is also very simple.

In addition to the poor market environment and the small supply of entrepreneurs, they also face the bottleneck of immature markets such as lack of exit channels, making it difficult for VCs to move forward.

However, in the cold environment, investors are bathed in a piece of peace. The money of each fund is not much, and a project is often invested by several people together, eating less alone, and there is no such thing as grabbing the project. Peers exchange information harmoniously.

Moreover, there is no competition in the entire Chinese market, so Xu Chuansheng has the opportunity to participate in the Baidu B round in the size of the fund. In 2004, they were supposed to lead the investment, and Google went halfway into China and threatened to invest strategically in Baidu. The tide rose, Baidu's valuation instantly doubled to $200 million, and the final plan was Led by Google and followed by Xu. This is his third investment, but it is already a masterpiece. This investment gave him a turning point in his investment career.

At the same time, the market is thawing.

The first to pick up was the entrepreneurial end, in 2003 in Beijing and Shanghai, some eye-catching entrepreneurs appeared, such as Chen Tianqiao. Then, the warm current flowed to the capital side, and from the end of 2003 to 2004, Ctrip, Tencent, Shanda and other companies went public, bringing a long-lost excitement to the market.

Since 2005, Chinese venture capital has become an unstoppable super trend. Overseas VCs have set up institutions in China (such as Sequoia China), and local VCs have also mushroomed (such as Hillhouse). Who would have thought that after years of difficult development, China's VCs will usher in a big boom – China will have as many unicorns as the United States and sit firmly in the world's second largest venture capital market.

This year, AAC Technology, Baidu and Focus, which Xu Chuansheng invested in, have been listed one after another. He raised a second fund, four times the amount of the last.

Tian Xuan, vice president of Tsinghua Wudaokou Institute of Finance, was born in the year of reform and opening up, and is a post-70s generation like Zhang Ying and Xu Chuansheng. While early investors groped through the darkness, he took the opposite path. After graduating from Peking University, he went to the United States and climbed along the academic ladder. He set one of his research directions on venture capital, published academic papers, and was the translator of the Harvard professor's american venture capital history book Venture Capital.

In academia, he summed up the period from 1998 to 2009 as the embryonic period of modern venture capital in China. The reason why it is 4 years later than the 2005 statement is because there are several milestone events born during this period, which have improved the barren soil of China's venture capital industry bit by bit – in 2007, China promulgated the Partnership Enterprise Law, which allows partnership enterprises to avoid double taxation and make all the funds raised for investment; in 2009, the GEM was established, which greatly reduced the requirements for enterprise listing, and startups have exit channels in China.

Tian Xuan said that before this, the long-standing phenomenon of Chinese VCs was "two ends outside". Partnerships and the Gem market have turned the tide, and RMB funds are slowly dominating.

Before the market recovery and policies were in place, Xu Chuansheng and his team struggled for five years. When the industry was sluggish and his heart was swinging, he did not immediately jump back to the old path of professional managers, and the idea of support was simple: at least the money raised was seriously invested.

Looking back, Xu is grateful for sitting on the cold bench for five years. The crashing market gives everything a deceleration button, giving him time to learn and polish, saving energy for the next stage.

"We all survived," Xu reiterated repeatedly, "and really survived." Halfway through, he saw countless people leave the feast and disperse. Those who eventually survive the cold tide, cross the cycle, and survive have only one tenacious survival skill - suffering.

In comparison, Zhang Ying was luckier. In mid-2003, after the SARS haze had just cleared, he stood directly on the night before the dawn of Chinese venture capital.

| Two kinds of David

2005-2007 is the hottest year after the thawing of the glacier, the so-called "strong dragon pressure, the rise of the earth overlord", overseas and local capital rose from the ground, Beijing International Trade Everywhere Entrepreneurship Conference. The warp and weft belong to the one that entered the game later before the tide cooled; it was stuck in the door slit before the window closed.

Zhang Ying and Xu Chuansheng have exactly the same English name, David — one is called DZ (David Zhang) and the other is called DS (David Su). But the two have completely opposite habits.

DZ has a beard, a flamboyant personality, love and hate, "this room has five square meters, his aura has six square meters." He is outwardly grumpy, but those who work closely with him find that his mind has an unexpectedly delicate side - when he encounters waiters and cleaning aunts, he often unloads his fierceness, even in China, which has no tipping culture, he still tips as always. He is an avid cross-country biker and is more interested in mavericks. He is Zhang Ying, who is familiar to the outside world.

DS is a humble man who grew up in Malaysia, chubby, wears round-rimmed glasses; he is more silent, quiet and introverted, and full of patience for every pore. One partner had seen David's gentle anger— with his unique jumping Chinese accent— and smiled and said, "Dude, you can't do that." "He loves to read, sci-fi, collect art, and occasionally accompany his wife to skiing. He is Xu Chuansheng, who is not familiar to the outside world.

Jingwei is a rare fund that still implements a "double GP" governance structure. Some people also say that Zhang Ying is strong on the outside, kind and tender in heart, and Xu Chuansheng is just complementary, belonging to the outer softness and inner rigidity. A corroborating example is that for a long time, xu came forward to fire employees.

In the case of Sun Tzu's Art of War, Zhang Ying is "plundering like fire" and Xu Chuansheng is "not moving like a mountain".

The two Davids met in 2003. At that time, Zhang Ying was 30 years old and had just been sent by the China Economic Cooperation Group. He went to the United States with his parents in junior high school, studied medicine for three years after graduating from college, and then studied for a master's degree at Northwestern University and changed careers to invest. At this time, he gave the impression of "the big boy of sunshine".

Xu Chuansheng is two years older than Zhang Ying, and they jointly appeared on Focus Media's Series B financing, which led to their acquaintance. Although Focus was the only project the two of them bet on together in those years, they maintained a close relationship with the industry. When Zhang Ying goes to Shanghai, or Xu Chuansheng goes to Beijing, they will spend a cup of coffee together.

Four years later, Zhang Ying told Xu that she hoped to create Matrix Partners Venture Capital. The two quickly decided to team up.

Zhang Ying is enthusiastic, imaginative, and keen to expand, suitable for being an infectious, export-oriented leader; through the cycle to make Xu Chuansheng more cautious and comprehensive, good at framework management. Starting on January 8, 2008, they began a new journey at the helm of Jingwei.

The first fundraising, very smoothly arrived. Just as they were about to do their best, the dark clouds pressed again.

| Run wild and pack wolf tactics

In the summer of 2008, a global financial crisis broke out.

Fortunately, this time there is no danger. Before the downturn eroded China, the government injected $4 trillion in stimulus, which dispelled the panic. However, this wave of crisis was deterred, and new VCs who wanted to step on the heel of the warp and weft were entered. From this point of view, the VCs who squeezed into the 2005-early 2008 window period are a bit of a blessing in disguise.

However, even though it was established for nearly two years, Jingwei has never dispelled the confusion in its heart.

After ten years of development of China's PC Internet, the BAT giant pattern has been stabilized, and there are few venture capital opportunities. Jingwei did not catch up with the tail end of the PC wave, and at the turning point of the times, investment became scattered - entertainment, B2B, medical equipment... And so on. Although there are also good results, it lacks a general direction and systematicness, and it cannot support the ambition to make a name for itself. Standing at the end of 2009, facing a new decade, Xu felt dazed.

This winter, the partners of Matrix Partners had a group outing. In addition to the two Davids, the participants also included two partners, Zuo Lingye and Wan Haoji, who were also from CIMC. In December, they came to a hotel in Xiamen.

At this time, the market saw the mobile revolution brought by Apple, Android made it possible to popularize mobile devices, and the global mobile phone industry was facing a reshuffle. Several partners vaguely feel that there is a big opportunity here, perhaps to step on the iteration of the times and play a shining label. It was at this 3-day conference that Matrix Partners established a strategy of all-in-mobile Internet from 2010.

Jingwei began to "recruit soldiers and buy horses". They reject takers, their strategy is different from other institutions to recruit financial practitioners, and they favor people on the front line.

In two years, Jingwei recruited more than a dozen young people, including: Wang Huadong, who studied information management and is working as an IT reporter at Sohu, Xiao Min, who is managing the Baidu sales system, and Xiong Fei, who is a product manager at Tencent and Alibaba. None of them had ever been an investor, and some had never imagined becoming an investor, and their lives changed.

Among them, the fastest to prove himself is Wang Huadong. Born in 1985, he mistakenly followed in Xiong Xiaoge's footsteps – from a journalist to an investor. He has the acumen of a journalist and the ability to cover the network of Canton nodes. He used the angel wheel to invest in Tang Yan, who was also a media person, on behalf of Jingwei. Momo's investment made Jingwei famous. At the age of 29, Wang Huadong was promoted to the rank of partners.

The mobile Internet was the base of Jingwei's establishment, and at that time they invested in about 20-30 companies every year. In addition to Momo, they also voted for You like, Hungry, etc., and later deeply involved in the intricate giant transactions of that era.

In an era when an app can walk the world, the investment philosophy of VCs is "investing in people". Jingwei prefers the founder of frankness and authenticity. "We think the best founder, he is flawed, even sometimes impulsive, reckless, but he does not change because he pleases you. Founders have a hard time doing everything. The pressures and choices he faced were very uncertain. If he always wants to say a set of words to Jingwei, another person, and another set of words to his partners, he is too tired to do well. He spent too much time thinking about people. Xu Chuansheng said.

At this time, there are also frustrated people in the team. Xiong Fei, who is the same age as Wang Huadong, calls himself a science and engineering man and a nerd (although he seems to have a warm personality). After joining in 2011, he first looked at the mobile projects scatteredly and found that the judgment criteria were too emotional, could not be understood, and had no battle achievements. When Zhang Ying found him in 2012, his first reaction was: "It's going to be optimized." ”

However, Zhang Ying said, if you don't want to be a living horse doctor, you look at to B. For many years to come, he didn't know whether the road ahead was the way out or the end, but fortunately there was a road. He split from the big troops and carved another path. Enterprise Services is the first fork of Matrix Partners outside the mobile base camp.

The mobile Internet is a huge wave in the history of Chinese venture capital, giving birth to a series of tens of billions or even hundreds of billions of dollars of giants. Jingwei has embarked on a different path, through occupying weibo, public accounts and other mobile terminal voice channels, Zhang Ying has become a symbol in the minds of entrepreneurs - Jingwei investors and entrepreneurs, the most favorite sentence is: "The same to give money, not the same cool." ”

But in 2016, in the midst of a hustle and bustle, Zhang Ying and Xu Chuansheng could not help but feel anxious. This is an era of rapid growth and rapid decay, and there are dozens of companies fighting in any subdivision industry. One opportunity is just emerging, others are following up at a staggering pace, while there are no barriers to model innovation, and there are only two competitive dimensions left: more money and faster speed.

Early, middle and late financial investment came, and the strategic capital of large, medium and small enterprises also came. But whenever there is a little flame, everyone is full of energy to cheer in, and the industry explodes in an instant - people in it are wrapped in fanaticism and cannot extricate themselves. "Money chasing deal, to put it bluntly, is drumming and passing flowers," Tian Xuan said, "but when the vast majority of people in the market do this, drumming and flowers always have the last stick - the music stops, the lights are on, and the bubble bursts." ”

Jingwei is determined to leave this Colosseum that burns money for scale.

The last straw is bike sharing. "We felt more firmly that we didn't want to get involved." Xu Chuansheng said. This is the last minute of the mobile Internet of Jingwei betting, and then the community group buying and other melee battles, they will never be seen again.

There is no landmark meeting for Matrix Partners' second transformation, but it has been discussed internally. Eventually, they decided to start a revolution. From 2017 onwards, they dispersed their partners and claimed a new track that was still in a lonely period. On the one hand, the dividends of the mobile wave are fading; on the other hand, they are really bored, repeating the game over and over again.

- First of all, two major advanced manufacturing industries: Wang Huadong and Wan Haoji entered the electric car, and Zuo Lingye took the initiative to ask for a look at commercial aerospace - betting on ultra-long-term aerospace, which is considered to be idealistic and adventurous;

- Xu Chuansheng set out to build a medical team, led by Yu Zhiyun, the first Jingwei doctor with a doctorate, to bet on the rooting of innovative drugs in China;

- Xiao Min began to look at the industrial Internet;

- Xiong Fei continued to cultivate corporate services.

VCs are the VCs of the times. In the ebb and flow of the big era, how can a VC rise and continue to capture the new wave with a group army? From my interviews with Matrix Partners and partners, I summarized 9 methodologies.

1. Wearing straw shoes stage: all in one track, after which the experience is copied to other tracks.

2. Diversified betting stage: stay alert and explore the frontier more proactively. When the industry is just beginning, send a detachment to enter the game, take the lead half a step down, experience the flow from the edge to the center, and retreat when the industry is hot.

3, a judgment criterion: if the judgment project is based on market behavior, media news, it means the wrong signal; leading the opponent into the track, endure a year or two of loneliness is the best state.

4. Organizational construction: from point to line, from line to surface, from surface to body. GP is responsible for the "body", controlling the direction of the fund and setting the rules of the game; Partner is responsible for the "surface", shouldering the coverage and performance indicators of a track; Managing Director and Director are responsible for the "line", deeply cultivating a vertical class of the track and maintaining continuity; investment managers and VPs are responsible for the "point" and break through at a single point. Points, lines, surfaces, and bodies perform their respective duties to ensure the overall operation, rapid collaboration and iteration of the system.

5. Methodical "wolf tactics": a total of 40 people invest in the team; a track is controlled by a partner, with a total of 7 partners; the track is divided into vertical tracks, which are responsible for MD/D; generally speaking, a partner leads a team of 5-7 people (for example, the corporate service team is 5 people, and the medical team is 7 people).

"We are the wolves of the vertical. 7 partners, the so-called 'seven wolves'. Each wolf claims a field, not a wolf that scurrys. Below there is the middle wolf, which claims a more vertical field. One partner explained that it was similar to the "co-production contract responsibility system."

6, in order to stimulate the internal big, medium and small wolves wolf, they will give 7 partners according to the IRR ranking every period of time, "every year to see how their score cards are", the same level of horse racing to give the partners pressure.

In addition to the quantitative judgment of the IRR ranking, qualitative judgments will also be made based on the performance of partners in the track - for example, compared with other 5-7 first-line funds, or whether the 10 excellent projects have hit 4-5 or 1-2.

A partner once said that in Jingwei, everyone has a credit account above their heads, and the battle achievements will be recharged, and vice versa. Zhang Ying has a saying about the inside called "capable people", if a person has been working in a field for a year and a half to two years, there is no achievement, he may be replaced.

However, because each partner is responsible for a completely different plate, the lines are clear, and there will be no tearing and internal friction of jungle competition, which injects a certain sense of security into them.

7, reserve force: continue the early method of no airborne landing, only internal training (except for the medical track, because it is too professional). From VP to Director to partners, they are all cultivated by themselves, so that they will not block the upward channels of young people.

Jingwei focuses on promoting young people: each partner has young people who work closely together; if the young investor project cannot be pushed by the partner, it can be directly pushed to the GP; for the VP/D that focuses on cultivation, Zhang Ying will call them to Beijing and spend two or three days with them to participate in all the meetings with themselves to understand the complete operation of a venture capital institution. These actions help organize metabolism, give young people the opportunity to pop up, and keep partners from lying on the credit book.

8. Attach great importance to post-casting: Jingwei has a post-casting team of more than 80 people. They believe that in the past, there was less money, and VCs were wholesalers who wholesaled LP's money to entrepreneurs; now that there is more money, VCs are service providers, and only services can produce stickiness (they call themselves "B B").

There are roughly six levels of services: pre-diagnosis (striving for early warning before stepping on the pit); recruitment and heavy work (HR with new vertical functions in each investment team); post-investment industrial chain coordination (building an upstream and downstream customer system); government affairs and emergency medical service team (providing emergency medical services for founders); due diligence team (providing due diligence judgment for invested investments and acquisitions); and hundreds of millions of entrepreneurial camps (building think tanks, training and cognitive output).

9, the number one is the absolute soul of the institution.

An interesting detail is that most of the people I interviewed at all levels of longitude and latitude followed Zhang Ying's example, either wearing Archaeopteryx, patagonia, or Uniqlo. In addition, it is a black jacket culture shirt printed with the Matrix logo.

| A collective turn

There is more than one venture capital in the big turn, which is a collective investment focus upgrade for Chinese VCs. The era of drumming is over.

We are in the midst of a historic and complex cycle. Sino-US relations have entered a delicate era, the internet platform is facing rectification, the haze of the epidemic has not yet dissipated, and the vitality of China's high-end science and technology innovation enterprises is being released.

Compared with the history of VC development in the United States, Chinese VCs have skipped a difficult journey. U.S. VCs began in 1946, after a focus on "real technology" such as semiconductors, computers, and biotechnology, until the 1990s, when they switched to software and online services. The wave of China's mobile Internet stands on the existing technology in the United States and directly ushers in a big outbreak. And now, when the easy things are done, you have to turn around and do the difficult things.

In the past 2021, capital has been extremely active, and in the case of Jingwei, the total number of investments they have reached an all-time high - 120.

There have also been structural changes in the portfolio. In the past year, Jingwei has invested nearly 50% in cutting-edge technologies such as new energy industry chain and intelligent manufacturing, biomedical care, and 20% for enterprise services. The proportion of mobile Internet is 0. The general policy is to re-position the rise of China's scientific and technological innovation.

However, in the process of the tire transformation of the times, behind the numbers, it is full of hardships of the parties.

New Energy: A Difficult Transition for Partners

Even Wang Huadong, who was promoted to partner at the age of 29, experienced anxiety in 2016.

Around 2015, he suggested that two Davids take a small sum of money and invest in some technology companies. They voted for several, but none of them succeeded. This was the beginning of Wang Huadong's transformation from investment to mobile to technology, and the painful period lasted for less than half a year.

A year later, in 2016, the outside world continued to sing the decline of the mobile Internet. As an investor who grew up eating mobile dividends, he began to think about what exactly to do in the future. A topic jumps to the head – VCs have made a lot of money on mobile internet apps over the past decade, but no one has ever made money on a device. What would it be to assume another disruptive device in the next decade? Based on this crude idea, he began to study cars.

In the automotive industry, intelligence is the consensus. At first, he focused on automatic driving, but soon had the first judgment: only algorithms, no landing scenes, technical advantages will be smoothed out, and the combination of soft and hard is the future.

But the difficulty of this matter is that while doing hardware, we must do a good job of intelligence. Based on the observation of the mobile phone industry, he has a second judgment: the founder who can do a good job of hardware and intelligence at the same time must be the Internet background.

In February 2017, he met Li Xiang and invested half a year later. Jingwei is ideal for a series B investment, with a valuation of 9 billion yuan. Another Matrix Partners, Wan Haoji, invested in Xiaopeng Motors. New energy three companies in the limelight (Weilai, Xiaopeng, Ideal), Jingwei investment in two. After the layout of the car, they expanded to the upstream industrial chain, which allowed them to establish a base area for electric vehicles.

As an investor who has lived through a 10-year cycle, he often takes a look at his own Portfolio over the past 10 years. He would blame himself and ask himself, "Why did you make a mistake then?" What lessons did you learn? Don't make a second mistake! Through the first 10 years, his experience was: "Don't get caught up in your current short-lived achievements" and "Keep your morale up".

Whether he was at the peak or the trough, he went to bed at 10:30 and got up at 5:30.

Enterprise Services: The Long Wait

Xiong Fei waited for 5 years in the position of waiting.

He is another partner who grew up with Matrix Partners. Just graduated from Tencent, Ali as a product manager, 26 years old to get the Jingwei offer. Then, for the first two years, they lived in the anxiety of being optimized.

At the beginning of the track, he drew a list of corporate service companies with U.S. IPOs — $10 billion, $5 billion to $10 billion, $1 billion to $5 billion companies and their distribution industries. The other column is China, and when a field is finished benchmarking the United States, he solemnly marks that column yellow. This was an early investment strategy for slash-and-burn farming: copying the United States and learning from the West to the east. The first shot was to invest in Beisen at a valuation of more than 100 million yuan, benchmarking the newly listed Workday.

In 2013, when Chinese corporate services were in chaos, he took Ji Weiguo, the founder of Beisen, to the United States to learn from the experience. Jingwei arranged the itinerary and accompanied the whole process. In the conference room, Ji Weiguo asked: "Is SaaS company a big customer or a small customer?" The other party was full of doubts: "Can you be a small customer?" "This is the beginning of their traceability to the source, and it has become a tradition to bring invested companies to the United States every year since then."

The Experience of the United States has fully implemented his thinking, bringing him a bumper harvest in front of him and also bringing him future bitterness. For a while in 2017, he felt great, "a bit of a gold winner", because he invested in Chinese companies such as Workday and Salesforce, which were benchmarked against the head of the United States. He thought he had survived, but he immediately encountered the second downturn in his investment career.

This year he missed out on two later unicorns (one for data analytics and one for e-commerce). "The reason at the time was very ironic, that is, the United States did not, especially dogmatism." China to B has experienced a process of unique innovation from copy to China, which is consistent with the development law of to C, and based on the super outbreak of China's to C mobile Internet, many of China's ecosystems (such as e-commerce) are more prosperous than the United States. The market began to diverge. The watershed was 2017-2018, when he found that his early investment strategies had failed.

From 2018 to 2019, he began to invest in a large number of companies that did not exist in the United States (such as PingCAP, Ban Niu, etc.), and the situation forced him to update his methodology. At present, the Beisen and Taimei Medical he invested in are about to IPO. After waiting for 10 years and turning 36, he finally ushered in his own public company.

According to his investment experience: "How much loneliness can be endured to achieve great feats." ”

Innovative Drugs: The Doctor's Gamble

Partner Yu Zhiyun once regretted that he had been studying for too long. For a long time, he was one of the few people with Ph.D. in the investment industry. But now, on the medical track, the Doctor is standard. He has the most luxurious team with the most academic qualifications.

The medical sentiment comes from two Davids. Zhang Ying is a biologist who once wore a white coat as a technician in the laboratory. He's always wanted to go back to the lab to extract DNA and relive old times. Xu Chuansheng attaches great importance to the technological development of life and health.

At the beginning, Jingwei only invested in medical devices, 14 years began to invest in Internet medical treatment, and in 18 years, it entered the innovative drug. It's a real gamble. The people who bet are almost all PhD students. Yu Zhiyun's route from undergraduate to postdoctoral is: Peking University, Columbia University, Yale. Investor Doctoralization, this phenomenon in the VC industry influenced by the "times make heroes" culture, in the past, rarely seen. Yu Zhiyun said that his team is configured according to an innovative drug company.

Jingwei said that they will continue to pay attention to the practice of post-investment. But when the target audience is no longer young people, but a group of scientists and technologists with an average age of 35+, the help entrepreneurs need most has changed. (Note 1)

A fundamental shift in the focus of Chinese VCs means tougher technology, slower speeds, and a certain degree of noise reduction in success, money, fame and fortune by society as a whole.

Tian Xuan said that a significant feature of Chinese VCs is that the existence of LPs is short. Generally speaking, the withdrawal of the first phase of the US fund is 10+2 years, and the First Phase of the China fund has expanded from 3+2 years to 5+2 years. After VCs move from innovative investment models to high-tech technology, society as a whole needs more patience – patient capital, patient LPs and patient survival. He encouraged more deep pocket institutional investors (pension funds, etc.) to enter the market, encouraging long-term money to come in. At the same time, in terms of social culture, there is a higher tolerance for failure, and only in this way can innovation be nourished.

One institution houses a brief history of Chinese venture capital, bringing together silhouettes of investors from different generations.

Xu Chuansheng, the first generation of investors, from a 24-year-old youth to now 51 years old - took root, settled down, and gave birth to Huafa. There are also many Chinese VCs such as Xu Chuansheng and Zhang Ying, who come from the north of Tiannanhai, and there are also many Mesozoic investors such as Wang Huadong, Xiong Fei, Yu Zhiyun, etc., who are 36 to early 40 years old and want to play a bigger tide in the big waves of the times. And, of course, there are countless new generations. But no matter which group of people, their personal destiny is inseparable from China's national fortunes.

There are nearly 24,600 private equity funds in China. However, they are only a small force changing the direction of the tide.

As Xu Chuansheng said: "Our fate in the next 10 or 20 years is in China, and we will not dwell on anything else." If you think thoroughly: know how to let go. Our focus is on China, doing our best to invest in the greatest founders in a variety of local core technologies. If it can indirectly help the rise of the industry, that's good. That may be all. ”

For today's young people struggling at a turning point in the new era, the forerunners who have endured every step they have taken may have a little inspiration for the current situation.

Note 1: After the big turn, the evolution of investment styles, industry trend judgments, and investors' worldviews will be updated later.