Source丨IT orange
Cover image source: IT orange
The word FA stands for Financial Advisor. The general function of FA is that when entrepreneurs are financing, when they don't know who to look for, they can find FA to help you introduce, help you screen, and then help you connect with some investors. Of course, in fact, what the FA does is not so simple, and the work he has to do is very detailed and highly professional. The following content is excerpted from the 06th episode of IT Orange's podcast "Orange Counts in My Heart", "Living Through the Bleak Venture Capital Cycle - The Current FA, That is, How Many Volumes Can Financing Intermediaries Do". The guest speaker is Brother Teng, a senior FA who has been in the industry for ten years. Subscribe to listen:
FA is so rolled, and it is much more than that
Regarding the detailed responsibilities of the FA, maybe I am a little more emotional. I think FA work is more like the CFO role of an early-stage team, from the concept of the same agreement with the CEO, to the short-term and long-term financing of the project itself, and the planning of the corporate strategy, all of which need to be deeply involved. In this way, the founders can be provided with a relatively objective and effective financing strategy to help the CEO achieve a relatively reasonable rhythm in finding and spending money. This process requires a lot of cognition. For example, the judgment of industry knowledge, the judgment of the rhythm of competitors, the judgment of the entire financing market, the current market situation of each buyer, the understanding of the competitiveness of each buyer in the subdivision or different technical routes of the project (hard technology projects), and the understanding of the background of the founder, all of the above comprehensive considerations have relatively high requirements for FA. For example, based on the BP and data pack of the project party, the follow-up of some later aspects, the interpretation of the buyer's true intention, and then to discuss the transaction structure and transaction terms. In fact, there are a lot of things involved in the back, and FAs who don't have many years of professional experience can't do such things. FA is actually a role that grows older and more fragrant, and it is not a simple job that many people think of as "knowing what the project is and knowing which buyers are likely to pay attention to (this track), so I will give you a connection".
How much should the startup raise in this round? As for how much money he wants to raise, the entrepreneur may have some general concepts, which are based on his financial situation - for example, my revenue this year is about 10 million, but I lose two or three million, and some expected orders next year may add up to 20 million or 30 million, then I may lack some money to expand the team, or do capital pools, or do upfront prepayment and procurement expenses, I calculate this money, I think I may need to refinance 15 million, which is seen from the supply and demand relationship of the finance's own team. But from our perspective, it's the industry. For example, if you raise 15 million, you may only get to the Pre-A round, but other companies in the industry have already raised 100 million, so from your point of view, it may be very difficult for you to raise 15 million. A financial advisor may be able to give you some advice based on your current situation. For example, if you first raise 5 million or 8 million, you first make you more verifiable in the rhythm of certain milestones, so that more investors who pay attention to the transformation of technological achievements themselves are more optimistic about the verification status of the company from technology transformation to commercialization, then you can more effectively attract investors and make them believe in you, and you may be able to benchmark competitors who have been integrated to the same scale, or potential competitors. Therefore, I think that the more attribute of FA is that it has a comprehensive judgment ability in the understanding of industry and capitalization, which can provide founders with more efficient and feasible financing strategies. Founders may only think about their own needs from within, without seeing what's going on in the market. To put it bluntly, in the market it may be an asset, to sell, there will be a lot of competitors, and investors can choose from a lot, so they will evaluate you in reverse to assess which companies are more suitable. The FA is the one who helps them sort out the positioning, price, or financing rhythm. In the past two years, there have been many hard technology start-up projects, and many CEOs have a technical background and a good background, and when he benchmarks against competitors, the core consideration is "my technology is better than others, so I am worth more money". But he may not have considered that in the case of commercialization or the operation of the entire market, including the automation market, others have been ahead of him for a year or two, and maybe even others have hundreds of millions of money in their pockets. At this time, he said that he wanted to finance tens of millions, and for the capital market, corner overtaking is not simply how much better you are than others in some technical routes, your efficiency cost is better than other people's products, and others can adopt you. Because you may be serving a state-owned enterprise, and others have already occupied the guests, you are not qualified to re-enter the supplier directory at all. It's not that the scientist has a problem, it's that he probably doesn't think too much about capitalizing the market, and from a strategic point of view, there is a better way to make financing secure.
There are so many VCs, can't the founders find them by themselves? In terms of several dimensions, first of all, some founders' own classmates and friends can cover a lot of VCs, which is actually very normal, because the current market informatization and open source are very high. But not all VCs will show their true intentions, and it is not so easy for founders to understand whether VCs really want to invest. And when the buyer gives a very brief message, some experienced FAs can already judge what the buyer's real attitude is, which essentially saves the founder's time, so that the founder does not have to have an imaginary optimism and think that the institution may invest, then I just have to wait, and don't meet other investors, this approach is sometimes inefficient. Some founders don't have a particularly meaningful coverage of some meeting-type organizations, because some organizations themselves are very volatile, or the state of the entire organization is very volatile, and when they need to build a project, they are actually completing their own KPI tasks. They need to have new projects to start in internal discussions, they need to build different projects, but they may not really push it forward after they build it. That's inherently a waste of time for the founder. So in fact, in the pre-session, the founder needs professional institutions to help him eliminate some meaningless institutions. Frankly speaking, we've seen some founders before, and he may have seen more than 100 institutions during the Series B round of funding, which is quite a time cost for him, because when he meets an investment director, the management role he meets may be a small partner, and then you go to meet the whole big GP, and then you have to go through the internal investment materials, in fact, the time cost of an institution may take a few weeks, so to 100 In fact, it is equivalent to the founder who has not done anything in a few months, and his own business may not be running with peace of mind. FA can contribute a lot of time value, including eliminating some of the inefficient work, but it actually makes a lot of sense. The full timeline is as follows:01:23 Brother Teng, who has been in the industry for ten years04:24 In addition to pulling WeChat groups, FAs have a lot to do06:20 Many entrepreneurial teams don't know how much they should want: the logic of pricing
10:08 As a third party, FA can better understand the meaning of VC feedback
14:08 People who have not been exposed to VC do not know the complexity of investment decisions
16:02 Although it is biased towards entrepreneurial teams, it will never fool VCs
17:14 Diversified development of FA: community-based, in-depth service, local and regional, overseas introduction, etc
20:48 The market is too volatile, and FAs have more and more skills
22:00 Buyers and sellers in the market are changing
25:28 In addition to the commission after the completion of the transaction, some FAs will start to charge upfront fees
29:42 How would you choose to give FA a commission VS 1 pip share?
33:06 What is the point of claiming to cover thousands of VC organizations?
39:01 About buying a house and taking the initiative to give a rebate to the buyer
41:05 Can FA serve two competing companies on the same track?
46:15 There are so many hot tracks in the market, do you focus on it, or do it with the market?
49:15 Going deep into the laboratory and going to the industry to find underwater projects
50:30 When the FA in the primary market also began to talk about "contracting" and "underwriting", the division of work of the FA was refined
53:43 "FA skills VC, VC work FA", a subtle competition
54:39 The addition of PhDs in science and engineering has not reduced the difficulty of judging hard science and technology projects
57:53 How long will it take for the technology dug up in the laboratory to be commercialized?
1:00:48 Do the work of FA: the quality of people is more important
1:03:57 How big is the difference between the Orthodox FA and the Yeluzi FA?
1:05:23 A project has a greater chance of encountering a head FA at the beginning
1:11:52 Someone wants to use FA as a springboard to jump to VC. Someone in reverse.
1:16:07 Commonalities and boundaries between FA and VC work
1:19:01 Working in a leading FA VS starting a small organization independently
1:25:25 Enjoy being a trader instead of managing a company
1:27:20 Is the distribution of benefits fair and transparent?
1:28:14 Is it possible for the venture capital industry to make an online "shell" trading platform?
1:31:18 The paradox of FA institutions also doing fund investment, being both referees and players
1:34:28 Run around the country and abroad, see more new opportunities, the current environment is the most testing the determination of FA agency partnersWelcome to subscribe to listen to all: