The head FA has been laid off again?
Last Monday's unverified rumors brought the FAs back into the spotlight. In this year's venture capital circle, which lacks news, many "wonderful" rumors are related to FA.
For example, an internal document from a head FA was circulated to strictly assess BD's project development indicators, and if the indicators were not met, they could only get the salary at the level of interns.
Another example is that an investor exposed a chat record with an FA, which was originally a polite and ordinary refusal speech, but it caused the FA to scold and even escalate to personal attacks.
It's hard to imagine what the FA went through before he had an emotional breakdown, but the tension in the industry is already palpable.
Busy in vain and busy in vain
In 2021, the FA industry is booming, with the amount of FA participating in transactions in China's primary market exceeding 340 billion yuan, and according to the average transaction rate of 4%, China's FA industry will reach a market size of more than 10 billion yuan that year, and the situation in 2024 may be in stark contrast.
The data shows that the total delivery amount of the top 10 FAs in the market has fallen by nearly half in 23 years compared with 22 years.
At the beginning of 24 years, the primary market has entered a state of full withdrawal, and investment activity has not picked up.
In the first quarter of this year, the number of US dollar investment events further declined, and the RMB occupied an absolute dominant position, accounting for as much as 95%.
The pot has become smaller, and the rice that can naturally be distributed to everyone's bowl has also decreased, leaving only two ways for the FA: either lower expectations, or change the pot to eat.
"I feel like I've been quite busy last year, I haven't been traveling less often, and I've been meeting with projects and investors like crazy every week, but last year I didn't negotiate a single thing. Many of them know that they may not be able to do the project, but they still do not give up, do you think this is a fake busy? Amy said bluntly.
What is more uncomfortable than fake busyness is the busy work in vain, the projects are all popular tracks, the founders are also industry bigwigs, and the docking government funds are full of gunpowder and have a strong willingness to invest, but they just can't be delivered, and they are stuck on the ground every time, and they don't squeak when they talk.
The inability to advance the transaction due to the landing of anti-investment is the primary problem faced by almost all FAs in the new era.
The government is in urgent need of the project to build a local factory when it gets the money, but the founder insists that there is no need to expand production, and the FA is caught in the middle, and many times the FA also takes on the responsibility of attracting investment.
In addition, some traditional large investment banks are still increasing the pressure on FA to survive.
"Now that the big investment banks are doing free FA, who wants to pay for the small FA?" There are many voices in the industry that investment banks have launched free FA services.
"But in fact, when the project is to be listed, the big investment bank generally charges nearly 10 million yuan in service fees, which is actually much more expensive than ordinary FA." An FA friend Liu Yang said.
Go to the most densely traded battlefields
"Of course, being an intermediary has to go to the most intensive battlefield of trading, and what you earn is the money of probability." An FA veteran who has been in the industry for 10 years said.
Where is the most transactional battleground? The yuan and the dollar give two completely different answers, and also give the FA two very different options.
On the one hand, the FAs who have been deeply involved in the "core half army" since birth, hard technology and other tracks, and are full of RMB labels, have contributed to a large number of "underwater" transactions, although the process is difficult and long, but they can still harvest a lot.
"The decision-making chain of state-owned buyers is very long, and it is really completely different from the dollar buyers and market-oriented buyers, and all kinds of textual materials are much more than market-oriented and dollar-oriented, and the little girls in our group are tortured and crying every day. Fortunately, though, they did it. ”
On the other hand, those FAs who used to be the main Internet and consumer tracks, after a year of confusion and various attempts to break through, finally ushered in the "outlet" that saved them - AGI.
According to Qichacha data, there will be a total of 590 global AI-related investment and financing transactions in Q1 2024, of which about 243 will be in the domestic market.
It can be said that AGI has single-handedly supported the main investment export of the entire dollar fund, leaving a new flame for the dollar fund and hope for the FA with the dollar background.
"If there is no AGI, the FA in the dollar circle is afraid that all of them will be transformed to attract investment, and the concept of industrial investment banking, which is easy to say, without 3-5 years to deepen the industry, how can it be so easy to transform."
Transformation isn't that simple
There are probably two reasons for "not so easy to transform":
First, the halo of the head FA brand is invalid.
Amy worked for a head FA, and in the past, whether it was a project or a GP, the company's brand background helped her save a lot of introduction process and gave her a lot of trust based on the brand. But recently Amy had an embarrassing experience, when she met with a state-owned company, the other party bluntly said: "I haven't heard of you." Amy could only smile awkwardly and began to detail the company's situation and past celebrity cases.
"For us, the FA brand doesn't mean much. It doesn't matter who you are, it's important to understand our specific strengths and needs, and really be able to provide the projects we need. Some so-called head FAs are not as patient and attentive as FAs in the area, and they are also more expensive. A state-owned buyer explained to a venture capitalist.
At this moment, the starting line of head FA, small and medium-sized FA, and regional FA was flattened.
The reality is that compared with the brand, the personal quality of the front-line project manager is more important at the moment. Under the list of recommended projects with similar professionalism and similarity, "why should I choose you" depends more on the added value that the project manager can provide personally. FA has also evolved into a sales-oriented industry.
As Hou Jiechao, founding partner of Yibai Capital, said, "Both sides need to be like-minded. There will be no difference in the philosophy, values, and methodology of doing things, otherwise it will be very screwed. ”
The second experience is the transformation of role positioning.
"Four years ago, there were many projects and few investors, and we mainly served the project party. Now the environment is different, there are fewer investors, but there are fewer projects, and we are mainly serving investors now. Le Ge explained to Titanium Media Venture Capitalists that he worked for a former head FA agency.
FA has changed from the previous project promoter to the current buyer, which at first glance feels like there is little difference, but after careful consideration, it is still fundamentally different.
There are fewer projects, not just to say that the total number of startups is declining this year, but more because projects that meet the requirements of the buyer are not as floating as before.
Gone are the days when you could follow industry mapping and reach a project with just two phone calls. Without the background and ability to really go deep into the industry, you may not even be able to meet the CEO of the target company, let alone raise funds for him.
The buyer and the seller have reversed positions, and the seller who meets the buyer's requirements has suddenly become a scarce resource, and it is no wonder that there are rumors that the head FA will strictly assess the recommended tasks of the BD post project.
Busy
"Layoffs are completely understandable, the heaviest cost of FA is people, and many FAs pay their employees more than VC. When business is not good, one more person is laid off, and one less person will be divided. Legor said.
At the same time as layoffs, we also learned that some FAs in the market are still actively recruiting new talents in mergers and acquisitions and investment promotion.
The giant wheel of the times is rolling in, and in the face of new trading trends, FAs also have to make some preparations in advance.
Another interesting phenomenon we observed is that during such a difficult period of time for FA to survive, there are still some "aspiring youths" who take the initiative to jump out of the head FA platform to stand up on their own, just like the years when FA made the best money.
"A few friends together, or a person who closes 1 or 2 orders a year, the income is still very considerable. Now they are coming out of their own doors, and they are all coming out with negotiated trading opportunities, and they are all pursuing the maximization of personal interests. Wang Xiaofei said, "To put it bluntly, it's not about setting up your own business, it's about laying off your own company and making the last pot of gold." ”
"The pursuit of maximizing personal interests" has become the main cognition that makes these young people willing to stand up and be FA on their own when the head platform is so difficult.
There is also an operation in the market, which is to bind the "depth" with the buyer's senior management, and the buyer's senior management will designate the project they have been about to vote for and sign a contract with a newly established small FA, and then charge an FA fee.
The "edge ball" operation is very difficult to implement in the internal control system of the head big FA, but the small FA who stands on its own is an excellent executor.
"At present, it is difficult to set up an institutionalized FA with a certain size. In the past, the market was driven by a single logic, and GPs were pursuing good financial returns, but now in addition to financial returns, they also have to face the demands of national strategies, local government investment promotion, and industrial capital strategic layout. The enterprise side has also changed from the past Internet era to the demand for comprehensive resources such as orders, plants, land, taxes, and talent subsidies. In this case, the requirements for FA are more complex. Hou Jiechao said.
It is difficult for us to evaluate whether the current is the worst or best era of FA, we can only say: there is no era of FA, only the FA of the times. (This article was first published in Titanium Media App, author|Zhang Yinan, editor|Tao Tianyu)