Feng Dagang, President of 36Kr: The venture capital circle is moving from the era of "great gold rush" to the era of "great alchemy" As follows:

China's capital circle is gradually moving from an era of "big gold rush" that grew barbarically and raced to an era of "big alchemy" that returned to commercial value and required intensive cultivation.

On September 4th, the 2018 China Investor Future Summit hosted by 36Kr was held in Beijing, and nearly 100 star investors from dozens of top venture capital institutions such as Sequoia Capital, Matrix Partners China, Today Capital, idg Capital and so on gathered together to discuss the "way to break the game" of the "inflection point year". Feng Dagang, president of 36Kr, said in his opening speech, "China's capital circle is gradually moving from a barbaric growth and horse racing 'big gold rush' era to a 'big alchemy' era that returns to commercial value and requires intensive cultivation."

In the two years from 2015 to 2017, a large amount of money poured into the venture capital market, and the venture capital capital showed a geometric growth. Feng Dagang said, "The large-scale influx of investors and huge amounts of capital into the primary market has achieved a considerable number of unicorn companies and star entrepreneurs, but they have also created a slightly deformed current venture capital ecology: excessive capital pouring not only distorts the original development path of some companies, but also brings great frustration to the financial returns they pursue."

The flooded development of the venture capital market has changed in the second half of 2017, deleveraging and risk control have become the main tone of financial policy, especially in April this year, the "New Regulations on Asset Management" were introduced, bank funds were withdrawn, important sources of RMB funds were intercepted, and an important "water source" in the capital market was cut off. Another manifestation of the cold winter of venture capital investment is that the capital exit channel is not smooth, "the valuation of the global secondary market is flattening, and if the primary market investors enter at a high price in the later stage, it is likely that they will not be able to exit smoothly," Feng Dagang said.

"Asset management tightening", "fundraising difficulties", "exit difficulties", all kinds of signs show that the venture capital industry is entering an inflection point year, and investors and entrepreneurs need to readjust their mentality and cognition under the capital winter. Feng Dagang said that the role of some investors is changing, some LPs are gp, GP is also fa, and some head institutions GP have also begun to lay out upstream and downstream investment.

Feng Dagang further said that GP is facing a period of industry reshuffle. In the future, the venture capital industry will put forward higher requirements for GP, and investment institutions need to have stronger professional capabilities, investment strategies and the ability to empower invested enterprises, which is not just a business that buys low and sells high, but an industry that needs to create value.

For entrepreneurs, the shortage of funds will also lead to a decline in project valuation, entrepreneurs on the one hand need to adjust the development strategy of enterprises, be prepared for a protracted war in difficult times; on the other hand, they need to raise funds as soon as possible to continue their lives, and select high-quality and reliable investors in the financing process to fight side by side.

Good morning, everyone, thank you all for coming to our event!

In the past six months or so, the venture capital circle is experiencing a stormy baptism.

Our 36Kr Venture Capital Research Institute collected research data from more than 3,700 investment institutions across the country, and with the support of whale insight data platform, it took more than two months to complete the "2018 China Venture Capital Industry White Paper". This white paper analyzes in detail the development trend of China's venture capital industry from 2017 to 2018, and makes judgments and prospects for the future development of the primary market.

"Dilemma"

In the first half of 2018, the current situation of the primary market can be described as a "dilemma".

Difficulties in raising funds have been the subject since the beginning of this year. From the perspective of the country's financial strategy, the intention of strictly controlling risks and leveraging from the top down has been very clear from the economic work conference at the end of last year and the two sessions at the beginning of the year. In April, the "New Rules on Asset Management" were introduced, bank funds were withdrawn, important sources of RMB funds were intercepted, and an important "water source" of the capital market was cut off. The cold current of capital winter hits from the source.

According to the official data of the China Foundation Association, the number of VC/pe funds that have been filed in China was 3111, down 59.51% year-on-year; while the scale of fundraising was equivalent to 855.4 billion yuan, a sharp drop of 43.20% year-on-year. Many institutions said that a few months after announcing the completion of the fundraising, lp's money still could not reach the account. Limited resources have intensified the "two-eight differentiation" of investment institutions, and a large number of small and medium-sized institutions will face severe tests.

The inflection point in the private market is approaching, and we observe that a panic is spreading in the primary market. In the past six months, 150 companies have entered the Hong Kong stock capital market. The result of this is that the valuation of the primary and secondary markets is inverted, and the spread space in the primary and secondary markets becomes very limited, which leads to a comprehensive reduction in the valuation of the primary market. The valuation of the global secondary market is flattening, and if investors in the primary market enter at a high price in the later stage, it is likely that they will not be able to exit smoothly. This is undoubtedly a frost plus for primary market investors.

"Asset management tightening", "fundraising difficulties", "exit difficulties", all kinds of signs show that the venture capital industry, which has achieved geometric expansion in the past four years, has passively ushered in a comprehensive self-examination, have we reached the inflection point of the industry?

In the year of inflection point, how can investors and entrepreneurs break through?

In the past 4 years, the VC industry has been in an unprecedented rush. The large-scale influx of investors and huge amounts of capital into the primary market has made a considerable number of unicorn companies and star entrepreneurs, but they have also created a slightly deformed current venture capital ecology: excessive capital pouring not only distorts the original development path of some companies, but also brings great frustration to the financial returns they pursue.

In the current primary market, the role of everyone is changing, and the original boundaries are blurred.

We have observed that some LPs are gp, in the case that the return on investment does not meet expectations, cross the GP middleman to do direct investment; GP is also fa, take the projects in the watch to make some cash flow, and the increase in this situation is also forcing the LPs, so can I directly find fa investment? Of course, some head institutions GP have also begun to lay out upstream and downstream investments.

GP faces an industry reshuffle period. In the future, the venture capital industry will put forward higher requirements for GP, and investment institutions need to have stronger professional capabilities, investment strategies and the ability to empower invested enterprises, which is not just a business that buys low and sells high, but an industry that needs to create value.

For entrepreneurs, the shortage of funds has led to a decline in project valuations, and the cold of the capital market has finally been passed on to entrepreneurs. On the one hand, entrepreneurs need to adjust their corporate development strategies and be prepared for a protracted battle in difficult times; on the other hand, they need to raise funds as soon as possible to continue their lives, and select high-quality and reliable investors in the financing process to fight side by side.

This evening, we will solemnly release the "China's Most Popular Investment Institutions/Investors Top 100 Awards". They are the most reliable partners and the most powerful support for entrepreneurs on the difficult road of entrepreneurship. Helping each other in the darkest hours and sending charcoal in the snow in the cold winter of capital will become more and more precious for such investors.

Investors and entrepreneurs have reached the moment of walking through the cold winter side by side, and only by hugging for warmth can they survive in this cold winter of survival of the fittest.

The way to break the game in the "age of capital alchemy"

Today, we are holding the Future Summit for Chinese Investors with the theme of "The Age of Capital Alchemy", which is to invite everyone present to discuss what is the "way to break the game" of the "inflection point year", and I look forward to your sharing today.

Thank you!