Devott Insights: Connect with Capital Like Choosing Wife
Source: View: 236 Date: 2015-12-23

Because of support from prime minister, the wave of public entrepreneurship has become more and more appreciated even have more incubators than entrepreneurs. Investment manager may visit 5 or 6 cities to inspect projects in a week with busy schedule, and may also think it is difficult to find good projects. On the other hand, we will see that many entrepreneurs begin to make financing as development goal that means to provide a good story firstly, to achieve angel investment and then to invest A round, B round and C round successively. Among them, as long as we will be not the last part, other people may continually attend or exist. That may like a blind data between man and woman who hold a standard to select objects; however, do they feel happiness if they meet same requirements? In this grand blind date between capital and entrepreneurship, all of us may forget the most important point that is integrating degree of soul with each other. Therefore, today we will make a suggestion for entrepreneurs how to select your soulmate—suitable capital.

You may believe that the most important thing for entrepreneurs is how to “achieve” capital, because they have not enough ability to “select”. However, most of entrepreneurs have ignored even forgotten the primary goal and confidences of making your own business under this attitude. The goal of capital is to add value and make cash; the goal of entrepreneurship is to growing career; if you lost to capital, your career has not gone further; thus, taking financing not career as a goal obviously puts the cart before the horse. In fact, capital can be duplicated, is the wing and support for entrepreneurship to accomplish goal, but not the final goal. Only this, can two parts stand on same position and focus on same future direction then arrive at end.

After you realize this, then how to select capital? The first one is to correctly realize capital. Capital is same as money, and is also different from money. As Wang Qiang, the director of ZhenFund (one of original founders of XDF) said “for an entrepreneur, achieving whose money, finding partners, hiring employees, focusing on what fields have same importance.” For entrepreneurs, fund not only is money but also is experiences & intelligence & human connections & resources from investors. Different fund will bring completely different results. Especially the early state of entrepreneurship is beginning time for entrepreneurship enterprises, and is also a key period to decide future development direction of entrepreneurship enterprises. Good fund will lead you to correct direction; however, non-integrating one may restrict you even mislead you.

From the financing way, enterprises in the seed stage will have clear realization for themselves. One is market position whether in China or in region: regional market can focus on local fund that are small but flexible, and have local resource, understand local market even can help enterprises development in region; domestic market need focus on domestic fund platform that have mature mode and a set of standard process can help enterprises to fulfill organization structure and to open domestic market. Another one is in vertical areas, such as mobile internet, e-commerce, intelligent hardware and etc. to select professional investors in different areas. Some investors may focus on one field for long time; thus, to select one of “insiders” may get twice the result with half the effort.

Besides that, entrepreneurship enterprises also need continually accumulate chip to achieve fund via self-packing and third party platform (including news, review, selection and other ways to attract fund). For example, current Red Herring Global Top Selection, BangCamp 100 and JINLIN China 100 are entrepreneurship & innovation project selections with strong influences. All third party platform collecting abundant investor resources from in the field of investment are also efficient and convenient ways to help entrepreneurship groups to achieve fund. Furthermore, currently abundant entrepreneurship incubators represented by Feimalv, Dark Horse Club, Kulifang, Innovation Works not only provide office place, coffee, communication space and public service platform; but also gather a batch of investment institution and entrepreneurs; at same time, they also connect them and set up their own funds, for example, Feima Fund from Feimalv, Devott Fund from Kulifang to achieve return via investment and to accomplish win-win.

Entrepreneurs should consider more when select funds; however, processing relation with fund more like a game. Entrepreneurs depend on fund to develop, at the same time also prevent kidnapping from fund; they not only need refer opinions from funds, but also need have their own idea. How to handle them balance is an economic art that entrepreneurship enterprises need research. Just like a blind date for man and woman, in the early stage you may have same interest; however, how to go further is another art.

Ma Yun, founder of Alibaba always talks a story that he only used six minutes to achieve 20 million USD from Sun Zhengyi, director of SoftBank. Many years later, when Ma Yun who has become a successful merchant asked the reason; Mr. Sun said “when I firstly see you, you have nothing; meanwhile, China’s internet industry was still at the beginning. However, your eyes had lights, dreams and passion. I believed you were crazy like Yang Zhiyuan (founder of Yahoo); therefore, I decided to invest your company.” “Crazy” connected them and made current legend of Alibaba. For entrepreneurs, you may have nothing; however, if you have enough passion, hard technology and perspective eyesights and confidence of producing value, you will win appreciation from investors and not far away from succeed.

This post is a personal or group view of Research and Advisory members and don't necessarily represent Devott's positions, strategies or opinions.

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