Infant Formula For Entrepreneurs

Angel investment (Angel Investment) is a one-time investment for free investors or informal venture capital institutions for original project ideas or small start-ups.

Angel investment is a kind of venture capital, but there is a big difference between them: angel investment is a form of non organization venture capital. The source of its funds is mostly private capital rather than professional venture capitalist. The threshold of angel investment is low. Sometimes, even if it is a creative idea, if there is development potential, it will be able to obtain capital, and venture capital is generally not interested in those infants who have not yet been born or are crying for food.

For startups, they can neither eat the "big rice" of bank loans, nor touch the light of venture capital "vitamins". In this case, they can only rely on the "baby milk powder" invested by angels to absorb nutrition and thrive.

Case 1 10 years ago, Tian Suning and Ding Jian met the two poor students who had just graduated from America, and sprouted a dream of building a company and bringing Internet back to China.

By chance, they met Liu Yaolun, a patriotic Chinese businessman, and got an investment of 250 thousand dollars in angel.

Tian Suning and Ding Jian seized this opportunity and founded "asiainn" in Dallas in 1993, and returned to China in 1995.

Today, "AsiaInfo" has become a famous brand of China's Internet industry, and its total revenue reached 116 million US dollars in 2003.

Case two in October 1997, two engineers from Beijing, Deng Feng and Ke Yan, founded the NetScreen company in the United States using 1 million dollar angel investment.

After that, the company gradually started. After several financing operations, the company gained more than $20 million in venture capital.

Today, the high tech company has more than 4 billion dollars in value, and the two founders are extremely impressed: without the support of the first angel investment, NetScreen may still be a dream of both of them.

What is angel investment?

Although angel investment is a "new face" in the venture capital market, but because the threshold is much lower than that of venture capital, it is favored by entrepreneurs. It even has the momentum of becoming green and becoming a new channel for venture capital financing.

In this regard, Zhou Shuiwen, chief investment officer of Shanghai LIAN Cci Capital Ltd, said that angel investment is not a separate financing channel, but is a kind of venture capital. It also has the characteristics of "three high". First, high technology, the investment target is mostly small and medium-sized high-tech enterprises in seed stage and start-up stage. The investment goal is not the project itself, but the potential huge profits behind the high-tech. Two, high risk, from investment to capital investment generally takes 3-7 years, and therefore has a large investment risk; three, high return, the annual investment return report rate is about 30%.

Although angel investment is a member of venture capital family, it has the following differences compared with the conventional venture capital: first, investors are different.

Angel investors usually exist in the form of individuals.

At present, there are mainly three kinds of angel investors in China. The first category is the representative or manager of foreign companies in China, such as Dr. Li Kaifu, vice president of Microsoft, and Dr. Zhang Yaqin, Microsoft Research Institute of China. They have invested in Tsinghua University's student entrepreneurship team "Oriental Bo Yuan"; the second category is foreigners and overseas Chinese who are interested in the Chinese market, such as Mr. Liu Yaolun, who invested in "AsiaInfo", Nicola Ponti, who invested in Sohu, Massachusetts Institute of Technology, and third successful private entrepreneurs in China.

Two, the amount of investment is different.

The investment of angel investment is relatively small. In China, each investment amount is about 50 thousand US dollars to 500 thousand US dollars.

Three, investment review procedures are different.

Angel investment is not very strict in the examination of entrepreneurial projects. Most of them are based on the subjective judgment or preferences of investors. The procedure is simple, and investors generally do not participate in management.

How do you attract angel investment?

According to our understanding, China's private enterprises have accumulated a large amount of capital after 20 years of reform and opening up.

Preliminary estimates show that China's private capital has reached 10 trillion yuan.

This large amount of private capital urgently needs to find the direction of investment so as to seize the opportunity in the new round of development, and angel investment is a new investment field generally favoured by private capital.

But the success rate of angel investment is not high, and 1 of the 100 projects are successful.

Therefore, although the threshold of angel investment is not high, investors are still very cautious about their investment behavior.

According to Mr. Zhou Shuiwen, according to the introduction of Mr., at present, the criteria for judging the investment of angel investors are mainly as follows: 1, whether there is enough attraction; 2, whether there is a unique technology; 3, whether there is a cost advantage; 4, whether it can create new markets; 5, whether it can quickly occupy the market share; 6, whether the financial situation is stable, whether it can get 5~10 times the potential investment return rate of the original investment; 7, whether it has a profit experience; 8, whether it can create profits; 9, whether it has a good entrepreneurial management team; 10, whether there is a clear investment exit channel.

Therefore, angel funds, like venture capital, will not be easily dropped from the sky, but targeted.

In this regard, Mr. Zhou Shuiwen's advice to entrepreneurs is that if you want to get the favor of angel investment, entrepreneurs should first pay attention to the commercialization of their own technology. Secondly, we should pay attention to the sustainability and competitiveness of project technology, pay attention to the response of products to enter the market, and not wait until the technology is mature enough to consider entering the market in an all-round way. Furthermore, entrepreneurs should provide a business plan with clear thinking, full demonstration and distinct views, and can give 10-20 times returns or 5 times returns in 5 years, so as to attract the eyes of angel investors in many application cases.