Venture Capital'S Ten Criteria For Evaluating Entrepreneurial Projects

In December 8th, I participated in the 2008 annual meeting of the founders. VANCL founder Chen was elected the entrepreneur of the year. UCWEB Yu Yongfu was selected as the entrepreneur of the year. Congratulations to the two!

I also voted for their best angel investor with their light. Thank you.

This is my keynote speech at the conference on how to select entrepreneurial projects. Google angel investors have made tens of thousands of times. Angel investment sounds the most profitable business in the world, but there is no such thing as a free lunch in the world.

How to control risks and improve the success rate, every family has their own brilliant ideas. I try to find the rules in a rational way.

I am just an amateur in the investment field. I haven't invested enough money to start investing.

The reason why I dare to talk about investment here is that the topic must also be talked about, and it can help entrepreneurs better start their own businesses.

As for the three key issues of investment, I would like to throw my views first and ask the experts to advise.

Every venture capitalist will say that projects and people are indispensable.

But there are always two situations. First, people are very good, and the projects are good, but they are not good enough.

In the second case, the project is very good, good people, but not strong enough.

Between projects and people, we still need to make the final choice. What should we do?

Finally, most venture capitalists in China will choose to invest in projects.

I will not hesitate to choose people.

Because man is the internal cause, and between man and project, man is the decisive factor.

Several of my practices have verified my ideas.

In April 2005, when he left the Amazon, I said to VANCL, "whatever you do, I will support".

The first time he founded I had a net, I invested in it, and founded VANCL again in October 2007. I continued to invest.

VANCL, I voted for the old man.

Here also thanks to IDG partner Lin Dongliang, who has invested two years in a row.

For example, UCWEB Yu Yongfu, when he was still working on Lenovo investment, I once said, "if you want to start a business, I will support it."

Later he decided to join the UCWEB venture, and I did not hesitate to invest in it (of course UCWEB is a very good project).

There are lakala Sun Taoran, DuoWan Li Xueling and so on.

I do not understand why most organizations do not do so.

After pondering for a long time, I think that the business mode of the fund does not support such investment mode, because the investment institutions raise the money of investors, there is a definite exit period. If the project is not good enough, it will waste at least a few years, and the organization can not afford it.

Angel investors invest their own money, without external pressure, and have enough time to invest.

Another important reason is that in China, high-quality and experienced people are scarce, which is different from that in the United States.

Therefore, my judgement is that the investment is even higher.

Two, how to evaluate people?

Assessing people is the most complex thing in the world.

I don't think I have the gift of seeing people.

I've heard that watching opera is very effective, but I haven't learned it yet.

I just sum up the ability to identify people in the long term management process.

The most important thing for people to evaluate is honesty, which is the premise of all assessments.

Angel investors invest less money, generally do not employ professional agencies to do due diligence, it is easy to be cheated, so the integrity of people is very demanding.

China is still in the initial stage of the market economy and has yet to establish a truly honest business atmosphere.

To assess people in such an environment, I am most concerned about this person's values and the bottom line of business ethics. Only by grasping these things can we truly grasp the integrity.

Angel investors and entrepreneurs have deep mutual trust, which is a successful start.

I have given six criteria for the assessment team: (1) to be able to see the needs of users and to be extremely sensitive to the market; (2) to have high aspirations and to be down-to-earth; (3) it is best to build a business with two or three complementary strengths; (4) to have a skilled leader who can bring the team (Internet Project); (5) to expand rapidly in low cost situations; (6) to have a good looking person, such as those who have successful entrepreneurial experience, and so on, and ten points will be added.

I think (2) (3) (4) (6), these four are easier to grasp, and the most difficult ones are (1) and (5). Let me begin with (1) and (5).

(1): it can see the needs of users and is extremely sensitive to the market.

This is a very high ability!

Everyone has heard of the story of selling shoes in Africa. Some people think there is no market in Africa and some people think that the African market is very big.

This is a typical example of insight. It is felt that the great people in the African shoe market penetrate the appearance to see the essence of things.

Shi Yuzhu pinpointed the nutraceutical product as a gift, from his market demand after communicating with a group of elderly people in Wuhan.

In 1996, Jinshan almost closed down under the pressure of Microsoft and piracy. At this time, the most important thing I reflected on was why we couldn't sell the products we made.

I stood for ninety days, and I met the customers face to face with each other everyday, and I finally found some feelings.

In 1997, Jinshan began to re start business, and did word bullying, poison bullying, online games and so on.

(5): rapid expansion under low cost.

There are two key words in this sentence: "low cost" and "rapid growth". Let me start with cost control.

Now it's the economic winter. Everyone is talking about the winter.

I don't think startups have been through the winter until they continue to make profits.

To start a business, you must have the ability to spend money or not to spend money on things, and to make things beautiful.

If you spend money on things, there will be no opportunity for small companies.

A few months ago, a Beijing entrepreneurial team came to me. I asked a question. What if you can't find investment?

They said they had made some money, and it took enough for a year.

In Beijing, eight highly capable teams spend a year, including computers, offices, servers and marketing. Guess how much they plan to spend?

Just two hundred thousand!

I particularly care about how they do it.

They said, "we do not pay wages, rent two hundred square meters of houses in Tongzhou, only one thousand or two thousand yuan per month, and spend another two thousand or three thousand yuan for an aunt to buy vegetables for cooking, office work, food and lodging."

In doing so for a year, we will go all out to achieve the ultimate goal. We can achieve considerable scale by using household registration tablet. "

I believe that entrepreneurs have such determination and self-confidence, entrepreneurship will succeed.

If we meet these six criteria, we will succeed if we have a dream and stick to it.

Three, how to evaluate the project?

The entrepreneurial team must find the right direction for entrepreneurship so as to be truly successful.

How to make sure whether the project is worth doing?

I summed up four criteria to select projects: (7) to make the most fat market, choose the biggest market that I can do; (8) choose the right time points; (9) concentrate, focus and concentrate again; (10) business is verified on a small scale, and has the opportunity to make the best place in a vertical market.

To put it in a sentence is to do a right thing in the right time, and to do the number two.

First of all, to do the right thing at the right time is a strategic issue.

If things are not practicable, they will still be persistent. Such people are doomed to failure.

Doing the right thing is relatively easy, and it is difficult to grasp the time point.

For example, Lianzhong made a great success in making a chess game in 1998. If they chose to do online games at that time, what would happen?

I believe they are more likely to fail, and the time is not yet ripe.

Grand September 2001 began acting Korean game "legend" is very successful, very important reason is that the timing is better, Internet cafes have sprung up, broadband has begun to popularize, and the market badly needs a good online game.

Secondly, choose the biggest market that can be done.

We must figure out the size of the market and think clearly before we do it.

Once I started to do it, I got stuck in it. This is my personal experience.

Back to 1996, we will be more successful if we choose a breakthrough.

Because the market size of the poison bully is too big.

At the end of 2000, it was a little late, and the cost was relatively high.

He continued to focus.

Focus is the most important weapon of the entrepreneurial team. Everyone focuses on one problem and solves the problem very quickly.

For various reasons, entrepreneurs can easily enter battlefields one after another, and the last thing can not be done well.

Finally, can we do the best?

Generally speaking, the value of the second is less than half of the first place, and the value of the third is very low.

What kind of core competencies do you have and what kind of skills you must have?

Do you really need such a high standard to start a business?

My answer is simple: no need!

All roads lead to Rome. Many successful entrepreneurs start from trivial matters, break through single points, and then step up the steps.

For example, Li Jiacheng started selling plastic flowers, and Liu Chuanzhi founded Lenovo and sold roller skates.

The most important factor in the success of business is "dream" and "persistence".

The ten assessment criteria I wrote are only applicable to entrepreneurs who want to rely on venture capital to develop rapidly.

When I wrote this article, I found an article on the Internet by Google researcher Wu Jun: "behind the scenes hero: venture capital", which mentioned that redwood's requirements for projects and people are similar to the ten major standards I have mentioned.

There are some basic requirements for Sequoia venture capital for the companies that want to invest in new ventures: the company's business needs to be clearly stated in 1. sentences.

(standard 9) 2., if the business of the company is not one billion dollars, it will not be necessary.

(standard 8) the benefits of the 3. company project to customers must be clear at a glance.

(standard 1) 4. must have a unique skill.

(standard 10) the business of the 5. company is to spend a lot of money to make a big business.

(standard 5) there are some basic requirements for the founder and Sequoia venture capital. The 1. is open-minded, flexible and able to prove that he is stronger than his opponent.

(standard 1) the genes of 2. companies and founders are better.

A company's genes are formed in the three months after its establishment. Excellent founders can attract excellent teams, and excellent teams can lay the foundation of a good company.

(standard 2) 3. fast action, because only in this way can we defeat the existing large companies.

The competition between a small company and a multinational company is just like that between a baby and a giant.

(standard 5)