Investment And Investment Situation Is Grim, Industry Bonus Period Turns Over: GP Seeks Capital Long Winter Preparation Tactics

Due to factors such as the impact of the new regulation on capital management, the investment and investment environment of China's equity investment market in 2019 was more severe than that in 2018.

According to CVsource statistics, 862 funds were completed in 2018, with a total scale of US $124 billion 500 million, down by more than 40% compared to $229 billion in 2017. At the end of Q3 in 2019, almost more than 350 funds were completed, raising the total size to 97 billion US dollars. It is estimated that the data for 2019 will continue to be lower than the previous year. In terms of investment, the total investment of the market in 2018 was US $217 billion, and in the first three quarters of 2019 it was only US $76 billion 800 million, about 35% of last year's total.

"GP has fewer bullets on their hands, fewer and fewer triggers, more and more cautious investments, and more and more investment projects." In October 23rd, at the thirteenth China investment annual limited partnership summit, Chen Jie, the founder of information, and /CEO, a partner in capital management, said.

At the same time, the equity investment industry is continuing to differentiate, and the head effect is becoming more and more obvious. Since the beginning of this year, the scale of fund-raising of the top 10 funds has accounted for about 65% of the total Market Fundraising scale.

Under such circumstances, how should GP prepare for capital long winter?

Tian Lixin, founder and managing partner of Tak Tong capital, said that from the perspective of GP, it is indeed felt that the tide is going to be washed away. Even with the head GP, fundraising takes more time than before. In his view, GP has to do something, holding the funds from LP to make it generate greater value, give LP a good return, so that the whole venture capital ecosystem will form a complete closed loop. In the case of uncontrollable external environment, GP should do this thing steadfastly.

Ji Wei, founder management partner of Huaying capital, said that in the downlink economic cycle, the upstream capital was decreasing, and the GP raised less money, and the money invested in the enterprise was less. Both enterprises and GP must be prepared for long-term operations, and we must give full consideration to the margin of safety. At the same time, it is also very important for enterprises and investment institutions to delineate their core competence circle, find their own boundaries, and then set up barriers.

For example, there are also cognitive upgrading, ability training and experience accumulation in Huaying capital. The group has 2/3 investment in culture and content field in the first five years, but in the second five years, Huaying team has increased the proportion of consumption and technology investment. At this point in time, maybe the first investment companies have come to the fore and become the leading industry. Hua Ying can join them in the layout of the upstream and downstream areas, for deeper learning and investment.

"In any difficult time, we must have confidence and conviction is very important." Ji Wei said that maintaining wolves and learning ability is eternal, and advancing is the only way to survive.

In solving the problem of raising funds, Ji Wei said that Huaying capital is very much looking for more long-term funds with more capital and strategic direction. Starting from five or six years ago, LP was a pure institutional investor, and the team also got support from insurance funds.

"Of course, the most essential thing is to do well in investment so as to get more LP's approval, so that we can go on for a long time." Ji Wei disclosed that the conversion rate of Chinese investment institutions to the new fund was about 50%. Apart from some institutions with continuous investment, the conversion rate is very high.

From the perspective of LP, Wang Jipeng, partner of yuan he Kun Kun, believes that China does not need so many GP at present. Now it is a natural selection process. A good fund can still be melted into money. To become a good GP, it is necessary to do more meticulous and professional work in core investment strategy, methodology, staffing and background experience of members.