Investment Situation: What Is The End Of Growth Arbitrage?

In 2019, the biggest attraction of China's capital market was the formal opening of the science and technology board, which also brought a new capital exit channel for China's PE/VC institutions. In order to comply with the trend of investment in science and technology, many RMB funds have moved forward step by step. How to adjust the investment strategy, valuation pricing and personnel training? What are the secrets of investment in science and technology?

In November 20th, at the "Ninth China innovation capital annual meeting" sponsored by the southern financial and financial media group and the twenty-first Century economic report, many guests from Pan Lin capital, source star capital, Huaying capital, star capital, Mai Xing Investment, Tatun Chi Chi, zero capital and Bohua capital discussed the topic.

Li Yuhui. Data map

Li Yuhui, managing partner of Pan Lin capital, technology innovation investment shortens investment strategy adjustment cycle

Pan Lin capital is a RMB fund. We focus on new drugs R & D and high-end medical devices for major diseases. The second direction is the direction of 2B, aiming at intelligent investment in the early stage of investment in the enterprise.

Pan Lin's experience in capital investment, first, we need to invest in technology or from the perspective of demand. For example, investments in cancer, cardiovascular diseases and metabolic diseases in the field of major diseases are all the absolute needs of China at present. The intelligent transformation of the consumer supply side includes the new requirements for the supply side caused by the changes in consumption demand after the 1990s, and the new demand for the supply side to reduce costs and increase efficiency.

The second is how to solve this kind of demand by means of technology. First, we are looking at biotechnology. Biotechnology is now playing a very important role in accelerating the development of new drugs. The second area is artificial intelligence, including mobile Internet and big data. It plays a very important role in intelligent transformation. There are lots of investment opportunities in the process of integrating comprehensive and specific scenes.

The third very important point is how to choose entrepreneurs. We call it an entrepreneur in a scientist, and an entrepreneur in an entrepreneur. With entrepreneurs, there are business models, business models and growth opportunities. This is our investment methodology.

The second point is about the observation of PE and VC investment. When pan Lin was founded in 2010, it was a PE institution based on its growth stage. After 2013, it turned to VC investment.

We have noticed that technology plays an important role in the adjustment of the entire industrial structure and in the development of the whole enterprise. Our judgment is that the technology field is more suitable for investment in the form of VC.

Recently, there are articles about the evolution of investors. My view is that equity investment should be viewed over 10 years and remain relatively stable investment strategy. During this period, we need to constantly adjust to achieve self evolution. With the continuous emergence of technology, the adjustment cycle of investment in the field of science and technology is further shortened.

We are looking for entrepreneurs in the scientists and innovators among entrepreneurs. With capital input, we can help the rapid development of China's emerging industries and promote the transformation of China's economic structure with the power of science and technology.

Zhang Gaonan. Data map

Zhang Gaonan, chief executive of Huaying capital: curiosity and cognitive ability are the driving force behind development.

There are four main investment directions of Huaying capital, namely, consumption, business, entertainment and finance.

I have always been concerned about technology driven early investment projects. PE is more focused on finding targets of high cost performance in certainty, while early technology investment is finding trends in uncertainty. PE investment requires strict logical thinking and sensitivity to financial and capital markets. VC emphasizes more on the thinking innovation based on knowledge reserves and industry experience. PE and VC investment emphasize the excavation and discovery of value at the source.

The misunderstanding of scientific and technological innovation lies in "only science and technology, no innovation". Some projects only have technology, which is system integration, but I am sorry, we can not invest without innovation.

The combination of innovation and mode can bring about two results. The first is to further optimize the original demand, the second is subversive demand, such as driverless. In our investment, we focus more on the improved innovation mode, analyze and predict the existing IT organization and business structure, and find out the future needs.

Whether investors or entrepreneurs, always maintain curiosity and cognitive ability, this is the driving force for all development.

Yu Lifeng. Data map

Source star capital management partner Yu Lifeng: the launch of the science and Technology Board will contribute to the return of venture capital.

The launch of the science and technology board is great news for investment circles, and provides a new exit channel for investment funds. The issuing standards, auditing principles and industry leading orientation of CB are conducive to finding capital for Chinese hi-tech start-ups as soon as possible, and providing investment funds with the means of realisation as soon as possible.

Although there were new three boards in the past, we still had many problems compared with the mature capital markets of the NASDAQ in the US. Today, due to the different auditing standards of the science and technology board, especially the pilot registration system and non-profit enterprises can be listed on such a large guidance, indeed, many VC funds have a tendency to move forward in the investment stage, and also meet the essence of venture capital to promote the value discovery of high-tech development.

I think the science and technology board has made most of the investment funds return to the essence of venture capital. Over the past 30 years, there has been a great arbitrage opportunity in China's capital market, that is, the arbitrage difference in the one or two tier market, which makes investment behavior VC investment PE and PE investment VC phenomenon.

The company creates a new challenge for our venture capital fund, that is, the ability to discover value. Because of the issuing mechanism and trading mechanism of the science and technology board, the main issue is the inquiry issuing mechanism, so the practitioners in this market are professionals. Therefore, the value discovery ability of investment funds is particularly important. We must find some enterprises that are truly high-tech and have more growth and run more standardized.

From this point of view, the launch of the science and technology board has indeed brought us a better opportunity to help the development of the fund, and also brought the discovery and self traceability of our foundation.

On the other hand, we also see that the companies listed on the science and technology board have already seen a price cut phenomenon, including 5 cases below the issue price. This reminds us that in the primary market investment, we must reserve enough market space and value space, and test what kind of value advance we choose and what kind of price exit, rather than hope for arbitrage opportunities.

When the science and technology board was launched, the market cheered, and many people thought there was another arbitrage market. The actual performance of the two tier market has brought us great vigilance. When investing, we must keep the security boundary between the primary market and the two level market. This is my basic view on Ke Chuang plate.

There will be many opportunities in the downward cycle of the economy. In this opportunity, investors and entrepreneurs must be good at grasping opportunities for development.

Liu Zehui. Data map

Liu Zehui, founder and managing partner of star capital, new era investment organization should be professional and integrated.

Star capital was set up in September last year, and the team came from the first tier investment institutions. The first fund has started to invest, mainly focusing on investment in big consumption and technology.

To invest or return to nature, star's mission is to invest in changing life. We find excellent enterprises to help them grow. Different stages of enterprises have different value growth points. Early companies are revolutionary and creative, and the growth companies are based on market expansion.

In the next 10 years, there will be fewer opportunities for arbitrage trading. Today, China's external market and technology are changing faster and faster, making more demands for investors.

Future professional institutions need to have two abilities: professionalism and resource integration. Professionalism refers to the professionalism of the industry, and should be familiar with the subdivision areas in the large industry. The ability of resource integration refers to "investment + investment banking". Besides resources, resources and markets are very important for early enterprises.

Our team has seen a lot of Internet related projects in the past, and now it is mainly looking at investment opportunities in three scenarios. Travel is a big market. We are optimistic about the application of vehicular Internet. The new energy vehicle is the trend of the times. What we can do in this mobile space is what we are looking at. In the same logic, we are concerned about home life scenarios, such as the opportunity of software and hardware integration in smart home and technology life, such as 5G communications. Another chance is retail related. For example, retail technology, services and support for retail enterprises, to provide them with the background system, or the intelligent front end. At the same time, it is also very concerned about the opportunity of combining consumer brands with big data and artificial intelligence.

Having experienced so many ups and downs, our first feeling is to have a common heart to see these changes, and second is to change life through investment. We hope that with the power of investment, investors will find excellent entrepreneurs and promote the progress of enterprises and the development of society.

Tian Zirui. Data map

Tian Zirui, senior partner of Mai Xing Investment Co., Ltd.: the meaning of Ke Chuang plate is more registration system.

Mai Xing investment is a growth fund with 14 years experience in China. We manage four RMB and a US dollar fund. The main investment areas are consumer, health and technology manufacturing. Mai Xing's position on the first day is PE project, and the perspective of VC investment may not be the same.

From the perspective of science and technology, the technological content and technological barriers of science and technology projects in recent years are all improving. This is a good thing. PE investment is mainly responsible for business risks. We also observe that in recent two years, the healthy development of business has increasingly relied on technical barriers and values.

From the point of view of withdrawal, we only invested 65 projects in 14 years, and today we have withdrawn from 24 projects, and most of them have been completed through mergers and acquisitions.

We think that the meaning of the science and technology board is more than the registration system, or even the significance of registration system itself is greater than that of the science and technology board.

There is another observation to share with you. From the perspective of the whole PE field, it is not that the two tier market is more advanced. Instead, the primary market is replacing the two tier market. For example, we can see how many years the Amazon has been listed, and how many years the Uber has been listed. A lot of companies haven't listed valuations for billions of dollars.

We only cast opportunities to see clearly and see clearly. For example, in the trend of new energy vehicles, we still can not judge whether the new car manufacturing force or the old car factory wins, but the components in the upstream part of the new energy vehicle industry chain are sure to have many opportunities.

As investors, we are more and more optimistic about the Chinese market. In 1990s, if we have the courage to make money, we can make money in 2000s. The trend in recent years is that we can earn money by technology. This is a good trend that makes us excited.

Guangdong. Data map

Bohua capital management partner Guangdong: the nature of the fund should not be simply classified according to PE and VC.

Bohua capital has just been established. The first phase of the fund will be RMB 2 billion yuan, which will be completed in December this year. The three investment direction is hard technology. The first is industry and energy, mainly new materials, new energy and some equipment manufacturing, the second is communication and technology, mainly chips, 5G related fields, third is health, mainly refers to medical device manufacturing and biotechnology.

Let's talk about why we chose these three industries. At present, the opportunities for domestic science and technology enterprises come from three directions. The first one is import substitution. Zhongxing incident and HUAWEI incident bring important opportunities for the rapid development of domestic science and technology enterprises. The second is the opportunities brought about by changes in the market structure, such as the opportunities brought by the industrial chain transfer and the opportunities brought by the medical collecting system. The third is new technologies from scratch, such as our new energy vehicles, Internet applications and foreign enterprises are standing at the same starting line.

The investment stage can not be simply divided into VC and PE. At the present stage, many funds will not only do VC or PE. For example, we are the PE fund, the investment stage is in the growth stage, that is, from the completion of product development to the market, until the company completes IPO before this stage. Our investment position is "hard core" technology, which is very compatible with the science and technology innovation board.

No matter how the capital market plate changes, investors will not change the core standards of enterprises and the value they will bring to enterprises. We must grasp the fundamentals and win the cooperation with entrepreneurs.

Xu Yuanping. Data map

Xu Yuanping, director general of Da Chen financial intelligence, and head of health care industry in Tatun, Hong Kong: different stages of investment institutions have different competency models.

Tatchen is one of China's oldest private equity investment institutions with a management scale of nearly 30 billion yuan. Our medical team has been professionally carried out earlier, and will also see some investment in science and technology in this field.

For the definition of institutions, angels are 0 to 1, VC is 1 to 10, PE and larger industrial capital is 10 to 100. The ability models of different types of investment are different. 10 to 100 abilities are not achieved by small teams.

The launch of the science and technology board also brings short-term opportunities and long-term opportunities. In the short term, the science and technology board allows companies with stronger technology attributes to go public earlier, including those listed on GEM companies. In the long run, this is a national strategy, though it may be at a low level in the future.

There are more innovative products and more product support. For example, we can see more about the investment of new drugs. One of the changes brought to the investment is the change in the strategy of the listed companies, such as small and beautiful enterprises, which can also be listed. The corresponding opportunities include biotechnology, material technology and information technology.

To sum up, the life cycle of an enterprise is relatively long. We should be able to resist loneliness and wait for investment.