Blue Chip Venture Capital Decoding Early Investment Method

In November 29th, blue Chi ventures announced China's RMB and US dollar fund-raising situation this year. The total scale raised was 3 billion 500 million yuan, which is one of the earliest funds raised in China in 2019.

The average duration of the blue chip venture fund is 10 years, focusing on the investment from Pre-A to A. 3 billion 500 million yuan in this stage of investment is already a big fund - called the industry myth of the old VC Benchmark, after nearly 25 years, each fund's management scale is also in the 400 million -5 billion (2 billion 800 million -35 billion RMB) range.

"We need to hit a target with the least bullet." Blue Chi venture management partner Chen Weiguang said.

Lan Chi venture was founded in 1998 in the US Silicon Valley and entered the Chinese market in 2005. Past investment cases include PPTV, Ganji, mogujie.com, fun shop, Qingyun QingCloud, Coupa and so on.

In recent years, the new projects include education in the field of VIP companion, art treasure, water droplets in the insurance field, good diagnosis, Nan Yan and so on, in the social field of Iraq, hard science and technology in the field of high immortal robot, Yun Sheng intelligent UAV and so on.

"As a quality fund, the concern and distribution of blue chip venture is more balanced. It is impossible for a fund to earn all its money, and to make good use of what is best at it. " Zhu Tianyu, managing partner of blue chip ventures, said.

From Silicon Valley to China

Blue chip ventures was the first US investment institution to enter China. In the same period, there were Sequoia China, red dot venture capital and KPCB, NEA and light speed ventures.

Among the similar investment institutions in the year, the Chinese team of the blue chip ventures is the minority core team with long-term VC investment experience in both Silicon Valley and China, and also takes account of the industry and investment background.

In the two managing partners of the China team, Chen Weiguang worked in Singapore Telecom and IBM. He joined blue chip venture in 2000. He founded the blue Chi China office in China in 2005. Zhu Tianyu worked in NetEase and Baidu, and joined the blue Chi venture China team in 2009.

Chen Weiguang entered the VC industry for the first five years and was stationed in Silicon Valley until the beginning of the blue business in China. Zhu Tianyu, his partner, said: "bringing the real Silicon Valley gene back to China has made what the blue Chi Chinese team looks like now, including our investment projects, investment characteristics and ways to get along with entrepreneurs."

In the past 15 years, the blue chip venture has been sticking to the early stage of investment and making the best choice. This also follows the VC style of Silicon Valley, emphasizing early, technological and value contributions.

Since 2015, the US dollar LP has paid more attention to the Chinese market in the past. There are also a new batch of fund brands in China to participate in the VC stage investment in a more diversified way.

In 2016, the blue chip venture completed a new US dollar fund and a new RMB fund totaling more than 500 million US dollars, becoming the largest dual currency early fund in the domestic market at that time.

"The concept of domestic VC has been generalized. Many different stages (investment institutions) call themselves VC. Over the past 20 years, we have consistently adhered to early investment, which is around A, and we hope to remain at this stage. Zhu Tianyu said so.

Research driven + highly disciplined

As of November this year, the management fund of blue chip ventures exceeded 10 billion yuan in China, leading to more than 100 early ventures. On the team side, the average IRR in China is more than 30%.

The group's investment in the Chinese market has pulled nearly 10 times of subsequent refinancing, of which nearly 80% of the invested projects have been successfully melted into the next round. In terms of exit, nearly 20 companies in the project managed by Lan Chi have achieved their exit through IPO and mergers and acquisitions.

Behind the continuous investment performance creation is the research drive and highly self-discipline of Lan Chi venture: the team finds the underlying trend of industry development through research, and then invests in "category a" entrepreneurs on the track with high growth space; in the ups and downs of the market, making investment decisions, there is always a criterion of awe and persisting in independent judgement.

Take the field of education as an example, in 2014, blue Chi ventures became the first round of institutional investors for VIP partners and art treasures. Now the two companies have grown into the top businesses of music and art track in quality education.

Research driven and highly disciplined also allow blue chip venture to have a higher hit rate in the selection of the wind tunnel. A big wind in 2017 was a shared charging treasure. According to AI's data, the market share of charging treasure was 90 million yuan that year, but there was more than 1 billion 400 million yuan of capital inflow.

In the eyes of the outside world, the blue chip venture, which has always been highly self disciplined, seems to be a "herd chase", putting money into the new player monster charging. In this regard, Zhu Tianyu explained that the fundamental reason for the team's investment decisions in the project is the layout in the direction of the energy network infrastructure.

It is understood that the blue chip venture capital has the tradition of additional investment in the follow-up financing of excellent projects, but each additional investment must experience the independent judgement of the team.

Cognitive arbitrage business

Since the beginning of 2018, China's equity investment industry has entered the adjustment period as a whole. Investment institutions' fund-raising difficulties, start-ups' financing difficulties and unicorn valuation callbacks are frequent.

For the impact of capital cold on venture capital industry, especially on the financing of start-up companies, Zhu Tianyu said: "China's VC industry has gone through 10 cycles and has gone through some cycles. This time is deeper than the previous several times. It is a deep massage to the industry, and the degree of extrusion will be even greater. "

Regardless of whether the industry is at a peak or low, the blue chip ventures keep pace with the investment of more than ten projects every year. The new funds will focus on the three major fields of technological innovation, big health and new consumption.

Specifically, they will focus on investing in business services and hard technology opportunities based on efficiency improvement and independent innovation, based on the great health opportunities of payment side innovation and medical service innovation, as well as the consumption opportunities based on new populations, new scenarios and new categories.

"VC is a business based on cognitive arbitrage. It is possible to earn more returns only when the opportunity and risk are judged earlier and deeper than others. Every era and every cycle has the opportunity. We have a long line of mentality to vote. " Zhu Tianyu said.

In the Chinese market, Lan Chi ventures manages both US dollar and RMB funds. Speaking of this, Zhu Tianyu said: "there is a" double currency fund "label does not mean that the operation of a dual track system. In the long run, the dual currency fund is the norm of the head organization. Our strategy is not differentiated, but it can meet the diversified needs of entrepreneurs. (editor Lin Kun)