Sunday, April 16, 2017

The Failure of Hot Venture Projects

Most investors in the complex disk, will think about such a problem: the early pursuit of the project by the venture why not easy to run out of it? Recently, the Jinsha River venture capital fund partner Zhu Xiaohu wrote an article, analysis of the existence of such enterprises six problems, the following to tell you.

The first problem is that financing is too easy. This usually means that the business model is very easy to understand, whether it is difficult to operate or copy the difficulty is relatively low. But Zhu Xiaohu found that those who really have the potential of the project, at the beginning often because of another way so that most people can not see the way, so financing is difficult. For example, where to go, founder Chuang Chen Chao searched all the investment institutions on the market, but no one believes in Baidu and Ctrip can also be a platform between. Another example is the drop, most investors are in doubt, Uber in the United States from the car cut, why drop from the taxi began? Another example is the street CEO Tang Yan out of financing when almost all of the investors are questioning strangers dating into a founding.

Zhu Xiaohu said that China's Internet over the past 15 years, any successful business, A round of financing are very difficult and very painful, so these entrepreneurs will not burn money at the initial time to subsidize customers, but rely on a strong Word of mouth to attract customers. Standing in the investor's point of view, they only like a subsidy: this subsidy is not used to obtain the user, but used to clear the field.

The second problem is that the incision is too large or too small. Over the past 15 years, the successful entry point of the Internet start-up companies are actually very small, it is because the entry point is small, BAT these giants can not see, you will have the opportunity, otherwise the giant opportunity, such as today's artificial intelligence, Every giants are doing it. Good small entry point, can contain potential big market, but also plan to get through the big market path. Such as the beginning of the entry point is the taxi industry, from the taxi driver who is very difficult to make money, but through the early bedding, they make money from the car above. Of course, if the entry point is really too small, the lack of ductility, investors will be very cautious. In addition, the initial business is best to do the stock market, do not think about to educate the market and users, any small company, no energy, no qualifications to educate others, the user will be forced to do after the incremental market.

The third problem is fast growth, but poor retention. Six months after the user retention rate, the general can have 10% on the good, if 20% is very cattle. You can spend money to obtain the core user, but must be concerned about long-term retention, six months to start retention rate will be more stable. Of course, very few APP have tail effect, like a drop, the beginning of the user will stay down, until the driver more, the user experience better later, the user will return some of the retention. There are tail effect of APP basic can reach billions of dollars in the market.

The fourth question is to see the wind, do not look at the law. Many people say that I am willing to gambling, in fact, the real outlet is often the law. 05, 06 years when a number of Internet companies, such as 58, where, when the penetration rate of China's PC Internet is 20%; 11,12 years when there have been a number of mobile Internet companies, when China Mobile Internet penetration The rate has reached 20%. The law is: the market penetration rate of 20% to fire up. For entrepreneurs, at least to the penetration rate of 5% -10%, entrepreneurs have the opportunity. Be too early to become very martyrs, and even if you come to the outlet, you start thinking, the gene may not be suitable for this outlet.

The fifth question is that there is no thing to do each round of financing. Zhu Xiaohu said that each round of financing should have to do. Such as A round to do three things: run the team, to prove the business model, as well as control the good burn. The second round of work is to verify the feasibility and reproducibility of the business model. C round to do two things, one expansion, the second is to fill the short board. Because the early business is to fight the long board, to the C round like to enter the semi-finals, this time to qualify to fill the short board.

The sixth question is only offensive, do not understand the defense. If you do not form enough high barriers to entry, it is easy to be killed by the giant. How to build that barrier? First, depends on the dependence on traffic and cash, rely on content, rely on social media, such traffic is worth and safe. Second, depends on the control, mainly refers to the customer and service control. Such as domestic service class App. Third, look at the battlefield depth. If you and the competitor's user base and business are the same, the same deal, the other to make you more than you, you have no way to defend. Four to see the difficulty of management. US group rapid expansion of two hundred cities when hungry as a graduate of the entrepreneurial team, rapid recruitment, management team pressure is great.

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