VC/PE Redifferentiation Under The Epidemic Situation: The Head Organization Speeds Up Investment, Small And Medium Enterprises Are Deeply Trapped In The Dilemma Of "Raising Investment And Returning To Management".

In the venture capital industry, some people waited for the winter to watch and some people went retrograde.

According to the data of Qing Dynasty, the number of venture capital dropped by 80.2% in January compared with the new crown pneumonia epidemic. But in stark contrast, Sequoia Capital has completed 25 projects in the past month, with an average of 1.25 days to invest in a project, covering TMT, consumer services, health care and industrial technology and other sectors, completing the full coverage from seed wheels and VC to PE.

"This is also a very different survival situation for venture capital institutions under the impact of the epidemic." A general manager of a large domestic venture capital company told reporters that compared with the industry's head venture capital institutions, they still have enough funds to continue the pace and strategic layout of the established investment. A large number of small and medium-sized venture capital institutions are deeply troubled by the difficulty of raising funds and slowing the pace of investment.

Reporters learned that the impact of the current epidemic on the venture capital industry is no longer limited to the investment and investment link, and more and more investment projects have increased growth pressure, leading to the withdrawal of the project cycle is stretched, is making a large number of venture capital institutions are facing increasingly severe post investment management and LP accountability pressure.

In the view of the managing director of the domestic large venture capital institutions, if the investment projects in the next year are not able to exit according to the original plan, they will be regarded as venture capital institutions by LP as a lack of anti risk capability and no longer invest in new funds. This will aggravate the polarization of venture capital industry and accelerate the survival of the fittest in the industry.

"Ice and fire two days" in the stock raising and investment links

Facing the past month, Sequoia Capital China fund has invested 25 projects, many small and medium-sized venture capital agencies are quite envious.

"There are only a handful of venture capital funds that can maintain such a fast pace of investment." A small and medium-sized venture capital agency official told reporters. The reason is that most small and medium-sized venture capital institutions are facing "rice without straw".

He told reporters that after the Spring Festival, his venture capital institution issued a letter of payment to LP according to the original fund payment agreement, but many entrepreneurs LP feedback that the epidemic caused the cash flow of the enterprises to be tight. They could not pay the fund's remaining investment funds, and even some LP proposed to raise the fund share in the transfer of the parity fund to maintain the operation of the enterprise.

"In fact, the epidemic has made the environment of venture capital investment worse." He speaks frankly.

According to the data of Qing Dynasty, the domestic stock investment market completed 1 trillion and 81 billion 177 million yuan in the first 11 months of 2019, which was 10% lower than that of the previous year. Now, affected by the epidemic, he estimated that the amount of equity investment raised in the first 2 months of this year will drop by about 30%.

The direct consequence of the "shyness" of venture capital institutions is the sharp slowdown in investment pace and strategic layout.

A number of small and medium-sized venture capital agencies admitted that the investment projects negotiated at the end of last year can only be shelved temporarily due to insufficient funds. However, some enterprises will still call a number of calls a day, hoping that venture capital institutions will quickly inject capital to "emergency", and they are willing to give the valuation of enterprises ten percent off.

In contrast, the industry's head ventures do not seem to have similar worries.

The director general manager of the large domestic venture capital company told reporters that their funds were relatively sufficient, and the investment projects that had already been negotiated signed contracts and allocated equity investment funds according to the established investment rhythm. Today, the biggest "resistance" is that the epidemic has led to the fact that the staff are unable to conduct on-site inspections to assess the operating conditions of the proposed investment enterprises, which slows down the investment progress of many contacts.

"So we missed some of the bottom line investment opportunities." He disclosed that due to the outbreak of the enterprise chain of funds is tight, a number of their original promising enterprises are willing to lower the valuation of enterprises to get investment as soon as possible, but the "stop" of the adjustment work led to their failure to finalize the investment contract.

A lot of venture capital insiders believe that the industry's venture capital institutions and small and medium-sized venture capital institutions have a polarization in the investment and investment links, in addition to the former has a good historical investment performance, attracting more LP funds, but also closely related to their different fund-raising strategies - for example, most of the industry's venture capitalists in recent years are fund-raising for institutional investors, and the latter is anti risk. Strong capacity, so in the epidemic and economic growth slowed down during the performance can still fulfill the commitments, and small and medium-sized venture capital institutions rely more on individual investors fundraising, when the impact of the economic downturn caused by the increase in pressure, individual investors may be due to their financial situation deteriorating, investment strategy conservative and other reasons halfway "change", resulting in their fund-raising suddenly tight, and then shadow. The strategy and pace of investment slowed sharply.

A small and medium venture capitalist fund-raising channel partners admitted to reporters that the fund-raising of individual investors is not in place, raising the environment for their fund-raising. Before they introduced the local government guidance fund as LP, they promised to drive 2 times the amount of private fund-raising to local high-tech enterprises. Now the government guidance fund has repeatedly urged them to increase investment power of local enterprises. To help the latter tide over difficulties, the fund's current private capital is less than 40% of its original commitment.

"Recently, the local government guidance fund has issued a final notice. If the fund fails to fulfill its original commitment to support local enterprises, they will no longer make additional capital injection, or even consider the redemption of their original investment share as soon as possible." He told reporters.

Post investment management and project exit "pressure"

Many enterprises are facing pressure of performance growth as a result of the outbreak, which also challenges new venture management and project exit.

"Recently, many individual investors LP have been asking about the performance of the projects they have invested, and whether they can achieve IPO exit according to the established plan. Will there be any new changes?" The head of the aforementioned small and medium-sized venture capital organization told reporters. In response to this, they appease LP and look at the operation of all the investment projects. They found that more than 60% of the project's performance growth is under pressure, which may not be able to achieve the performance growth targets stipulated in the original investment contract, and the other 15% projects are facing "life and death tests". If business fails to recover in the short term or receive additional financial assistance, they will probably face bankruptcy; only 25% projects will be stable. The epidemic situation has little impact on performance growth, and the IPO process can be launched according to the original plan. These self - felt projects are mainly focused on Internet education, fresh electricity providers, online diagnosis and treatment, medical research and development.

"This makes the management team extremely nervous." He revealed. Today, the management team is working overtime, contacting banks and other financial institutions everywhere to seek emergency loans to help enterprises to solve urgent problems; to integrate all kinds of industry resources to help investment enterprises to expand sales and speed up the pace of online marketing transformation. In the past week, they have also contacted several logistics companies and human resources organizations urgently to help a number of investment enterprises to solve the problems of raw materials transportation and recruitment.

He said frankly, now only hope that the investment enterprise can restore the past business situation as soon as possible, let LP eat "reassurance".

Reporters noted that compared with the central venture capital agencies to find contacts around the relationship, some heavily capitalists venture capital agencies simply help with capital operation, help enterprises to tide over the difficulties.

For example, the 25 projects invested by Sequoia Capital China Fund in February, including all channel operators, 100 autumn electricity providers and catering supply chain service enterprises, Shu Hai, logistics enterprises, and so on, can effectively help the relevant investment industries to solve the problems of supply chain and online marketing transformation. In addition, they also layout the exix, oil drop net, Bo flow intelligence, circular intelligence, MEKA Mander machine. People, SIM computing and other industry rookie, in the long run to help enterprises upgrade technology and enhance operational efficiency.

The director general of the large domestic venture capital organization told reporters that they have also made an assessment and found that most investment enterprises can increase their income and reduce expenditure strength after the outbreak of the disease, and continue to restore the previous IPO plan.

"What we are worried about is that some business owners exaggerate the impact of the epidemic, leading to the fact that the business decision is in a state of emergency and confusion, instead of dragging the business into the mire." He pointed out that recently, they launched online courses quickly, hiring experts to guide enterprises how to quickly finance and strengthen cash flow, improve the efficiency of telecommuting, and accurately understand the latest development trends and potential opportunities in the industry.