LP and GP are two sides of the same coin, and no one can do without.
Throughout 2019, the lamentation of GP fundraising difficulties continued. As the "golden father", LP has become the most valued group in the private equity investment industry.
Five or six years ago, the "National LP" era was ridiculed as "people are stupid and have a lot of money". Even institutions without professional team background and investment experience can easily raise funds. Nowadays, affected by the "New Asset Management Regulations", market-oriented funds of funds, which are mainly bank channels, are also in the dilemma of "exhausting ammunition and food." Even the only "landlord with surplus grain" recognized in the market, the government guidance fund, is unspeakable.
The government guidance fund bears two responsibilities, not only guiding the direction of capital and industrial investment, but ultimately returning to performance. In this process, how to balance the natural contradiction between industrial guidance and performance has become a test.
At the same time, in the "setter" position, the government guidance fund is slightly embarrassed.
Two completely different operating systems are like two completely different trends, sandwiching the government guidance fund. On the one hand, they have to undergo multiple audits a year, and on the other hand, they have to face a highly market-oriented and professionally operated GP. Need to answer the audit, but some questions cannot be answered.
For example, in GP investment speed, investment project mistakes and other issues. Because GPs are recruited through open procedures, what the government guidance fund can do is to strengthen active management. In addition, how to achieve a balance between speed and quality has become another issue facing government guidance funds.
LP replays, the choice between awkward situations
changes from time to time. As the trend of GP going to both sides becomes increasingly obvious, some government guidance funds have made strategic adjustments.
"In the first half of 2019, the head institutions have a strong ability to absorb capital, and we give the money to the head. After the second half of the year, the head institutions also have financing difficulties. The third-party wealth filing and the management of the fund industry association are to a large extent The financing progress of the top institutions has been lagging behind, so we invested more money in VC or industrial capital." Yang Li, general manager of Beijing Science and Technology Fund, told Rongzhong Finance.
Xinzhongli Capital has increased the operation of the guidance fund. Based on many years of experience, a relatively good guide fund management system that can fulfill the policy requirements has been sorted out. This system focuses on real-time refined management and standardized cleaning.
In terms of refined management, has formed a barrier for each sub-fund from the early stage of contact, acceptance, due diligence, decision-making, capital contribution, and post-investment management after capital contribution.
At the same time, cleaned up the sub-funds of the provincial government guidance fund. "In many cases, the shareholding of the guiding fund will last for two or three years. A large amount of empty resources is occupied and there is no way to clean up. So far, the subscription of the guiding fund to the sub-fund is valid for one year, mainly through standardization and real-time refinement. Management.”
In order to avoid the panic of fund losses from affecting the subjective evaluation, more and more funds of funds adopt a unified standard for quantitative evaluation of investment.
"All are based on the data transformation after the sub-funds and projects. Any data transformation must have reliable third-party evidence-based logic; pay close attention to DPI, and then pay attention to other indicators on this basis, such as investing in the first round of the fund The project is the first financing for this project. If the company has not raised the second financing for more than 18 months, it will be considered to be excluded when making internal value estimation." Zhongyan Investment Management Partner Shan Shiqiang told Rongzhong Finance.
Shan Shiqiang found that after adopting quantitative evaluation standards, there are two types of manager data that perform very well, has a deep understanding of craftsmanship in a certain field, and an institution with industry empowerment, the latter can greatly reduce the development process Risk of failure in
When the overall industry financing is the most difficult in 2019, Zhongyan Investment and the Cognitive Craftsman-type organization signed a strategic cooperation agreement to provide several hundred million levels to support managers. In addition, for good projects, they carried out tracking direct investment.
"In the next three to five years, the structure of investors in the entire Chinese equity investment industry will undergo tremendous changes and adjustments, and the structure of Chinese fund managers will also undergo tremendous changes and adjustments. In the case of substantial adjustments in GP and LP, the winter It will be very ferocious." Jiang Yucai, vice president of Shenzhen Innovation Investment Group Co., Ltd., believes,The equity investment industry has just reached the edge of difficulty.
In the cold winter, the LP and GP who are two sides of one body should hug each other to keep warm and avoid "love and kill each other." At the Financing China 2020 (Ninth) Annual Capital Conference, many LPs opened their hearts and expressed their new expectations for GP.
no longer puts the pursuit of financial returns in the first place
"Many GPs talk about the same logic when communicating with us, except to introduce the team, the projects that have been invested, and the performance. They don’t realize that many LPs are no longer The pursuit of financial returns is the first priority." Yuan Li, general manager of Minmetals Jintong told Rongzhong Finance.
According to statistics, 75% of the newly-added funds in 2019 came from state-owned assets, including government guidance funds, state-owned enterprises, and central enterprises. The biggest feature of this type of money is that it is not very interested in financial returns. Big, more "hope to have other needs for exchange."
is supported by facts.
“It turns out that many government-guided funds invested in some market-based funds, but in the past two years, many government-guided funds have directly connected to project funds.” Jiang Mingming, chairman of Shengshi Investment, said that looks at these two trends. In the future, if the institution cannot bring something industrialized to the local area and simply give financial returns, it will face greater pressure when communicating with the LP.
"When GP communicates with LP, we should start more from the perspective of LP" has become the voice of many LPs.
"Some GPs and LPs have been hot for a few months and have been silent. We hope that the communication between GPs and LPs will be continuous. Each LP at hits different points. Some LPs focus on core competitiveness, while others focus on returns. Some are concerned about the grasp of long-term trends." Fang Yuan, the founding managing partner of Astral Capital, believes that only cares about the mutual communication of LP appeals to be effective.
voted better than retired
In 2019, DPI gradually became an internet celebrity. It is gratifying that
has voted in the star project, but did you seize the opportunity to quit? Whether the asset portfolio can generate maximum value has become a point of great concern to the fund of funds.
"Never want to withdraw until the seventh year. We have projects that cannot be withdrawn after five years. They can neither be liquidated nor dissolved. All legal methods have been used to delay for five years." Guan told Rongzhong Finance that, for this reason, they added a department dedicated to exit this year, and at the end of the year it will conduct exit reviews with each fund and formulate an annual exit strategy.
“U.S. dollar LP pursues long-term capital appreciation, and RMB funds are more concerned about the speed of money recovery.” According to Jiang Haotian, the founding partner of Extreme Capital, the level of DPI mainly depends on the composition of the fund LP, and the choice of investment areas and stages.
"It is impossible to invest in hard technology funds to have a good DPI in the early stage, unless the early round is invested in the next round of selling. It is unrealistic to invest in a slow-developing industry and retreat quickly. GP needs to weigh."
Different industries have developed at different speeds. For example, Internet companies have developed rapidly. From establishment to listing, WeChat has been used for more than two years, and Pinduoduo has been used for three years, but the pharmaceutical industry takes time.
As far as the investment stage is concerned, the further you invest, the greater the probability of getting a good DPI. Organizations should consider whether their core competitiveness is in the early or late stage, and whether it is in the front-end or the back-end.
values fund-raising ability and whether it can connect with the industry
"In 2019, we made a lot of investment, but there was still about 30% of the money. We gave up because GP was unable to raise social funds. So now we pay more attention to GP fundraising Ability." What impressed Wei Dahua, chairman of Guangzhou Small and Medium Enterprise Development Fund Co., Ltd., was that many GPs found him and asked if they could contribute 40% of the capital before they started cooperation. "In theory, it can be 50%. But there are also some requirements. Can you be a little smaller first, and first reflect your ability to invest and raise funds." Under the cold winter of
capital, fundraising ability has become a factor that some LPs value when selecting GPs. In addition, "Whether it can get through with the industry" has also become an important measure.
In 2019, Hengxu Capital cooperated smoothly with institutions from the 5G, chip and other industries. "It can be deeply integrated, and it can be connected with our industry. Both parties will mutually benefit and increase the project's rate of return." According to Lu Yongtao, Chairman of Asahi Capital.
In addition, Hengxu Capital took the initiative to focus on advanced manufacturing under the direct investment project, and followed up with GP to realize the entire investment portfolio. The
market is waiting for the "long money" to enter the
reform into the deep water zone, and the whole industry has entered a period of adjustment. When the pain strikes, how should the winter of China's equity investment industry pass?
In Jiang Yucai's view, both ends have changed, and the entire venture capital industry may usher in a new transformation.
"To form a stable, continuous, and high-quality investment environment. The current structure must undergo a fundamental change to form a long-term investment philosophy; at the same time, the GP team must also change to standardization and specialization."
Shenzhen Angel The investment guidance fund has studied the development process and model of the world’s earliest government guidance fund—the Israeli government guidance fund. From its establishment in 1993 to the late 1990s, Israel’s venture capital industry has been nurtured and driven by government guidance funds, attracting foreign investment institutions from the United States and other countries, and the guiding role of government guidance funds has been completed.
"For China's capital market, this process of cultivating the industry may be longer. In the final analysis, the government guidance fund depends on the relationship between the government and the market." said Yao Xiaoxiong, chairman of Shenzhen Angel Investment Guidance Fund. Compared with the conversion rate of high-tech achievements in the United States, Europe and other places, the results of our original innovations are often still at the stage of research results and have not been transformed into productivity. This requires the support and promotion of original innovation from all parties."
More importantly, China's real long-term LPs, such as insurance funds, social security funds, pension funds, including bank funds, have not yet entered the venture capital industry as mainstream funds.
The attribute of money determines the attribute of investment. If the money in the market is short-lived and hot, investment in long-term projects may still take some time.
While waiting for "long money" to enter the market, confidence is very important.
As said by Liu Zhou, the founding partner and chairman of Fortune Caizhi, during the course of 20 years of ups and downs, Fortune has three firm beliefs: firmly believes that China’s economy will improve, that China’s capital market will improve, and that China’s local venture capital will do it is good. Apart from this, there is nothing but persistence.
"Confirmation" and "persistence" inherently contain endless power. Believe, you can see. In the future, everything can be expected.
