Sequoia, true disciple

On March 20th, Tiger Securities was listed on the US Nasdaq IPO, which is China’s US stock internet broker NO.1. The two management partners of Zhencheng Investment have successively invested in Tiger Securities for four rounds, becoming the most involved investor in all investment institutions.

Li Jianwei (the partner of Zhencheng Investment Management) first led the former Dongjiazheng Fund to complete the angel round investment in the Tiger Fund. After the founding of Zhencheng Investment, he gave Tiger Securities a large amount of financial support for two consecutive rounds. Later, Li Jianwei’s former colleague Zhao Xinghua (the partner of Zhencheng Investment Management, who was then the managing partner and chief investment officer of Hongtai Capital) paid a large sum of money to Tiger Securities C round to help him advance to the Unicorn camp.

In the past five years, they have invested in nine unicorns in their respective fields. Among them, Huami, Weilai Automobile, Zhongman Petroleum and Tiger Securities have successfully IPOs, A group of companies such as Pony.ai, Momenta, Xiaoyu Yilian, AppLovin, Yunzhou Intelligence are in a high-speed growth period.

It must be said that the real investment gene has a deep brand of Sequoia Capital and Zhenge Fund. This new fund was established in 2016 and was founded by Li Jianwei’s former Dongjiazheng fund Xu Xiaoping. Zhao Xinghua, managing partner of Zhencheng Investment, is an old colleague of Li Jianwei in Sequoia. Even the fund’s mid- and back-office personnel are from Sequoia and Shinger.

More interestingly, Shen Nanpeng’s Sequoia is a model of rational investment in China. He is good at in-depth research and is known for his “gambling track” strategy. Xu Xiaoping’s Zhenge Fund is a representative of Chinese sentimental investment. , known as “investment only see people.” With the two companies that have been branded by the former employer, how can the two genres that seem to be out of sync be integrated and come out of a different route? How do you get in advance on the eve of the project?

Heavy player
Li Jianwei met Tiger Securities CEO Wu Tianhua in a US stock exchange community. At the time, the former was in Sequoia China, and the latter was the technical leader of Netease. In 2011, Wu Tianhua regularly held a knowledge-based paid course training on WeChat Group to talk about how to make options trading. Out of interest, Li Jianwei spent 30,000 yuan to purchase Wu Tianhua’s course and became a high-end student of the early WeChat group to pay for knowledge. This training model is a bit like the prototype of the App paid platform.

At that time, Wu Tianhua did not start a business, but Li Jianwei strongly felt that witch was the top expert in options trading. Not only was the trading plan insurance, there was very little money retracement, and he also won the second place in a global options lab competition. One of the details that made Li Jianwei impressed was that Wu Tianhua had an extraordinary memory. When the witch did training, he quoted a 900-page transaction manual from the US Internet brokerage. When the student asked for a knowledge point, he could immediately say the part of the answer.

It is precisely because of the high judgment and trust of people, so three years later, Wu Tianhua proposed to use the Internet to make the idea of ​​securities trading software, Li Jianwei immediately took him to Xu Xiaoping’s home. Wu Tianhua’s personal charm conquered Xu Xiaoping, and he won the Angel Wheel investment of the Real Fund in the absence of products.

Li Jianwei did not expect that the experience of purchasing the Wutianhua training course buried seeds for two important transactions of Zhencheng Investment. One is that Cheng Cheng started to invest in Wu Tianhua, and the other is that Cheng Cheng led the app to get the C round. More coincidentally, the two projects were completed in the first phase of the fund of Zhencheng Investment, and then quickly advanced to the unicorn. It can also be seen that the investment veteran Li Jianwei is indeed very visionary.

Although Wu Tianhua is a rare product manager, he still appreciates Li Jianwei’s product strength: “Jianwei is a heavy player of Tiger Securities, and has a deep understanding and insight into our direction. With the tiger walking from angel to B In the round, let us take a lot of detours. In fact, Li Jianwei is a heavy user of every invested company, and often participates in the process of conceiving and improving the products of the invested company. Therefore, some entrepreneurs also praised some of the killer functions that Li Jianwei has developed as “Jianwei function.”

The purchase of Wu Tianhua’s training course made Li Jianwei’s cognition of knowledge payment, so that after the App paid platform was launched, he could not help but purchase more than 10,000 courses. Investor’s professional inertia is the result, Li Jianwei also pays attention to the relatively hot knowledge paid platform Himalayan. At first, in terms of marketing power and data, the Himalayas clearly gained the upper hand. The Himalayan DAU is dozens of times more, and the SKU is 1,000 times more. The former is more like an Internet company with economies of scale and is more sought after by capital.

But in the end, Li Jianwei threw the olive branch to his favorite product and asked for a lead. Through in-depth product experience and rational deduction, he believes that he has the opportunity to become the main distribution channel for quality knowledge. “Knowledge payment is the head content market. Who can make the best content, who can have the opportunity to become a real platform. In the case of limited time, users are not sensitive to price and are more willing to pay for the best content. “The recognition comes from Li Jianwei’s insight into the behavior of users competing in various competitions.”

Through several deep communication with Li Jianwei, the CEO got a deep feeling that the investor’s product was “true, true, true, not for investment.” Financing, in the absence of money, accepts the important reasons why Zhencheng Investment leads the C round.

“This kind of investor is very rare.” When it comes to Li Jianwei’s keen sense of product smell, he does not spend a high degree of evaluation. It’s not a good compliment, she said without a word: “A lot of research on the future of the product, even the research team of Zhencheng Investment, did it in advance.” For example, Li Jianwei mentioned a point of view in the post-investment service: “Listen to the book every day” has the opportunity to become a large-scale paid content with high renewal rates, and get the advantage of fully utilizing the capital and scale. Under the premise of ensuring quality, the scale of the library will be bigger and will surely win.

Later, this strategy was actively adopted by the team, and the effect was unexpected. After the real capital injection, the App business quickly showed rapid growth, and the influence was rapidly amplified. Later, a number of first-line investment institutions followed suit.

As a heavy user, it has become a pleasure for Li Jianwei to act as a “endorative” for the invested company. Wristband wristband, comb and electric toothbrush with eyebrow technology, short-distance travel with Ninebot (Ninebot), open a business meeting with Xiaoyu Yilian, stir-fry US stocks on Tiger Securities, learn knowledge to get App, buy Military uniforms on the military martial arts plane…

The products and services of the invested companies penetrate into the daily life and work of Li Jianwei. Even his WeChat circle of friends is filled with all kinds of information about the companies being invested. Li Jianwei will be happy to promote the propaganda for the invested companies, and often slogan with a smiley face. He also often recommends good products to friends around him.

Constantly enthusiasm for the product, willing to explore and deduct with the founder and explore the unknown. This point Li Jianwei and his partner Zhao Xinghua are very similar.

Reverse thinking, identifying structural opportunities
“Structural Investment Opportunities” is a term frequently mentioned by Li Jianwei and Zhao Xinghua in an exclusive interview with the entrepreneurial state. Zhao Xinghua explained: “Many entrepreneurs are faced with the threat of oligopoly, which requires small companies to find differentiated competition points based on their own advantages, have reverse thinking, and look for structural opportunities.” They invested in Huami, Zhongman Petroleum, etc. The project is a typical representative.

Zhao Xinghua’s investment in Sequoia China’s Zhongman Petroleum has identified this opportunity. Zhongman Petroleum is a To B company that is not known to the public and looks like a partial door. But he found that the company has the world’s leading technical service capabilities and successful experience in the Middle East, with equipment and service advantages. In particular, after seeing the obvious trend of oil and gas technology service companies going to sea, Zhao Xinghua believes: “The Middle East-based international oil and gas service and equipment market, China’s head market and successful accumulation of technical services have become the structural advantages of Sino-Merman Petroleum. Investment opportunities.”

In the end, he promoted Sequoia China to become the sole investor of Zhongman Petroleum B round, with a single investment of 200 million yuan. After the investment of Sequoia China, the company has grown rapidly and became the largest private oil and gas technology service company in China and has launched operations in several countries. The company has been in the A-share IPO at the end of 2017, and the deal has brought high returns to Sequoia China’s RMB funds.

How to identify institutional opportunities? Li Jianwei has played an incisive role in investing in smart hardware. This is a “prolific” smart hardware investor. He has successfully invested in many hardware companies such as Xiaoyan Yilian, Huami, Yunzhou Intelligence, Ninebot, Remebot, The ONE.

At the end of 2014, the market was full of doubts and even despair about the future of wearable devices. Negative ideas such as pseudo-intelligence and pseudo-demand continue to ferment. Many intelligent hardware investors have concluded after baptism: the hard damage of intelligent hardware is low gross profit, not making money at all, or even a huge pit.

These doubts also became the biggest obstacle for Li Jianwei to promote the investment of Sequoia China (when he worked for Sequoia). In particular, at the end of 2014, Huami was in the initial stage, with a cumulative shipment of only 500,000, and the products were relatively junior. Many funds agree that it is difficult for Huami to resist the impact of other competing vendors such as Apple.

The most terrible thing is that a hardware company with no shipments has a pre-investment valuation of $300 million. This is also an important reason why Li Jianwei’s investment in Huami has been called “big head” by the industry.

After the failure of the Segway, tracking a large number of hardware companies, after doing in-depth research and thinking, Li Jianwei issued a different voice in the market, he boldly proposed that China’s smart hardware startups are facing structural opportunities. That is to say, wearable devices are real needs as human body sensors, especially Chinese companies do wearable devices, which have structural advantages in supply chain, software iteration, cost and so on.

The obvious advantage of Huami is that iterative ability is very strong. After completing the research on the fundamentals of the Huami team and products, and repeatedly making a rehearsal from the competitive landscape, Li Jianwei predicted that Huami may become one of the global leaders in wearable devices. In the end, in a doubtful voice, Li Jianwei dominated Sequoia China to complete the B round investment in Huami.

In 2015, the second generation of Huami’s products is still under development. Li Jianwei made a forecast of the volume: “The millet bracelet with screen has a chance to reach 30 million.” At that time, this was an astronomical figure. By 2018, Huami not only had an IPO in the US stock market, but the cumulative shipment of Xiaomi Bracelet 2 exceeded 30 million. This landmark figure is quite consistent with the number that Li Jianwei originally predicted.

“This kind of forecast is not a rush to the head, but a feeling that has accumulated over a long period of time. iWatch announced its sales target this year, and its global sales will be 30 million.” Although he has just joined Zhencheng Investment, Zhao Xinghua has been practicing with Li Jianwei. The case of the disk is well-known, which stems from the repeated knee-recovery of the two. The two-person investment exit performance is evenly matched, but Zhao evaluation Li is a top intelligent hardware investor.

“The company’s fluctuations in the short term are normal. In the medium term, I say who wins, it will have a greater chance of breaking out, such as Huami. In the mid-term judgment of performance growth, I think I am very similar to Eric (Zhao Xinghua).” During the interview, the feelings of Li and Zhao were quite tacit.

Heavy money bet, dare to do centralized investment
Dare to gamble, dare to bet, dare to put limited funds on a small number of cases to do centralized investment. Li Jianwei and Zhao Xinghua have very similar risk appetite.

Take the lead shot to get an example. At that time, Chengcheng Investment was just established, and Li Jianwei invested half of the funds in the first phase of the fund. “At that time, the first closure of the 150 million yuan, the investment reached 72 million yuan.” Li Jianwei revealed to the entrepreneurial state (WeChat search: ichuangyebang).

Taking Tiger Securities, which was just listed in the US, Li Jianwei led the Zhenge Fund to give Tiger Securities a round of expensive angel investment. The post-mortem valuation of Tiger Securities’ angel round has reached hundreds of millions of yuan. Subsequently, Zhencheng Investment continued to add two rounds of investment to Tiger Securities. Three years later, Zhao Xinghua, who is a managing partner of Hongtai Capital, invested in the C-round of Tiger Securities. In the process, he and Li Jianwei, who had become tiger shareholders at that time, had a profound discussion on the development path of the tiger. In the end, Zhao Xinghua became an important shareholder of the previous round of financing of Tiger Securities IPO.

However, Li Jianwei did not know that Zhao Xinghua had bet nearly half of the dollar-based amount in the hands of Tiger Securities. “At that time, the US dollar fund I managed only subscribed for more than 30 million US dollars. I gave Tiger Securities nearly 13 million US dollars.” Zhao Xinghua confided to the entrepreneurial state.

The most insane transaction that Zhao Xinghua has done is that the investment in a single project is close to 7 billion yuan, accounting for 70% of the shares. What made his peers fall through the glasses is that Zhao Xinghua’s heavy money is bet on the second-line echelon of the mobile-end advertising technology in Silicon Valley. At the end of 2015, Zhao Xinghua discovered an Ads advertising platform called AppLovin in the United States. Although the company was established for three years, it has not been market-financed in history, and the business has not gone international. It ranks far behind Google Ads and Facebook. After the first-line advertising platform such as Ads, the transaction volume is not large.

Through research, Zhao Xinghua found that the product form of this American company met his expectations. “The mobile vertical sector needs more effective user growth and product realization, and Google Ads and Facebook Ads are not well satisfied. In addition, China’s sea market has great potential and demand is clear.”

Zhao Xinghua quickly flew to Silicon Valley to express a strong investment intention. In the end, he tried his best to persuade a US company to accept a Chinese fund investment. After Zhao Xinghua’s investment, he helped AppLovin to go international, and actively deployed content-based self-operated products such as games. Out of the inflection point, AppLovin’s three-year performance showed explosive growth, performance growth of up to 10 times, advanced to the unicorn camp. The size is so large that Twitter once hoped to merge its advertising business with it and hoped that AppLovin would take the initiative.

This centralized investment risk system has multiplied, and it has tested whether investors are uniquely eye-catching. “We take risks and take risks. It will take a lot of effort in research. Of course, it is often qualitative to judge people and judge the competitive environment. You have faith, I believe this thing can be done, not to say I believe in the brain, but after repeated deductions, I feel that there is a big chance.” Zhao Xinghua said.

When it comes to in-depth research, the most obvious way to reflect the fact that Zhencheng Investment has indeed worked hard is the investment report. Within them, often see more than 100 pages of investment reports. Sometimes, only project interview reports can reach more than 40 pages, and most of them are dry goods analysis. They are more detailed than the reports of most first-line funds. “Our investment report is not in the form. Collecting so much information is not for the sake of LP. It is for ourselves. We have certain requirements for the completeness of the project information.”

As a newcomer in the investment field, Zhencheng Investment will participate in projects from angels to growth stages. If you look forward to the case, you will be able to vote for a few. It will emphasize the sense of participation in the case and actively act as a lead investor or an important investor. For example, they have continuously injected four rounds to a laser radar company called Flow Digital. “We are doing a Big Venture, which is the best ability to test the team’s ability to fight, and the requirements for the team’s comprehensive ability are quite high.” Zhao Xinghua, an investment veteran with more than 10 years of experience, is full of confidence and can enjoy it from big projects. The smoothness of the battle.

True 2.0 mode, move the investment committee to the startup company
Leaving the 4A-class office building of the former inauguration fund, the office address of Zhencheng Investment was chosen in the Langyuan Cultural and Creative Industry Park next to the Beijing International Trade Center CBD. The two management partners did not set up an office separately, but sat down with the team to communicate at any time. “We advocate an equal corporate culture, and it is still a matter of investing in the attitude of entrepreneurs. The arrival of Xinghua has made us really open the 2.0 model.”

Li Jianwei has made great achievements in the fields of intelligent hardware, enterprise services, financial technology, and content media, and Zhao Xinghua has profound knowledge in the fields of travel, education, autonomous driving, and AI. For example, Zhao Xinghua invested in well-known companies and industry leaders such as Pony.ai, Weilai Auto and Grebo.

Li Jianwei is sunny and cheerful, and Zhao Xinghua is very reserved. The track that the two saw was a certain intersection, but the ability was complementary. Their earliest cooperation stemmed from the case of Yunzhou Intelligence when they were in Sequoia China many years ago. “Although I didn’t make it in the end, we felt that the angle and style of looking at the problem were quite similar.”

After leaving Sequoia, Li and Zhao found in their frequent exchanges that they judged the style of good and bad. The most typical example is that the two people make investment decisions quite smoothly. Although Zhao Xinghua just entered the real world, the two have already made several projects on the spot. “We talked privately on the two sites and we were able to make decisions, which was very efficient.”

In contrast, too many newly established funds need to go through the investment decision-making committee and the investment cycle is infinitely lengthened. “I and Eric (Zhao Xinghua), as managing partners, ran directly on the front line, and we represented the IC (Investment Decision Committee) and were able to make a decision on the spot.” Zhao Xinghua said: “Keeping the fund’s complete independent decision is the bottom line for them to fight for LP.” It is understood that the LP of Zhencheng Investment includes Shougang Fund, Zhongjin Qiyuan, Century Jinyuan Family Office, Yixin Parent Fund, Longhu Real Estate Family Office Shuanghu Capital and other large institutions as well as some individual investors.

“I feel a little afraid that our GP’s judgment is completely inconsistent, so the team style will be super conservative, and we may miss many opportunities. But we will definitely not vote indiscriminately, we will do in-depth research, analyze very carefully, and take the boutique route.” A fund with a volume of 500 million yuan, it is impossible for Chengcheng Investment to adopt the game of the Redwood Gambling Track, and it is impossible to take the route of the real grid.

Zhencheng Investment follows the deep research route of Sequoia China, and at the same time draws on the essence of the methodology of judging people. On this basis, they continue to do subtraction, and at the same time use the base of the game, that is, each time to focus on a new field, according to the map to find the target, to thoroughly penetrate a base, and then open up new territory.

Li Jianwei and Zhao Xinghua condensed Chengcheng’s investment philosophy into three points: one is to invest in a team that can create excellent products; the other is to have a clear market positioning; the third is to have a relatively clear profit model. Since the founding of Chengcheng Investment in 2016, they have used a case of high growth to confirm that this may be an effective way of playing. They are more willing to describe the entrepreneurship of Zhencheng Investment as “an experiment of an investment concept”. .