On December 6, 2018, when Mushroom Street was successfully listed on the US stock market, I felt like my first baby was going to college. Mushroom Street is the first project of Amoeba’s investment. Now when I think about it, I will feel that time is passing very fast.
One day, I had a meal with Chen Qi (founder and CEO of Mushroom Street) in Beijing. At the time, he was also feeling how he felt that time had passed and he had looked back and looked at it for so many years.
In March 2011, just after the establishment of Amoeba Capital, we saw the mushroom street project. Our three partners, I and Zhiguo (Li Zhiguo, former CEO of Word of Mouth, the founding partner of Amoeba Capital) and Zhao Hong (founding partner of Amoeba Capital) saw what was actually a shopping guide.
At that time, Alibaba had not been able to achieve the precise marketing of “thousands of people”. When we look at Mushroom Street, we feel that this part of the traffic has a chance. Of course, the final decision to invest in Mushroom Street is still because of Chen Qi. We really appreciate Chen Qi, who decided to give up Ali’s stock when he started his business and start his own business with his own money. This requires a lot of sacrifice and courage.
Mushroom Street has come all the way, during which it has experienced a lot, including the merger with the beauty, from entrepreneurship to listing for seven or eight years, I think the core is still persistence. This is a kind of suffering. It is not easy for people who can grasp this kind of suffering.
Early investment, especially angel investment, is actually quite horrible. It is actually a human heart. Doing business, especially in China, may be even more difficult. Because in addition to China’s rapid development, the overall business environment is still very urgent. To do one thing, most people’s planning is actually three to five years, it is necessary to make this thing. But in fact, early investment does not have a seven to ten-year time to prepare, I think it is very difficult to make.
Seven to ten years to prepare, what is this concept? Even if you are finished, don’t think about how to get a quick return. If you want to help the founders, if you can’t help, don’t mess with them.
Of course, early investment must not follow suit and must be judged independently. When we re-invested all the investment cases, we found that no matter whether it is Mushroom Street, Didi, Weimar or Jushui, small medicine, there is no project that we are anxious to vote for. We just want to be clear. Don’t pile up to see this track because of the outside world, and go to these projects.
In addition, you must have a good understanding of the founder’s “heart”.
Before deciding to invest in Weimar, I talked with Shen Hui Shen and Du Weigang Du for a half year and kept communicating their ideas. The threshold for the car-making industry is too high. If you don’t have two or three billion yuan in financing, you can’t go to mass production. In addition to funds, your license, integration of upstream and downstream industry chains, integration with future technology, talent introduction… Which one is easy? If the founding team is not strong enough, it is actually difficult to go on.
I always believe that the “heart” of the founder has a great impact on the success or failure of the project. This “heart” is not only the determination, the confidence to do this, but also the meaning of entrepreneurship to him, where is his mind. There are some founding teams now, and the founders like to report to various classes. I think that for a start-up team, especially at a stage from 0 to 1, a good founder definitely has no time to do these things.
Secondly, we also need to see how the founder can think about entrepreneurship and how much he can focus on it. Truth is definitely not a complicated logic. Many of us are not willing to face it. It is because there are too many desires, too many appeals, and the things themselves are not simple. Just like an entrepreneur with a strong background, he saw his peers get a $10 million A round. He thought that he would not be able to get $10 million, so I should get $15 million. Then I feel that this matter is far from the truth.
The attitude towards the interests is also very important. Some founders always calculate, count the team, investors, then his business must not be big. Of course, when we meet the team of several founders who share the equity, our fund will definitely not vote because it shows that the team has a big pot of rice, there is no backbone, and no one is the boss.
Our investors will have one more “heart”, which is our normal heart, because the most you face every day is failure, and you must have a calm attitude towards failure.
Of course, I think that for the founder, the most important “heart” is actually a kind of belief, even a blind belief. Any investment we make is the future. Most of the things the founder does are from 0 to 1, sometimes even a PPT, or a piece of paper. The founder must firmly believe in it. The “letter” of the founder will influence the team and then convince your investors.
The most important thing for early investment is not to follow the trend and make independent judgments. Get together and see the project. At least from our amoeba, there are no particularly successful cases. We all think clearly, and we met the founders we admire in the process of finding the project. Of course, there are also situations in which we think about it, but we have not found a suitable founder.
For example, we were watching the live broadcast track very early. In 2012, we wanted to cast one or two companies. We saw a lot of projects but didn’t find a team. There are quite a few such cases, because after all, it is a small fund. The entrepreneurial team that we can cover, including our trust circle, has not reached that level. This is our limitation.
By October 2018, Amoeba Capital basically completed the recruitment of three RMB funds. In the early days of the fund’s establishment, we invested in many 2C projects, such as Mushroom Street, Fast. But starting with the second phase of the fund, 2B SaaS companies have become one of our main investment directions.
I think from the informatization, through the formation of SaaS to the formation of data, to artificial intelligence, this transformation will start from small and medium enterprises, and will penetrate into more vertical industries in the future. This impact may not be just ten years, so everyone’s competition is on efficiency tools. I think the result that artificial intelligence can finally achieve is “going to labor.” These years, human resource-intensive companies should feel very deep. The artificial intelligence startup company said that although it was only established more than two years ago, the customer service volume handled during the double eleventh period has accounted for 5 percent of the entire double eleven.
For a long time, enterprise services were not paid attention to. It is like a pool, although it is a startup company, it is now the largest enterprise of Chinese e-commerce SaaS. Orders processed a day account for about one-sixth to one-seventh of the entire Alibaba e-commerce service. This is a particularly amazing service capability. But when we vote, it is actually only tens of thousands of singles a day.
From tens of thousands to tens of millions of singles, such a good business was not understood three years ago. I remember when I was talking to Black Tea (the founder of Jushuitan Luo Haidong), he said that he had just seen more than 20 investment institutions when he first came to Beijing Road Show. No one is willing to vote. From this point of view, there must be persistence and hard work behind every success, and each founder must have the hardships that ordinary people can hardly understand and understand.
In the process of the development of artificial intelligence, we will also see some subversive scenes appear. From Didi to Weimar, and immediately travel, why should Amoe invest in traffic? The essence of our investment is not just new energy, intelligent driving, but artificial intelligence.
If technology develops into the stage of intelligent driving, it will cause subversive changes in the entire industry. Cars are not just a means of transportation, but a tool for connecting people and people to things. In the future, cars will be automated, and each car can be opened to the door by itself. At that time, if Drip is not an artificial intelligence company, it will be eliminated. After the person is liberated from the driver’s position, he can take two or three hours by car. What can he do? Mobile commercial real estate is created, new services can be provided in the car, and new requirements are created.
In a sense, we believe that this autonomous driving is not a car industry, not a transportation industry, but a new means of connecting people and machines. It is a brand new industry. After the emergence of new hardware platforms in the future, many industries will merge and rebuild. What we see will be a new industry and the world.
Looking back, we also saw that investing in 2011 and 2012 actually caught up with a particularly good time. At that time, it was the traffic dividend period of the mobile Internet, and the shipment of Android phones increased greatly. In fact, many early investments were not too bad. Our first fund has invested in Mushroom Street and Didi, but in the process, I am not saying that there is no regret. Sometimes, because I didn’t think clearly, I’m going to tangled and weigh, I think we can actually vote less. Projects and better projects. I am satisfied with our results, just saying that I think I might do better when I resume.
I always feel that both investors and entrepreneurs need to have three “hearts” to prove each other. This is the heart of faith, the road to simplicity and the heart of passion. Our investors will have one more “heart”, which is our normal heart, because what you face most every day is failure, and you must have a calm attitude towards failure.
This year, we have clearly seen that some so-called unicorns are facing particularly big challenges. I even think that in the next two to three years, many unicorns will die or die. But this timing is not a bad thing for us, because in the case of a market environment is not ideal, in fact, a group of entrepreneurs whose purpose is not so simple has been naturally eliminated, and the group that wants to speculate is automatically screened out. people.
If there is a flood of money in the market, it is often difficult to invest in good projects when money is chasing projects. When the market is not so rich, everyone can keep a clear head.