We are about to bid farewell to 2023. Looking back on this year, the venture capital circle is showing a scene of “ice and fire”.
Compared with the venture capital boom in previous years, 2023 is considered a deserted year. Since the investment exits in the past few years have not been ideal, many investment institutions may have insufficient “bullets” or are restructuring their investment logic, hesitant to wait and see, and rarely take action.
Moreover, in recent years, the capital bubble has faded and the threshold for entrepreneurship has been raised a lot. In addition, the scene in the mobile Internet field has gradually reached its peak, and the number of active entrepreneurial projects in the market has greatly reduced.
However, there are also many fields in 2023 that may shine when they first appear on the stage, or may steadily rise and become increasingly popular. For example, AI has exploded, with large models competing to catch up; hard technology is still a “potential stock” sought after by policy and capital; going global has become a magic weapon for most companies to pursue incremental growth; under the wave of rational consumption, many cost-effective consumption Projects also emerged.
Investors remain cautiously optimistic about the upcoming year 2024. The continuation of the AI craze is certain. Exploring more native AI scenarios, extending AI applications from the consumer field to the manufacturing field, and extending from software to hardware are all promising directions; consumption is also an eternal topic, and high-end Cost-effective brands and offline experiential consumption projects have the opportunity to explode, and domestic products going overseas will also be a major trend; and cutting-edge technologies represented by aerospace, low-altitude economy, and biomedicine are still in the period of development and dividends.
Although the threshold for starting a business today is high, there are opportunities suitable for both high-end talents and ordinary practitioners. What entrepreneurs need to do is not to be anxious or blind, but to base themselves on their own advantages and business itself, actively embrace new technologies and trends, and catch up with the times.
AI’s new battlefield:
Native scenarios, industrialization, and combination of software and hardware
In 2023, AI has almost become a popular venture capital investment track throughout the year. AI’s superpowers have been initially verified, and its potential is still being developed. It is basically certain that in 2024, the AI craze in the venture capital circle will continue.
Where are the new opportunities? The exploration of AI native scenarios, the transfer from the consumer side to the industrial side, and the expansion from software to hardware are the major directions.
Wang Sheng, a partner of Inno Angel Fund, said that although AI will be very popular in 2023, the capital and asset sides are relatively convergent. There are not many VCs who are really actively investing. There are about twenty companies, and the project fields are not broad and concentrated. On large language models and AI hardware network infrastructure such as computing power. In his view, next year there will be greater openings on both the asset side and the capital side, with more VC investments and projects in more fields emerging.
As for the specific direction, Wang Sheng is optimistic about multi-modal large models and AI native applications. “Multi-modal large models may make breakthroughs in the direction of dynamic video; in terms of applications, entrepreneurs can find native applications and scenarios of AI in the fields of games, social networking, entertainment, emotional companionship, training, etc. We hope that many past applications will emerge. There are no applications, like Meituan, Didi, and Pinduoduo in the mobile Internet era, which do not just use AI as a tool to improve efficiency.”
The current implementation and commercialization of AI can already be seen in some subdivisions. Du Yu, a former investor at Sequoia Capital and a partner at QAQ, a technology startup accelerator, cited an early-stage project he had recently seen as an example. He introduced that this company uses AI robots for psychological consultation because AI can serve customers 24 hours a day. At night, psychological counselors usually go to bed, but many depressed people need more consultation and companionship during this period. At this time, the value of AI is This has been reflected, and this project has done very well in commercialization since its inception.
Du Yu pointed out that the next trend of AI is to shift from the consumer side to the industrial side, and expand from consumption scenarios to industrial and industrial scenarios. AI can also make factory mass production more efficient in the manufacturing process. At the same time, AI has great influence on new materials, life Industrial fields such as science and semiconductors will play a driving role.
Wu Wei, the founder of Granday International Investment LLC, who has long been concerned about venture capital investment in Silicon Valley, added that the application of AI in the fields of industry and manufacturing, medical care, and finance will further develop in the future.
“In industry and manufacturing, AI and machine learning have extensive applications in industrial automation, predictive maintenance, quality control, etc. Investors may be looking for AI solutions that can improve production efficiency and reduce costs.”
At the same time, the healthcare industry has extensive demand for AI applications, including disease diagnosis, drug research and development, medical image analysis, etc. He is optimistic about companies that provide innovative solutions for the medical field. Benchmark companies in this category include: Tempus (using artificial intelligence and data analysis to improve cancer diagnosis and treatment), IBM Watson Health (in healthcare data analysis and cognitive computing) There are solutions).
In addition, Wu Wei mentioned that the financial technology field will continue to benefit from AI innovation, including credit assessment, risk management, transaction automation and other directions.
From software to intelligent hardware, AI applications are also the next trend.
Wu Wei believes that innovative companies that apply deep learning technology in fields such as autonomous driving and robotics will be favored by investors.
Now many car companies are beginning to use large models in the fields of intelligent driving and robotics, and some smart home appliance companies are also trying to integrate some AI functions into home appliances.
The direction is clear, but entrepreneurs who are involved in it will inevitably feel confused.
In the process of communicating with entrepreneurs, Du Yu found that many entrepreneurs are too anxious or have too much hope for new technologies. He believes that entrepreneurs must first have a stable mentality, return to the business itself first, and be less anxious about technology. , and at the same time, we must realize the limitations of technology. AI is an auxiliary business. Don’t expect that the original business will be able to turn around with AI, thereby discarding the good and chasing the weak. AI can reduce costs and increase efficiency, but it is difficult to solve the shortcomings of the business itself and reform the business from the bottom up.
In addition, he suggested that when companies that are closely related to the real industry embrace AI, they need to first improve the digitalization of their business. Digitalization is the prerequisite for intelligence. Finally, he believes that more young people should be given opportunities. “In this wave of AI entrepreneurship, there is a trend of younger people. Traditional industries are often stuck in the cognitive barriers of the older generation of entrepreneurs and embrace new technologies. , relevant decision-making can be delegated more to young people.”
However, AI entrepreneurial opportunities are also divided into capitalization-based entrepreneurship and businesses suitable for ordinary people.
Projects that VCs are willing to invest in usually require strong barriers and high growth potential. “If you want to go to the capital market to become a listed company in the AI field, it is more suitable for scientific and technological talents.” Du Yu said that for ordinary people, the entrepreneurship that can be done is not necessarily a model that the capital market can give a high valuation, but it can It is a business, for example, corpus annotation for AI. This labor-intensive model does not have too high technical barriers. Investors may not look at it, but entrepreneurs in this area can earn at least in the last one or two years. money.
Consumption + AI, cost-effectiveness, domestic products going overseas
There will always be a market for consumption, but users have different consumption psychology in different periods, and the consumer industry will always be explored.
Chen Momo, a senior investor in the consumer field, is more concerned about the application of AI in consumer scenarios.
She explained that AI in the consumer field mainly has two ends, one is the research and development end, and the other is the delivery end. These two ends are themselves data-driven, but they were originally digitized by humans, but now AI can be used to better improve efficiency. Currently, some companies are already using AI in their R&D processes to speed up screening and research efficiency. The delivery side includes content editing, dynamic monitoring of delivery efficiency, and reinvestment. Both the server side and the content side can be driven by AI to empower consumer brands. Ultimately, AI will enable products that better meet consumer needs to be produced faster.
In Chen Momo’s view, this opportunity may be for a certain consumer product brand or a third-party service company. The challenge is that such a company needs to have a deep understanding of technology, products and users at the same time.
When it comes to the field of consumer experience, Chen Momo mentioned that this year’s concerts and other events are very popular. Next year, she is still optimistic about offline experiential consumer projects, especially those that emphasize experience and interaction, create deep links with consumers and provide products that accurately meet user needs. direction, such as various more subdivided and diversified service projects, or interactive experience content and related products, etc.
When it comes to consumer segments, Zhan Hao, founder of Nut Ventures and founder of Zhuge Store, is optimistic about cost-effective chain restaurants.
In his opinion, the popular trend in recent years should not be called consumption downgrade, but sober consumption. Consumers are paying more and more attention to many things themselves and are becoming more and more rational. Several major trends have emerged in the projects he invested in: store miniaturization, simplified decoration, and collection of popular items.
He explained that in the past, consumers felt that going to a big store to eat was very dignified. After consumption sobered up, everyone believed that the store would only need to meet demand. At this time, it became reasonable and economical to downsize the store; in terms of decoration, the industrial style that is now popular , wabi-sabi style, and frigid style, which are very simple. Merchants spend all their money on ingredients, and consumers will feel that what they buy is cost-effective enough.
In addition, Zhanhao noticed that single product hot-selling stores are now not as effective as hot-selling collection stores. According to him, each batch of customers now has an average of 2.6 people. Three people come to the store to eat together. They may want to eat ramen, rice bowls, and dumplings. The popular collection store can meet the needs of several people at the same time, and the store’s repeat purchases The rate will also be higher.
He summarized this kind of shop as “Ma Sala Huang”, which is a collection of Mala Tang, Shaxian snacks, ramen, and braised chicken and rice. Several classic fast food or daily snacks are put together, and some braised food, snacks, and grilled skewers are added to make it a casual place. Sharing meals, similar restaurants such as Nancheng Xiang.
Murakami Ichiya, a project invested by Zhanhao, used to specialize in Japanese cuisine. Recently, considering that customers may be worried about food safety issues, it has been adjusted into an Asian fusion restaurant. It includes Tom Yum Goong soup and Korean army pot. The richness of the dishes has increased, and the average number of customers per capita has increased. The unit price was reduced and sales recovered after a month.
Zhanhao is currently investing in catering projects based on the above logic.
However, he suggested that junior entrepreneurs in the catering industry should not start building catering brands at this stage, because the threshold for catering has been raised higher and higher.
“The elimination rate in this industry is extremely high, and most of the catering founders who succeed in the end are very powerful. Catering newbies can consider joining chain catering companies that have been verified by the market.” Zhan Hao said.
He predicted that in 2024, many brands will appear in the catering field, and many companies that cannot make money will exit. Reality will force everyone to make progress. “When everyone can eat something one day that is more cost-effective and tastes better than what they cook at home, the restaurant chain will be on the right track.”
Going overseas, or globalization, is also a major trend that will continue in the future.
Chen Momo believes that in the past, the public’s inherent concept of domestic products or domestic products was mainly based on cost advantages and focusing on low prices. In fact, many domestic products are actually at the forefront internationally, such as biotechnology, innovative raw materials, consumer goods, Many new products in fields such as medical robots not only serve the domestic market, but also have great opportunities to compete internationally. “In the first two years, we used our price advantage to go overseas, but products that can be marketed can be released at the same time at home and abroad. It just needs to comply with regulations and adopt different marketing methods in different countries.”
Huang Zicheng, managing director of Chenfeng Capital, gave an example. Currently, companies that focus on the international market are performing well overall, such as BYD. He added that another idea for entrepreneurs is that because many companies don’t know how to go global, there is a market for projects that help companies go global quickly and provide one-stop solutions to problems.
Cutting edge technology:
Hard technology, biomedicine, aerospace, low-altitude economy
In recent years, hard technology has been an area strongly supported by national policies. In terms of China’s hard science and technology, some fields are mature and have developed to the forefront of the world, but there are still some industries that are catching up with international standards and striving to develop domestic alternatives. These fields often require capital and innovation and entrepreneurship to develop, and investors are also willing to invest in them. Bet on these areas.
“Venture investment must follow the country’s general trends and directions, so that it is more likely to receive development dividends.” said Wu Shichun, founding partner of Meihua Venture Capital.
In recent years, Meihua Venture Capital has focused mainly on hard technology. Wu Shichun summarized investment in the field of hard technology into seven words, “New Half Military Digital Intelligence Aviation”, which refers to the seven major fields of new energy/new materials, semiconductors, military industry, big data, intelligent manufacturing, commercial aerospace, and biotechnology. .
The latest Central Economic Work Conference mentioned the need to create strategic emerging industries such as commercial aerospace and low-altitude economy.
Based on this, Wu Shichun believes that commercial aerospace will have a major explosion in 2024. Some foreign companies have made many breakthroughs in this field, and Chinese entrepreneurs will catch up. Meihua Venture Capital has a relatively broad layout in this area, investing in Galaxy Power, Micro-Nano Star, Star Mobile and Lianxin, etc.
In recent years, another popular area in science and technology is the “low-altitude economy”.
“Low-altitude economy” refers to a comprehensive economic form that is mainly based on civil manned and unmanned aircraft, driven by low-altitude flight activities in multiple scenarios such as manned, cargo and other operations, and radiates to drive the integrated development of related fields. The low-altitude economy mainly includes industries such as low-altitude manufacturing, low-altitude flight, low-altitude support and comprehensive services.
The venture capital circle is also actively seizing the golden window period of intensive innovation and rapid development of low-altitude economic industries. Key technologies such as chips, power systems, and sensors have considerable room for development. These technologies can be widely used in logistics and agriculture. , surveying and mapping, power inspection, safety patrol, emergency rescue and other fields.
Du Yu mentioned that “low-level economy” is their main area of focus. One of the projects he recently looked at was agricultural AI. Nowadays, technologies such as drones and Internet of Things remote sensing have been widely used in the agricultural field. The agricultural drones launched by DJI Agriculture are targeted at farmland spraying, seeding, forestry aerial defense and other scenes. Another drone company, XAG Technology, has completed multiple rounds of investment from Hillhouse Capital and others in recent years.
Du Yu is also optimistic about the investment prospects in bioscience, medical and other fields, including immunotherapy, synthetic biology, AI pharmaceuticals, etc.
He pointed out that the promotion of artificial intelligence in biology has greatly improved the efficiency of today’s scientific research. The winner of the 2023 Nobel Prize in Physiology or Medicine is immunotherapy related to mRNA vaccines. Many companies now use AI to develop immunotherapy.
In terms of synthetic biology, he mentioned that the United States has achieved certain results in this area in recent years. Following the law of technology diffusion, we should see more progress in synthetic biology in the Asia-Pacific region. Shenzhen University of Technology and others have established separate schools of synthetic biology, and the investment prospects in this area are clear.
“AI pharmaceuticals is a field that has both commercial value and people’s livelihood significance,” Du Yu said. AI can accelerate the research and development of new drugs. For many patients, drug research and development is a race against time, and its value is self-evident.
Wu Wei also mentioned that as the trend of population aging intensifies, health technology will become a field of great concern, including digital health, telemedicine, personalized medicine and other directions. Next, gene editing, personalized medicine, and medical big… Areas such as data are likely to attract more investment attention to drive innovation in healthcare.
Wu Shichun has his own investment logic in the field of hard technology. He believes that qualified projects need to have a complete team, not just a scientific research enterprise. He summarized the combination of personnel needed by the team as: “MSOTC”, M is the management dreamer and dreamer of a company, S is super sales, O is industry veteran, T is technical leader, and C is the head of content. .
However, when starting a business in these fields, one must admit an objective fact. Talents in high-tech science have opportunities in this area, but it is difficult for ordinary entrepreneurs to make breakthroughs.
Wu Shichun’s advice to ordinary entrepreneurs is: “If you can’t beat it, join it.” He said that small and medium-sized entrepreneurs should have a clear view of the market trend and would rather give up their own small track to join the big wave. Moreover, the hard technology field also needs technical, sales, content and other talents, and find excellent teams to join them. You may achieve greater results and gain greater personal gains from the entire project.
In 2023, the driving technology required for the development of the next decade has been unveiled, and in 2024, the performances on the stage are about to begin.
Venture capital investment in the past few years has shown that blindly chasing the trend, aiming for financing, telling stories, painting a pie, and over-relying on capital have long been unworkable. After the bubble, climbing high will only make entrepreneurs fall more heavily. .
At this stage, investment is more calm and entrepreneurship is more demanding. In the face of opportunities in the new era, entrepreneurs must not only move forward boldly and actively embrace the new wave, but also return to real user needs, identify market opportunities, focus on the true value of the business itself, not be blind or speculative, and practice basic skills well. Start a business cautiously and seriously.