Will the coffee heat up when the venture capital market warms up?

Beijing 768 Creative Park, a 400-square-meter open-plan office, welcomed a wave of visitors "with gold". Wang Liuquan, founder of immediate Video, told the Huaxia Times that since the Spring Festival (April 24), more than 10 investment institutions have come to him to discuss a new round of financing.

The venture capital market began to heat up in 2013, peaked in 2015, slipped with the collapse of A shares in the middle of the year, and in 2016, in the depths of the "capital winter" of Venture Street.

Wang Liuquan started his business just before the "cold winter month" in January 2016. "at that time, many investors chose to wait and see, and the capital was idle," he said. " Until after the Spring Festival this year, the warm current of the venture capital market began to rise. Another entrepreneur has just finished round B financing and "is going to do B + soon."

"the equity investment market has picked up." On April 27, Yang Peng, director of Shennan Venture Capital Investment, said in an interview with our reporter.

Venture capital market picks up

Garage coffee, known as the home of grassroots entrepreneurs, also feels the warmth.

"judging from the internal data of garage incubation, the activity of garage incubation projects in Beijing has always been high, and the recent garage incubation network projects in second-and third-tier cities have also performed well, and there are signs that the venture capital market is gradually heating up." The person in charge of the garage coffee told the Huaxia Times.

Garage Coffee, which began trial operation on April 7, 2011, is the first entrepreneurial-themed coffee shop in the world, providing the early entrepreneurial team with a low-cost office environment and the most unimpeded communication and cooperation platform.

On April 24, the reporter came to the garage coffee in Zhongguancun, Beijing. In the 800-square-meter flat, hundreds of people, small groups, or heated discussions or quietly typing were sitting behind dozens of desks. "it's so hot!" Such was the comment of a lady who came head-on.

Wang Shuo, a 32-year-old from Xiamen, won his first bucket of gold from garage coffee not long ago. Before the Spring Festival, the "young man", who looked much younger than his actual age, took part in the start-up competition held by garage coffee.

According to Wang Shuo, of the six events in the final, his team was the only one from other places to compete, and before he came, he was told "Don't get your hopes up." so he came alone, wearing the only cotton coat that could not withstand the cold in the north, and even booked an early flight back at 8 o'clock that night.

But to his surprise, a few hours later, his project became the winner "unexpectedly" and received direct investment from the garage coffee incubator.

"at that time, I felt that a stone had fallen to the ground, and I was finally able to give an account to the team, especially when there were still five days left for the Spring Festival." Behind the relief is Wang Shuo's unspeakable hardship. He told reporters that before obtaining this financing to quench his thirst, "the whole team has been seeking financing for nearly five months."

This is not an isolated case. "Huaxia Times" reporters learned that many start-ups feel the pick-up of the venture capital market, financing is much smoother than before, they are paying close attention to financing.

According to the latest report on the Operation of Internet Investment and financing in the first quarter of 2017 released by the China Academy of Information and Communications, the study included 110 investment and financing cases in the Internet sector in the first quarter of 2017, with a disclosed investment and financing amount of US $7.25 billion, up from the second half of 2016.

IPO issued more than expected.

Both investors and entrepreneurs feel that after the Spring Festival, the capital environment in the primary market has improved and capital is accelerating investment.

"every year after the Spring Festival to June and July, it is the traditional peak season for the venture capital market, during which investment institutions look at projects and circle enterprises, which is a regular situation." A senior person from the venture capital circle told the Huaxia Times.

But in his view, another reason is more important, that is, in the so-called capital winter of last year, many institutions dared not invest, but they raised a lot of money in the second half of last year and had to invest.

Wang Liuquan has a deep understanding of this: "the cold winter of capital is not a lack of money, but that the innovation brought about by the last round of technological changes to the entire industry is coming to an end, and revolutionary things no longer appear." many investors choose idle capital to wait and see. "

Yang Peng, as an investor, attributed the recovery of the venture capital market to the opening of the IPO gate. "IPO issued faster than expected, so that many start-up companies in the primary market see the opportunity to go public and cash out." He said.

Gu Bin, executive manager of the issuance and listing Center of the Shanghai Stock Exchange, said publicly that according to the speed of issuance in the first quarter, 2017 will continue the pace of high-speed issuance in November and December last year. It is estimated that the number of IPO issued in 2017 will reach 500, and the amount of IPO financing for the whole year will reach 300 billion yuan.

The number of new shares issued in 2016 was 245, ranking third in A-share history, second only to 347 in 2010 and 277 in 2011.

"the acceleration of IPO means that it is relatively easy to exit after listing and has a stimulating effect on private equity." Yang Peng said metaphorically, "it's like a house, where you keep piling things inside, and if you don't take them out, the pile will be full." It is precisely because the exit channel is relatively smooth, China's mass entrepreneurship and innovation can be booming.

Since the beginning of the year, the CSRC has strongly managed the chaos such as stock market manipulation and high delivery, pointing the spearhead at the capital predators, which has frightened many people.

Yang Peng analysis pointed out, "the secondary market is not easy to do, risk-conscious investors will be more willing to invest their money in the primary market."

Will it heat up?

As a "mass entrepreneurship and innovation landmark" in Beijing, Zhongguancun Venture Street is still deserted. The reporter visited twice on the spot and saw that there were few pedestrians on the street and few visitors stopped.

On the afternoon of Monday, April 24th, the attendance rate of 3W coffee was about 70% during prime working hours. The reporter met Luo Donglong, a Taiwanese investor who had been in Beijing for three days in front of the gate on the first floor. He frowned and asked the reporter, "Why is this different from what I saw in the media before?"

Another reason why Entrepreneurship Street appears empty is that many stores are exhibition halls or offline activity venues, no longer the home of entrepreneurial incubation, but "model rooms" for people to visit.

The reporter saw that Lenovo Star, the investment incubator of Lenovo Holdings, occupied the first and fourth floors of Building 2, the fourth floor was the staff office area, and the first floor looked very empty.

"there are four project financing this month." Niu Kai, a staff member of Lenovo Star, told the Huaxia Times, "our incubator is a virtual incubator. Through online delivery of applications, the first floor here is basically for display."

Cocoa beans, the innovative incubation platform of the design company Rococo, which entered in early 2016, is headquartered in Wangjing. There is only one receptionist in the 100-square-meter store in Zhongguancun, and two cats are "strolling" in the huge space. The store of Dark Horse College, another innovative and entrepreneurial service platform, is also a place for offline activities, where courses and entrepreneurial laboratory activities are held, and only two or three people are resident.

As we all know, there are two kinds of people in Entrepreneurship Street, one is investment, the other is entrepreneurial partners, they work together to maintain the temperature of this cup of coffee.

"the impact of the macro environment is not a major factor, but only accounts for 30%." In response to the Huaxia Times reporter's question about the reasons for the investment, Garage Coffee said that VC investment is at the front end of the investment industry, and the policy impact is transmitted for a long time, so it is more difficult than PE to directly benefit from the policy dividend in the primary market. As the investment object is the early start-up project, the change of the small environment of the enterprise is the most important reason for the garage to start investment.

When asked whether mass entrepreneurship and innovation is picking up, Wang Shuo believes that from a financing point of view, investors are becoming more and more rational and cautious, entrepreneurs should not be too idealized, and careful consideration of the "profit model" can be successful. "as long as the project is good, you can get the investment." Wang Liuquan, who is also an entrepreneur, is also called.

The venture capital market has warmed up, will the cold coffee heat up? The senior figures in the venture capital circle, who spoke on condition of anonymity, said that if capital wants to find a way out, there may be some warming up, but there are still relatively few good projects and further observation is still needed.