"Technology should be a means rather than an end itself, and products should serve needs." Recently, Liu Yuan, partner of ZhenFund, accepted an interview with a reporter from BJ News Seashell Finance during his participation in the 2022 Global Entrepreneur Summit (HICOOL) .
In this article, Liu Yuan shared his views on the status quo of the current venture capital industry, the new characteristics of young people's entrepreneurship, and how to find good companies. He also gave his own opinions on the current hot topics, including hard technology, meta-universe, and new consumption.
In Liu Yuan's view, with the disappearance of the mobile dividend, today's projects are more about the hard technology field of underlying technology innovation, involving very detailed technical knowledge in the knowledge tree. "Investors should keep pace with the times to update and supplement their own knowledge and ability boundaries, which puts forward higher requirements for investors' learning ability."
ZhenFund focuses on early-stage investment, and has accompanied dozens of companies growing from start-ups to unicorns, and many invested companies have gone public one after another. Liu Yuan said that in the view of ZhenFund, relevance, ability of learning and influence are the three most important factors of founders. "We often divide founders who meet these three most important criteria into four categories, namely young geniuses, serial entrepreneurs, executives, technologists."
Zhen Fund is an early-stage investment institution established by Xu Xiaoping and Wang Qiang, two former co-founders of New Oriental in 2011, in conjunction with Sequoia Capital China Fund. Up to now, ZhenFund has successively invested in more than 800 start-up companies. Since ZeroIPO's "China Venture Capital&Private Equity Annual Ranking" established the ranking of early-stage investment institutions in 2014, ZhenFund has won the first place among the "Top 30 Early-stage Investment Institutions in China" for six consecutive years.
Liu Yuan has invested in projects such as Momenta, CastBox, Plantag, Xinshixiang, Ramen Talk, Snow Plus, and MOTI. He was selected as the "Most Acute Investor in China's New Consumption Field" by 36Kr in 2017, and was included in the 2018 Forbes China "30 under 30" list.
Liu Yuan, partner of ZhenFund (photo courtesy of HICOOL)
Prefer young geniuses, serial entrepreneurs, executives, technical experts. Value founders' relevance, ability of learning and influence
Beijing News Seashell Finance: In your opinion, what are the characteristics of the venture capital market in the past two years? What is the development trend?
Liu Yuan: With the disappearance of the mobile dividend, today's projects are more about the hard technology field of underlying technology innovation, involving very detailed technical knowledge on the knowledge tree, and investors should update and supplement their own with the times. The boundary of knowledge and ability, which puts forward higher requirements for investors' learning ability.
Beijing News Seashell Finance: Is it difficult to learn the basic knowledge of these hard technologies?
Liu Yuan: ZhenFund is an angel investment organization that focuses on investing in people. We strive to extract the same qualities that entrepreneurs in different industries need as much as possible. We learn this industry knowledge in order to be able to identify outstanding entrepreneurs by asking the most accurate and core questions.
Beijing News Seashell Finance: ZhenFund has been focusing on early stage investment. What are the main characteristics of the entrepreneurial projects that have sought financing from ZhenFund in the past two years?
Liu Yuan: Many of the people who come to us now are serial entrepreneurs, people who have had one or even multiple entrepreneurial experiences. In addition, we also met many very young founders, such as founders born after 2000.
Beijing News Seashell Finance: How do you find good companies today? How to select and make value judgments? What are the main factors to measure and how to measure?
Liu Yuan: We believe that relevance, learning ability and influence are the three most important factors for founders . Relevance refers to when a founder wants to do something, how does his past experience prepare for this thing; learning ability means that he needs to be a smart founder who can evolve himself; influence is that he can build a good team. We often divide founders who meet these three most important criteria into four categories, namely young geniuses, serial entrepreneurs, executives, technical experts.
Young geniuses are generally very young students in school, who had the idea of "I want to start a business, I want to make an innovative product to change the world" very early on. Serial entrepreneurs are those who had one or even multiple entrepreneurial experiences. An executive is an operation manager who has been in charge of a project from 0 to 1 in a large company. Technologists are masters of core technology in certain fields and represent the highest level of technology.
These four types of people who meet the above three criteria are the target groups we have been looking for. Of course, there are also many outstanding entrepreneurs who are outside this induction system.
02 Entrepreneurship is a matter from 0 to 1, learn war in wars
Beijing News Seashell Finance: What kind of guidance and help do young entrepreneurs need most?
Liu Yuan: Entrepreneurship is a matter from 0 to 1. We all learn wars in wars. For example, how to form a team, how to avoid pitfalls in the product, how to gain insight into user needs, how to raise funds, and even how to choose an office. These things are all done for the first time. There are so many things to learn in starting a business, and this question is difficult to answer.
ZhenFund is also an institution with entrepreneurial genes. Only from the perspective of entrepreneurs can we best help entrepreneurs and know what the real good way to solve problems is.
Beijing News Seashell Finance: On June 30 this year, ZhenFund launched an entrepreneurial scholarship project. You provide entrepreneurial funds to students in school and encourage them to come out and spend about 2 to 3 months full-time to start a business. How is the progress now?
Liu Yuan: We have received hundreds of applications. They are students from top schools at home and abroad, including undergraduates, masters, and doctoral students, and their age ranges from 16 to 30. We sent out our first batch of scholarship winners two days ago, a total of 4 applicants. However, we are still conducting a new round of interviews, and you are welcome to continue to apply.
We were pleasantly surprised by the high quality of applicants. We found a group of very interesting young people with very big dreams.
03 Be wary of hot concepts, technology should serve the product
Beijing News Seashell Finance: In the past two years, hard technology has had a high volume in the venture capital market. What is your view on this field, and what initiatives are you taking?
Liu Yuan: Technology should serve products, technology should be a means rather than an end itself, and products should serve needs. When we look at this kind of project, the most important thing is to see what problems it can solve? What is its productization idea? Who is its user? How much are users willing to pay? How big is the market?
When everyone's technology is very good, insight into users is the key point that distinguishes whether founders can make great things. Entrepreneurial success requires a positive business cycle and positive feedback, so that technology can be well applied and developed, rather than just looking at how difficult technology itself is.
Beijing News Seashell Finance: What do you think of the current metaverse? What layout did you do?
Liu Yuan: Since the establishment of ZhenFund, we have been looking for those who have insight into the future and create trends, rather than chasing trends . Looking back, many projects we invested in were also defined or labeled as metaverse projects, but we are always vigilant about the concept itself .
When the concept itself became very popular, many founders came in because of chasing the wind, but the concept was originally only a "label" for the purpose of quickly processing information, and should not be a "purpose".
Regarding the matter of the metaverse, we think this is a very interesting direction, and we have also seen a lot of projects in the fields of VR and virtual humans. But this concept is indeed too popular, so that the proportion of metaverse-related projects is much higher than it should be, which makes the competition more intense and more difficult to vote for. So we are sober and vigilant about it.
Beijing News Seashell Finance: Is new consumption really not favored in the capital market? How big is the temperature drop?
Liu Yuan: From the perspective of the capital market, it is indeed huge. I think there are two reasons. On the one hand, investors will always overreact to their emotions, so there is the famous saying "I am fearful when others are greedy, and I am greedy when others are fearful". A good investor must be counter-cyclical, rather than following the wind . On another level, when new consumer projects were too popular in the past, many consumer brands pursued growth through a large number of flywheels, but this phenomenon can only be established when the market sentiment is very optimistic.
It’s good that the tide has receded now, and consumer demand still exists, so we are actually paying attention to the opportunities in the consumer industry. At this time, the founders who are still willing to start a business in this field may be founders with a more original and original intention. We will pay more attention to people , which is also a good thing for this industry.
Liu Yuan, partner of ZhenFund, participated in the HICOOl roundtable discussion
Beijing News Seashell Finance: Participating in the HICOOL Global Entrepreneur Summit, what gains and feelings do you have, and what expectations do you have for it?
Liu Yuan: I was a judge in the final round last year, and I will start to be a judge in the first round of this year, so the impression is still very deep. HICOOL has received the support of many top investment institutions, scientific research institutions and government agencies at home and abroad. The types of project founders are also very diverse and excellent . HICOOL's brand has successfully attracted top entrepreneurs from home and abroad to participate in the competition in Beijing. It is also very forward-looking in terms of industry focus, and the activities are developing very well.
Beijing News Seashell Finance: What is your judgment on the trend of technology venture capital in the next 5 to 10 years?
Liu Yuan: We rarely predict the track. But by coming to our founders, we often get a glimpse of what might happen in the future. We see that there are continuous new developments in the field of AI. One is breakthroughs and progress at the technical level, and the other is that technology is embedded in products to bring about changes in products. New energy technology continues to undergo changes. This year, many outstanding entrepreneurs have found us, and we have therefore increased our layout in the energy field. In addition, the innovation and application of many interdisciplinary technologies has promoted the exponential development of the industry. This is also a track that we will devote a lot of time to.