Peng Ran, Bai Ze Capital： FA, which can only make quick money, is a failure and should continue to iterate and update itself.
Startups need to keep up with the times, and so do investment institutions.
In December 2017, Ether Capital upgraded its brand to "Ether Chuangfu", and the original FA(finance advisor) team of Ether Capital, which focused on growth projects, was renamed as "Bai Ze Capital".
"Ethereum is like a group company, FA is one of its businesses, and Bai Ze is the most important brand in FA. In addition, we also have the most active investment and financing platform in China. " Peng Ran, co-founder of Ethereum and partner of Bai Ze Capital, told the interface journalist.
Peng Ran worked in the European headquarters of the investment banking department of UBS and BNP Paribas. When working in France, the merger of a French company and an Italian company may last for five years, and the transaction amount of a merger can reach tens of billions of dollars, but Peng Ran thinks that is just a number.
After returning to China, Peng Ran joined the newly established Huaxing Capital, which made him feel enriched during that time. Whether it’s Meituan or Tujia, these companies that emerged at that time were small in scale, but they really and quickly changed everything around them. Here, Peng Ran met many extreme founders. "At that time, Wang Xing told us that the company would quadruple every year and what level it would reach this year and next year. Later, he did it. You will feel that this matter is very close to yourself and very exciting. " Peng Ran recalled.
Four years have passed since Huaxing came out to create Ether, and the times have changed. Four years ago, the mobile Internet was just a racetrack, but now it has penetrated into all fields. New technology and new economy have redefined every traditional industry.
Now, more and more new FAs are entering this industry, and there are many new industry stars such as Taihe Capital and Light Source Capital, which focus on quality products. The internal adjustment of Ether has also been carried out, from the initial stage of its establishment to the stage of Bai Ze focusing on the B-round and subsequent growth projects. Peng Ran said that such a change stems from the evolution of the market and the growth of the team, and also from the overall consideration of the Ethernet business layout.
Peng Ran believes that with the gradual development and maturity of FA industry, the choice of efficiency and service depth is bound to be divided in the industry, and boutique investment banks that pay more attention to the gross profit of single projects will inevitably go to the middle and late stages. From the business point of view, FA is a non-standard business, which also means paying extra resources and energy.
From the beginning of today’s headline project, Peng Ran constantly summed up his tools and methodology. He feels that this industry is ultimately about people’s business, always dealing with different founders and investors, but the chemical reactions in the middle are different every time. The general method is to do a good job of industry research in advance. From the service of this company, we should have a basic judgment on the industry and the heat of the market, and make clear what are the core value information that enables both parties to communicate efficiently. Think of yourself as a partner in the client company, not just a financial adviser.
Peng Ran told the interface journalist that there will be more and more such advanced industry research conferences in the future, and now Bai Ze will focus more on mid-and late-stage projects, which may last for several months, and several people will focus on this one thing. Where time and manpower are spent means what kind of customers can be served and what kind of reputation can be accumulated. How much money you can earn in the end is a matter of course.
"Now that we have contacted Company A, we are bound to look at all BCDE. Of course, the methods of looking at it may be different. Some of them can be talked face to face, and some of them can be inquired and investigated around, as well as basic desktop research, but these tasks are all essential." Peng Ran said.
The following is the dialogue between the interface journalist and Peng Ran. The interface is slightly edited:
Interface: From which round did you come into contact with today’s headlines? What was the judgment of this company at the beginning?
Peng Ran: The first time we met with Zhang Yiming should be at the end of 2012, when today’s headlines had just finished early financing. Zhang Yiming talked about a set of his theories, saying that the mobile Internet will bring a lot of fragmentation time, and it needs fragmentation to sort out and provide information. The previous news apps were actually B2C, all of which provided electronic versions of newspapers. It is difficult to meet real traffic opportunities by providing content in this way. Now it seems that everyone understands these truths, but in the early years, there was such a judgment and determination, which was the business sense and pattern. Later, when Ether was founded in 2014, the headline became our first order.
Interface: Ether also has its own follow-up fund. When did it start to invest? What is the investment performance now?
Peng Ran: Since the first half of 2017, almost a dozen companies have been invested, and the results have basically reached our expectations. Choose to vote from the best companies we have served. Of course, there will be some tendencies within us. For example, we really don’t know so much about some industries, so we won’t vote first.
Interface: So if you look at an industry now, do you usually only choose the head company of this industry?
Peng Ran: If the team chooses the direction of deep service, the final target customer must be the head enterprises in various industries. At the beginning of this year, we will see several phenomena. First, it is increasingly difficult for funds to raise funds, especially those that are not too high quality. In addition, everyone was talking about asset shortage last year. On the surface, investors could not find good projects, but in fact, good projects were there but could not be invested. The same is true for FA, it must be the best project that corresponds to the biggest benefit. In the long run, only by such accumulation can a brand be remembered after 3, 5 and 10 years.
Interface: What industries were your projects concentrated in last year?
Peng Ran: There are still many areas such as enterprise services, consumption and artificial intelligence. At the beginning of last year, we didn’t invest so heavily, and it may average tens of millions. Since the second half of last year, I feel that the amount of a single project has become much larger.
Interface: Now that there are more and more FAs, entrepreneurs will be exposed to many different FAs. What do you think is needed to attract them to cooperate with you in this process?
Peng Ran: We have seen everything that FA has done in recent years. I think that in the end, we need everyone’s approval to make the business well and comfortable. In particular, I often emphasize with the team that we should have a sense of resonance with the founder, deeply understand the business of the customer’s enterprise, truly agree with the development direction of the enterprise, and the problems he is facing now, and even help him think of what problems he may face in the future in advance.
As a financial consultant, if we only think about how much the company should sell, we are a trafficker, and it is impossible for this matter to resonate. Many times, everyone is halfway through financing and basically becomes a family. The CEO can’t talk to anyone, including partners and relatives. This pressure has nowhere to release, but it may be the safest to talk to FA. No matter how big a FA team is, no matter how many people there are, the customers it serves are limited. Take time to make friends with the best entrepreneurs who have the most resonance, this business is interesting, and we can really grow together.
Interface: Bai Ze will also participate in many hard science and technology projects, which involves the understanding of this technology. To resonate with the founders, the requirements for FA are quite high.
Peng Ran: So I have to keep learning. We recently contacted a large-scale private military enterprise. Such enterprises need a lot of qualifications and industrial resources, as well as professional technology and talent reserves. Frankly speaking, I didn’t understand it at first, but our colleagues came from the national defense system and had enough knowledge reserves. We did a lot of industry research before in-depth investigation. Always be in awe of the industry, even if you are familiar with it, because the industry is changing with each passing day, and what represents the future with new value is always subverting your own past cognition.
Interface: You will also get in touch with some unpopular industries like military industry now?
Peng Ran: This is not unpopular at all. It’s just that traditional VC and FA have fewer opportunities to get involved in this industry, because this industry has certain technical thresholds for intermediaries or investment structures, but after we went in, we found that there are really not many people competing with us.
Interface: Are there any mistakes in judgment?
Peng Ran: There must be. For example, we entered the industry of unmanned shelves very early. First of all, its economic model is very good, and secondly, the track is actually not that big, and the return on investment that the head company can give is considerable. But we underestimated it at that time, because the economic model was good and the capital paid too much attention to it. This has made life difficult for a group of companies before.
Interface: You have done early financing for Yingke. How did you judge this outlet at that time?
Peng Ran: That’s really the outlet. Everyone is doing it. At that time, there was a bonus in traffic, and the content was scarce. Yingke ran faster.
Interface: Many things may be unexpected at first. What do you think is the most important criterion in the initial stage?
Peng Ran: I ask a very broad question: Do you think artificial intelligence has a chance?
Interface: There must be.
Peng Ran: Why?
Interface: Because it represents the technology trend.
Peng Ran: Suppose I look at this problem, the first starting point is human nature. I think all products are ultimately to satisfy human nature. The Seven Deaths talks about human nature. Whether it is good or not, it is a choice for human beings to seek advantages and avoid disadvantages as creatures. The development and change of technology in the future must help people meet these needs more and more. If conditions permit, I can become more and more lazy, then artificial intelligence can help you be lazy. At first, the computer internet helped people solve problems more efficiently, but in the past, computers could not solve problems that only people could solve, and now artificial intelligence may partially solve these problems.
Looking back, it depends on whether the technical infrastructure is good enough and whether it is possible. Nowadays, massive data are generated every day, with more and more complete communication infrastructure and more and more rich sensing tools. When all these technological trends are combined with people’s nature, you think this thing will probably happen, but when it will really break out in some fields and what kind of company it will produce, everyone may have different opinions. But for the big direction judgment, this is the deep logic, and human changes always have some laws.
Interface: this year, the investment industry is saying that it is difficult to raise funds. Do you think it will have an impact on the FA industry?
Peng Ran: Not really. FA always has business to do anyway. The difficulty in raising funds will affect some people, but it will not be said that everyone will be affected. Moreover, you should see that the current cycle is monetary tightening. Some people used to do trusts, but now they are not good at it. They all want to see equity assets. In the future, more money will gradually enter this industry, and in fact, there are a lot of long-term funds in China that have not really entered, such as enterprise annuities and social security, and government funds. Now most of them are managed by their own people, and I believe there will be more professionals to participate in this part of fund management in the future. In the future, the capital structure may change in this market, but there will be no shortage of money, because the equity market in China is still small compared with that in the United States. My own judgment, the first is to see if there is enough money, and the second is whether the assets are getting richer and richer. These two aspects are now moving in this direction.
Interface: What do you think of the saying that many FA are talking about quality now?
Peng Ran: In foreign countries, high-quality products mean that you can’t do underwriting or secondary market, but can only do mergers and acquisitions and provide consulting services. This is called high-quality products. So now, quality is just a saying. The concept that everyone wants to talk about is that I am a serious, professional and long-term FA institution. Now everyone says that FA makes more money and faster, so many people rush in from different industries. However, to truly make a serious, professional and long-term FA requires patience and moderation. What needs to be done continuously, what needs to be institutionalized and systematized, and what red lines can’t be touched, we must be aware of it and stick to the principles as a team. For example, many investors spit out that some FA institutions are like pimps, and they are not worried and unprofessional. For example, there is interest exchange and corruption between FA and investors in this industry. As a FA team, you have to know where you want to go and how long and how far you want to go, and the rest of the choices are relatively simple.
Interface: There are other FA organizations trying to do a platform like Easy Item. What are the differences between Ethernet?
Peng Ran: Making a platform is not as easy as everyone thinks, because you have no concept. What is the key to the success or failure of this thing? Zhou Zijing has worked as a FA and a product manager, so we know from the first day what we need to pay attention to, what talent pool we need and what we need to accumulate in making products. In particular, our equity trading platform is a tripartite trading market, with sellers, buyers and intermediaries. This market is like a seesaw. Whether you do supply or demand first, or both sides go hand in hand, this rhythm is very difficult to grasp, and the equity is not like buying an explosive product on Taobao. This matter is non-standard for everyone, which projects are good and which projects are not good, and there are thousands of people, so there are many challenging things in the middle to do screening and convey information efficiently. From 2014 to now, we have been polishing for four years, and we have slowly walked through many pits. Now I think it is an initial success.
Interface: What are the new opportunities for FA institutions under the background that local governments are stepping up efforts to attract investment?
Peng Ran: What projects investors want to see and what enterprises want to do sometimes have information asymmetry, which also exists between the government and enterprises. Everyone’s discourse system is different, and the methods and efficiency of doing things are different, which will lead to a lot of resources being wasted and many good opportunities being missed. We can understand the government as an investor, but it not only invests money, but also its own administrative resources, including land and talent conditions. For such investors and such targets, there is no really good intermediary agency to provide them with a scene and atmosphere to sit together and chat. Many people in the market have great resources on both sides or at least one side. In our own business, we can feel that a large number of customers are at a loss in the face of such choices.
Therefore, since last year, we have also dealt with a large number of local governments to understand their demands. Industrial guidance sounds trite, but it is the top priority of real long-term work for local governments. We have said that innovative enterprises in the north and the north began to flow out, and all localities competed to attract good innovative enterprises and provide them with the best growth soil. But for this change, how much contribution our market-oriented institutions have made and how much role they have played, at least now it seems insufficient. We can’t expect this kind of chemical reaction and effective configuration between the two sides to happen naturally. Ether has the largest project trading platform, a large professional FA team, and good asset management capabilities. We continue to actively try and hope to see some achievements in the future.
FA should not only know the persistence and restraint in pursuing long-term development in the future, but also continue to iterate and update itself like the industries and customers we serve. FA, which can only make some quick money, is a failure in my opinion. Because in this era, as long as you are not too bad at FA, it is not surprising to earn some money. It may be awesome to continue to accompany the growth of the industry and even make a little contribution to the industry and make big money for a long time.
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