揭秘投資鏈最頂層玩家：風險創投

Hello everyone, I'm Terry. Today, I'm going to be talking about a friend of mine, Tim. He is the founder of Essence VC, a startup company. The VC world is probably a little bit more mysterious for many people. Without VC, there would be no C-Series we know today, no innovative technologies, and no companies that can change our lives.

So today I'm going to invite Tim to share with you how VC usually invests, where VC's money comes from, and what VC's business model is, and how they make money. Next, how VC helps their founders. If you're also working in the tech industry, or if you want to join a startup company, or even if you have a goal of starting your own business, I believe this video will be very helpful to you. I think most people would say that I'm a Chinese-Japanese person, right?

Yeah, we sometimes cast pre-seed to seed, sometimes cast egg. But we focus on pre-seed and seed. Pre-seed is the early seed. The founder hasn't even started yet. Actually, seed is just a name. It changes every two years. There was no seed round before. But the seed is getting bigger and bigger.

After C has reached 6-8 million dollars, many people are trying to get another round before C called Pre-C. I think C was emailed a long time ago. Yes, Series A is now C. Pre-C is now C. When I started my own business in 2016, I got a C round of about 1.5 million dollars. Now 1.5 million dollars is Pre-C.

These names are changing with the times. But we still vote for the first round. How do you decide whether to vote for C Round?

最难的一个问题,因为其实大部分VC,很多人可能都不太了解VC这个行业,我们看多少个公司啊,我们怎么去做决定,其实我们看很多家耶,我没有真的仔细去算过,但是我们可能平均一个月一定会看到快四到五百个公司以上。 哇,这么多? 对,所以我一个月平均可能投一家。 一个月平均一家? 对,而且就我一个人。

So I can't spend so much time to look at 400-500 people. So I will quickly choose. So I usually choose whether I understand this industry and this field. If I don't understand at all, I can't say that it really takes so much time. But at least I have a certain understanding. So how did I decide? The first decision is whether I have a way to decide whether this company is the best.

或這個團隊是最好的 有沒有任何的因素是我夠了解 夠多知識 夠多背景去了解 所以其實我通常在投任何一家公司之前 可能都已經有做過一定的功課 可能幾個月或幾年的時間 看類似這個方面的東西 所以當我在看到一家公司的時候 我就說

I can see if this is a potential. The first is to see the field. After that, I'll see the team. So you usually focus on infrastructure? Yes, my fund is actually focused on infrastructure.

Actually, Infra is a wide range of applications. We just talked about Cloud, right? Amazon, of course, is one of them. DevTools, developer tools are also one of them. But actually, in terms of infrastructure, anyone can build on top of the platform. So, strictly speaking, every SaaS, like Salesforce, Workday, and many other apps in this world, including Shopify,

So this is actually all infra. So with the vision of infra, we look at the company and see if this thing has the potential to let developers build an ecosystem. We decided to invest in this company. Okay, so which aspects do you pay more attention to? For example, its product maturity or its current user volume or its profitability.

已經有了這個營利能力 或是說你會看這個Founder的Quality 就哪些你會比較去特別篩選 對 我比較特別 因為我投很多最最最早期的 甚至Founder都還沒有離開他公司的時候 先去raise他第一輪 我通常都會在這個時候就已經開始了 而且因為我是第一個輪就要投 對 所以很多時候可能至少一半以上 是沒有任何的數據可以看 對 沒有產品 Nothing

And his idea may not be very certain But we don't want to wait until everything is done before we start voting Because it might be too late Because a good team has a good direction, has data, everything Many times it becomes a seed round, a big round So because I want to focus on pre-seed

I'm focusing on the team. The quality of the team. The way they work. The way they think. Their knowledge. Their motivation. I even try to discuss it. Because I've done a lot of Infra. Infra is not about revenue.

If we look at HashiCorp and other well-known law enforcement companies, they didn't have any revenue in the past. So I'm actually looking at whether their ideas and work have changed the industry. If you have the ambition and the ability, we have aligned you to do something specifically in the past two years. This may not be profitable. Open source is also good.

freemium or something but you can do it bigger this is the best you can do I care more about that do you have anything you can do to change the potential of this field? mainly I look at the product, to see if it has potential but before you make the product because there are no products you can show me maybe prototype or some simple rough sketches but not a complete product I haven't seen a complete product yet, I stole it

投資錢就有 所以我會用聊天的方式 大部分的時候 你說是 pitch deck 這些東西都是很 一部分的資料而已 很多都是通常溝通跟 discussion 好幾輪之後 我慢慢開始 conclude 說這個團隊 他的做事方式 想法是什麼 有辦法在這個領域裡面 可以成為一個 disruption

Then you will invest in those founders who have a track record, which is that they may have a successful startup or successful exit before. Or in general, you invest in companies that are relatively young, like the first time. There are. Of course, I hope so. Most VC will say, of course, find those who have sold a lot of money. But in fact, there are many VC rounds. If you find the most mature, most credentialed, and have a background, their rounds are very large.

像我們這種小的Fund 像我的Fund大概三、四個Million 所以我們如果都只投這種 8 to 10 Million的Seat Round 我們可以佔的那公司的股份就不多了 而且每一家公司都可以大賣

啊,賣幾個billion的exit 其實沒有機率,沒有那麼大 所以我們必須得選 哪一些公司 we really take less ownership 對 因為我覺得這個前提真的很大 然後這公司的 founder 陳儲, do everything 是真的適合我們去 own 小一點的piece 但這個是很大的一個機會 但是相反的 我們也必須 take more risk 第一次 founder 可能甚至是 PhD 沒有出去做過很多工作經驗的 或者是anything 我們也去考慮這些 所以我大概基本上有快一半一半

OK. 一半以上的 founder 可能是有做過公司 或做過蠻多工作經驗或 something. 有一半的 founder 可能有幾年的工作經驗 research 為主 或是可能甚至沒有出去做過 peer PhD professor 我們都有投過。

OK. But we have to take more risks. The risk is much higher. Yes, the valuation is lower. And we will do more things to help them. Personally, I prefer self-modeling. Because I think this is one of the characteristics of our fund. We know how to help these very technical founders to find a product market fit. I actually spent a lot of time in this group.

人的身上 OK 所以我OK for both OK 但是他come down to evaluation 啊 司機點啊 跟所有東西 都全部是所有的因素我們考量

Do you work with other VCs like you? Do you work with other VCs like you? Yes, we do. We have a lot of VCs. Most of the famous VCs are our LP. They have backed us. Like Sequoia, Gleason, and so on. They are our next-level capital. We have established our brand. We often see good pre-seed.

Right, so sometimes they will follow up with us. But most of them will keep in touch with us. We will tell them that we are taking out these companies. Or we will help each company position well. How to get the funds for the next round. So we will go with a lot of famous funds. To the next round, follow up with us. The first round, because our funds are not big.

So it's quite common with many pre-seed, like SoloGP is a name, which is only us alone VC, investor fund, or angel, we will work quite often. So actually every time we race, if I lead or co-lead, I will catch a bunch of friends.

- Okay. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah. - Yeah.

Tim, can you share with us? I'm not that rich. So the VC fund, you just said it's 30 million. Where did this fund come from? Let's pause for a minute. Do you know what happens when you encounter sharks during a wave? That's right. I'm talking about Surfshark. Everyone's understanding of traditional VPN is to overcome barriers and protect your online privacy. But there are many VPN brands. Why would I choose Surfshark? Of course, because their cost-effectiveness is very high.

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I will put the link in the description box below Or you can scan the QR code directly I think everyone might be curious about where the VC money came from Actually VC, as far as I know, VC is not to use your own money to invest No Tim can you share with us? I'm not that rich VC's fund is 30 million, where did this fund come from? VC is usually called Limited Partner, which is LP money It's really wide

Everyone's money from VC funds might not be the same as mine

因為我第一個放才一個million而已 第二個放七個million 第二個放是Found3 30 我的LP其實差蠻多的 我剛開始的時候全部都是個人 可能一兩個VC放 但是基本上全部都是個人 個人就是一些其他的Founder啊 我以前工作過的Manager啊 知名的YouTuber Engineer啊 就是只要有對Founder的興趣 有一些錢 我也可以加入 對對對 就是我以前拿的錢真的很少

So my colleagues and friends would follow me to join in. The second fund is similar to that. But many people may not know that many VC funds become LPs. Like Sequoia, Andreessen, Foundation, NEA. Why do almost all of them become my LPs? Because they actually take a bit of their money from the Rays and invest it in VC funds. Not to make money. Because they actually bet that their own money will make money.

We are like his little brothers. We tell him that we see many similar companies. We help them to see and know some good companies. Before they raise money, we have already sent him some insights. So there are about 15% to 20% of the funds are VC funds.

Okay. 但是大部分啦, 其实只要你一定的数量的钱以上, 可能15, 20 million以上, 你必须得找institution. Institution就是可能很多美国, 我们讲family office, 就是有钱人, 真的很有钱的人, 有50, 100个million, 或甚至billion dollar的一些, 直接卖石油的啊, 或Bill Gates啊, 或是他们都有一个family office, 把他们的钱拿去专门去投high risk, 就是我们就是high risk, venture capital. 所以我们常被一些可能,

某某某 Levi's the founder 或者是這個的 founder 像我有 Intel CEO 我有些其他的一些 他們的 family office 會 reach out 說我們可以放一些錢 到你的房裡面 所以我一部分的錢 是叫有錢人的 family office 投我

The other part is fund of funds. Some people raise their funds to invest in VC funds. So, 50% of them are fund of funds. These are all money, our money that we have invested. Many people don't invest with their own money. Or VC funds.

Or they can just ask for VC funds. They can just say that they can find a VC fund. So you don't have to worry. Just give it to me and I'll help you find it. So this is actually one of our main sources of money. So it's like a financial chain. You can just look for the best VC. Actually, this is all about your popularity. Your popularity is really important. And it's not just about popularity.

It's in this circle. It's very important. If he hasn't heard of you, he won't vote for you. But he must want to hear you. So it took five or six years to slowly penetrate into this small LP circle. And many startups, very cool startups, they also choose VC, right? Yes.

对,对。 你其实如果到我的网站, 你如果不是engineer, 你不做Infra, 你应该不会完全看不懂 是所有的logo。 对。 但是很多喜欢Infra的 工程师或founder, 一看我的网站, 就是哇, Tim, you have so many good companies. 就是怎么这么多好。 所以其实在我们的领域里面, 假如说你知道我们这个领域的话,

至少聽過兩三家以上。 所以,founder很多時候, 因為我自己也是founder過, 我也raise過錢。 所以,當你真的不認識一個VC fund的時候, 你第一個就看到他帶頭過事。 但是你如果看到他, 欸!

This could be through Snowflake, Databricks, or something like that. You'll see that the quality of this company is this. So, am I more likely to become this? You'll have a psychological reflection. The quality of VC funds, whether it's the vision or the way they help, if they're all companies of this type, this is our brand.

Right.

Yeah.

-

VC is a brand that is built by a brand. What is your business model? How do you earn money? We are similar to other funds. We have a management fee.

管理費 管理費 對對對 手續費嗎 對 算管理費 管理費 OK 因為不是一種手續的一種費用 所以最通常聽到可能叫2 and 20 每一年這個VC fund 都會拿2%你RAISE的錢 當作你的budget 包括你付你的薪水 跟任何其他兩種 說的Marketing 像我們也買SaaS products 全部的budget 全部的Budget 全部從這個2%買

So we allocate 2% of our income every year to pay our own salary. When our company sells money, whether it's an IPO or a purchase, we usually raise 20% of our income after we pay the interest. So I raise $10 million, I only have to return over $10 million, maybe $11 million. When we start to raise more than $1 million, we take 20% of our income.

We'll take 200k and give it to LP. So it's like this. So it's for LP or institutions to vote for you. Yes, we'll vote for 80% of the ratio. Okay. So this 2% is for them? Or you vote for this company and then you vote for this company? No, it's for our raise. Oh, for our raise. Yes, so you see a VC and say, oh, we raised 400 million. But a lot of people don't understand that actually you raised 400 million doesn't mean you really took 400 million to vote for the company.

Right.

This is a business model. As long as you have a way to invest in a good company, your LP will want to invest in you. This is a cycle. We just talked about that you usually invest in seed round and pre-seed companies. What stage is your exit? Exit, we usually... Because there is company exit, it is usually based on whether they want to exit. So we only have two ways to exit. We either buy the company

Or when it comes to IPO, then this might... Oh, you won't sell it for $10? Not often. Not often. Actually, most VC funds, especially at our stage, won't sell too early. Because the biggest return is after 5 to 7 years. So you sell it first, you lose on the upside. Because you know, VC funds have a very famous name called Powerwall. Oh, that's right. If you invest 30, you might only earn 1 or 2 big profits.

中間快三分之一全死 對 中間一大半可能return 1 to 2x 可能只管你一點 只夠 cover 那些死掉的 或者甚至 cover 不良的死掉的 但是通常就是那一家 那一家可能叫 Google 那一家可能叫 Facebook 那可能就是排行好了 可能就有那種賣 2 billion 3 billion 10 billion 或甚至以上的 可能就只有一家 三年來就那一年加 而且你要投到 你只要投到 欸 這所有的錢

You can do 5x, 4x, whatever. So if you're too early to sell, and you're not sure which company will become the lead. Many companies in the front, like Snowflake, have several rounds, and many VC's are not going to invest. They think it's weird. They don't make money. Why do you have so much money? Can this company survive?

So there are some questionable, rough periods that become the most important icons. So we can't sell too fast. But we still have to sell some at a certain time. Usually, our exit, like this kind of pre-CC fund exit, it's called secondary or tender offer. Usually, I have a choice. This company may have at least 20, 30x. Yeah.

Yeah, just already covered enough of our funds. Maybe we have returned half of the funds, or 1x of the funds. Maybe at least half of the funds. Of course, it would be better if it's on top. But we can take the upside first. Take the risk first. Yes, buy a few percent, 5%, 10%. But this is usually, for me, after 5 or 6 years. After I invested, it really happened like this. It's really in the middle, at least 4 or 5 years.

There are some lucky cases. For example, I bought a 2 billion accident. It's been 3 years. But it's the only one. It's been 4 years. It's been 4 years and sold. It's called Tabula. It's written on the Tecron. David Briggs bought it. That's a special case. We call it lucky. I didn't put it on the bet. Every company sells it like this. So in most cases, it's going to be 8 or 10 years.

So if the company you're in loses money, will you have to pay for it? Because this fund is not your money, it's your LP money. If you lose this money, will you have to pay for it? No, if I have to pay for it, I don't have any money. We'll just go to the bank. So VC is basically a stable payment.

一個生意 也不是這個意思 如果你全部投的公司全死 你就是全死 但就repetition很差 對對對 你就沒有下一個fund了 你就沒有一個fund了 對對對 所以為什麼 VC fund不好開始 因為大部分的LP 其實都不喜歡 take這樣的 risk 但是大家都知道這個 asset class top quartile 是比 S&P 500賺得更多錢 那top quartile是賺非常多錢

So you can't just not invest, right? There's a benchmark, if you don't invest, you'll have a 10x return. So this is a bit like investing in Bitcoin. You know, it's like, I know this thing is likely to make a big profit, but I'm not sure how much or which one. So I have to split up my investment a little bit. So we actually don't have a majority of money to put in the VC fund, because it's too risky.

Right.

But there's no difference. Because our power law, as long as you have a family, or even two families, and you can go up, then it's okay. It's a very strange business. In fact, the company's death is not just normal. Even my friends from VC said, "My company, my fund's death is not enough. My risk is not high enough." They said, "Why is everyone still alive?"

It's part of the plan.

你就是 sign up to 就是做很 risky 的 investment 最后的问题是 很多 VC 会帮就你们自己投的公司 招工程师啊 或者招那个 technical team 像我自己也是会 收到很多 LinkedIn 上面的那个 message 你预发来讲 是怎么去帮这些公司 去找这些 candidates

What do you think? Actually, we don't help them decide who to hire. Just introduce them. We actually... On one hand, we help them think about what kind of person suits their company best. And then we will start doing some... Because we started our company so early. Maybe it's just two founders. That's it.

前面幾個hire很重要。 對,以前那個Airbnb的CEO就說他快六個月的時間去hire第一個人。 他需要這個culture line, value line,不是隨便找的。 而且這東西不是你放在網站有個job description, 不是那麼容易可以找到這麼好match的。 就通常前幾個hire是我們最能做的。 那前幾個hire我們做的事情就是你是要做什麼產品。

你是什么样的culture 你要找什么样的人 大概有问题之后 因为我们有做一些podcast 做一些technical community 有没有很广的一些 我们同样的公司 是有很多engineer involved的project 对 我们就利用这些社群 我们去帮他search 哪一些high possibility的人 我觉得是会match 但是那之后我们会 我的工作不是去帮他

I will help him reach out to a few people. Our company is looking for founding engineers. I usually have a closer relationship with my company. This engineer is already interested in this company. I have interviewed him. I like this company, but there are several offers. Or even considering whether to add such a risky startup. I just call to tell the company that this company can think about it. Why invest in this company? Why do you want to add a startup? Why do you want to consider the advantages and disadvantages of small companies and large companies?

I've also hired 4 startups before. I've also started a company before. I've invested a lot of money. So I share my experiences with them. I use these things to close their candidates. I think it's very helpful. I learned a lot.

I'm not saying that. It's a pretty interesting job. I didn't have that before. It wasn't my dream when I was young. It wasn't your dream. I didn't know about this industry. But after I became a founder, why did I love being a VC? I think it's because I have a way to get close to so many founders. I think it's rare to have a job like this. It's on repeat. Such an interesting project and company can be in close cooperation.

- Yeah. - Yeah, so. - Okay. - Oh yeah.

Bye!