On November 26-27, 2015, “ChinaVenture Group 2015 China Investment Conference” was ceremoniously held in Beijing. On the list of top VC institutions of the year, N5Capital was rated as “2015 China’s Top 10 Mobile Internet VC Firms”. Mr. Will Jiang, a partner of N5Capital, attended the conference and delivered a speech.

While participating in the discussion of the topic “The next explosive point in the eyes of the investor”, N5Capital founding partner Mr. Will Jiang said that what he cared about was the cost of entrepreneurship.

“We have not been affected by the expansion or shrinkage of the bubble of this round of valuation. But in my opinion, the cycle of the expansion or shrinkage of the bubble will be gradually shortened, from the previous cycle of three to four years to the present cycle of one to two years. We should not be affected by the cycle, and we should make decisions according to the actual situation of the businesses.”

According to Mr. Will Jiang, N5 enjoys doing businesses with relatively greater challenge. In his opinion, the great challenge lies in the fact that putting offline resources online is not a simple matter of match. It requires to begin with the scenarios and situate businesses in the transaction context of real economy. The premise is that there is gross profit. The company can focus on generating better performance or gain profit by M&A.

“People believe that there are no opportunities in today’s industries of tourism and education, in which there are an excessive number of investors. But as a matter of fact, the opportunities are many, but the opportunities for the entrepreneurs have become fewer. There are not any opportunities for doing communities and tools. Ultimately, the companies have to compete in the speed of sucking volume. But we’d better focus on the substantial procedures of the businesses. The concern are the industries with potential profit. This is the focus of investment in 2015 and 2016.” said Mr. Will Jiang.

The following is the speech  script of N5Capital’s founding partner Mr. Will Jiang:

Hello, everyone! I’m from N5Capital. Ours is a Fund that focuses on early-stage and mobile internet related funds. Our Fund was established in 2013, and now we only have two RMB funds. The scope of our business is the integration of the Internet and the modern and traditional industries and the goal is disruptive innovation. So far, we have invested in nearly 40 companies.

Beginning from Q2 2014, we observed that the bubble had begun to develop, so our investment speed began to slow down during 2H 2014. The slowdown lasted until Q2 this year. Q3 offered us very good opportunities. Our investment speed was accelerated. During this month, we have invested in three projects. In terms of valuation, in the early stage, the bubble mainly reflects in the fact that some people who should not earn money have earned money. This is reflected in two aspects. The first is market itself. The company is in a less popular industry. The people of such company should not have earned money, because they start up business only for the sake of business itself. This is not attractive to us.

The second situation is that in the environment of a large market, 20 teams are doing the same thing. In last year and the first half of this year, a most prominent phenomenon is that the first 10 companies in the top 20 could finance great amount of money. But by far, only the first three companies have survived. All regard the Internet as a way out. In fact, this is a pseudo proposition. In the early stage, we do two things in our investment. The first is verification and the other is promoting growth and acceleration. If your company has not done verification, we will do it for you. When the verification is done and it’s the time for spurring growth, we will make growth-oriented investment. Our business in each stage is sensible, and this is not for the sake of cash burning. This has been especially remarkable from last year to this year. For a fund like ours, it’s better to understand the nature of the business. Since the establishment of our fund, we have invested in nearly 40 projects. In the valuation of these companies, we invest according to the cost. For people who operate fund, they do not need to worry that there are too many projects. As my partner said, in 2006, when USD fund appeared, you could focus on performance on the market. It’s okay if you can invest in three to five projects in each industry. This is not possible today, because the opportunity is so intimidating. If we cannot cope with it in a commonplace mentality, we will easily fail. That’s why it’s not important to valuate in the early stage. This depends on the view of the market itself on this matter and is defined by the supply and demand.

How much cost does entrepreneurship require? This is what we are concerned with. We have not been affected by the expansion or shrinkage of the bubble during this round of valuation. Today, the early-stage fund collects tremendous amount of money. We have not been affected by the expansion or shrinkage of the bubble of this round of valuation. But in my opinion, the cycle of the expansion or shrinkage of the bubble will be gradually shortened, from the previous cycle of three to four years to the present cycle of one to two years. We should not be affected by the cycle, and we should make decisions according to the actual situation of the businesses.

We enjoy doing businesses with relatively greater challenge. But the effect is shown more slowly. Quick money is made in businesses sustained by large amount of capital, so when the bubble bursts, such company will die first. One thing we need to be clear is that whether we can make money online or offline and where we can gain users. There are opportunities in each industry. But the great challenge lies in the fact that putting offline resources online is not a simple matter of match. It’s not a simple way of re-presentation of supply and demand. It begin with the scenarios and situate businesses in the transaction context of real economy. The premise is that there is gross profit. The company can focus on generating better performance or gain profit by M&A.

People believe that there are no opportunities in today’s industries of tourism and education, in which there are an excessive number of investors. But as a matter of fact, the opportunities are many, but the opportunities for the entrepreneurs have become fewer. There are not any opportunities for doing communities and tools. Ultimately, the companies have to compete in the speed of sucking volume. But we’d better focus on the substantial procedures of the businesses. I find that you are all much cautious in your speeches, and you’re rational investors. What all concern are the industries with potential profit. This is the focus of investment in 2015 and 2016.