What causes the decrease in the success rate of starting a business? It's not that capital is hard to find, but that capital is too cheap
The cheapness and availability of capital are not entirely good for startups. And it needs to be recognized that the power of capital is limited, and the fact that the entity business is not good has been illustrated by facts.
Many people think that it is now in the cold winter of capital, which has caused the large-scale closure of startups. The capital winter can be traced back to this time last year, but we believe that the so-called capital winter is only the result of comparison with the previous two years. In the long run, for entrepreneurship, capital is not difficult to obtain, and relatively speaking, capital is very cheap. Cheap capital makes entrepreneurship a trend, which gives birth to a bubble, which is one of the reasons for the high failure rate of entrepreneurship. In addition, cheap capital makes startups lack innovation and get used to it? Money? To solve the problem, rather than more efficient operation means and more creative marketing methods, this is worthy of vigilance.
1. Why is capital getting cheaper and cheaper
If we know that FedEx broke the Wall Street record with less than $111 million in financing, and Google raised only $1.9 billion before listing, then the A/B financing of several hundred million dollars is really too high now, even ignoring inflation. Moreover, the losses of startups have also risen. Uber's losses in one quarter exceeded the annual maximum loss after Amazon's listing. This kind of capital competition is rare, but now it is not surprising.
As far as the China market is concerned, the cheapness of capital is due to the reduction of investment opportunities, which makes a large amount of capital flow into the venture capital field. On the one hand, there are not many investment opportunities in the property market and the stock market at present, and many entities are also facing the dilemma of transformation. Generally speaking, all walks of life feel that business is difficult to do. This situation has caused a lot of private capital to have money but nowhere to invest. The vigorous development of internet finance also reflects this point, which is actually an upgrade of private lending, and there are more and more investment channels in the name of P2P.
At the same time, some funds have also entered the high-yield industry of venture capital. For example, stars and anchors have made cross-border investments, which was fully reflected last year, and the prosperity can be seen. However, venture capital not only has high returns, but also has high thresholds and high risks. The entry of amateurs only values the returns and underestimates the risks. Therefore, we predict that after three or five years, this wave of venture capitalists will face the danger of collective withdrawal.
The prosperity of venture capital is inseparable from the encouragement of policies. Part of the reason why capital enters venture capital is that physical business is not easy to do, so many people attribute the prosperity of entrepreneurship and investment to the overall economic downturn. However, we have put forward different opinions. The overall economic depression is mainly reflected in the surplus of some industrial production capacity and the reduction of international commodity prices, which only accounts for a small part of the economy. If we go to the streets, we will find that the quality of goods and the service level have been significantly improved in restaurants, hotels or other physical stores, and the after-sales service of various companies is much better than in previous years. Nowadays, most restaurants are more standardized, even standardized, and there are more and more chain stores, but there are fewer and fewer mom-and-pop shops and individual businesses with no characteristics. And those high-end consumption that focused on public money consumption in previous years have now opened the door to ordinary people and the price is close to the people.
therefore, we believe that the real economy is not doing well because of the economic downturn, but because the competition has become more intense, that is, from the traditional seller's market to the buyer's market, or it can be called consumption upgrading. Gone are the days when you can make money by throwing some money into a restaurant or laundry and then hiring someone to take care of it. This is what most people call difficult business. At the same time, a number of new enterprises with advanced business ideas are emerging, and their business is getting better and better by catering to consumers' preferences and providing better products and services. Theoretically speaking, this is due to the abundance and cheapness of capital, which leads to the diminishing marginal effect of capital, while the effects of management concepts and management methods are constantly displayed. The enlightenment for startups is that the role of capital is limited. But cheap capital makes entrepreneurs ignore this point.
2. Entrepreneurs are becoming more and more interested? Money? See
The encouragement to start a business has made many potential entrepreneurs see the glamour after their success. The lure of money and fame aroused the entrepreneurs' desire for money. Many entrepreneurs started their businesses with the intention of financing, while others defrauded various policies and withdrew after making a profit. The prosperity of the capital market has also amplified this situation. In order to get financing, many entrepreneurs began to make various gimmicks. The post-91 s and post-95 s are obviously not enough. Some founders even claimed to be post-92 s?
Therefore, many entrepreneurs have no so-called initial intention from the beginning, not to realize social value, but only for money, but some speculators who are not afraid of tigers want to change the world (here I recommend a book "How to Change the World" to let them know what to do to really change the world) and finally realize their dream of ringing the bell. As a result, there are fewer and fewer entrepreneurs who do a project just for interest, or even have no financing demands, or they are diluted in the tide of entrepreneurship.
However, it is obvious that the prosperity of the capital market makes most people a little impetuous. After financing, startups need to use capital to return, so they start to create new or non-existent demands. For example, it was hard to imagine charging for knowledge before. Under the current * * * enjoyment economy, the free ride famous for the green ribbon during the heavy snow in 2119 was replaced by a dynamically priced car, and? Sitting on the ground starts at a price? Described so reasonably. Why can't private cars work in some countries, because some countries have a tradition of free rides.
Entrepreneurship is no longer the essence. In order to find possible opportunities, many people begin to monetize everything, such as fame. During the Rio Olympic Games, Bai Yansong fully demonstrated his strength as a stage player, and athlete Fu Yuanhui also showed his charm as an expression pack, so many people gave them suggestions. Admittedly, Bai Yansong will certainly get considerable investment when starting a business, but this ignores the point that money is not the only pursuit of people. A Michelin-starred restaurant can develop fast food in an authorized way, make huge profits in the short term, and even raise funds to go public, but is it successful? In fact, this is also an overdraft of brand value in advance.
3. The cheapness of capital leads to the neglect of factors other than capital
Why are subsidies prevalent in various industries? Why is there a street of scanning code and there are fewer and fewer creative promotion methods? Because startups are too rich. From the perspective of total production factors, when capital is cheap, creativity becomes scarce because it is easier and more convenient to solve problems with money. For example, in the early days, Uber won word of mouth with creative promotion, and now only subsidies are left. For many entrepreneurs, problems that can be solved with money are not problems.
But the problem really comes. Subsidies can only solve short-term problems. On the one hand, it leads to less and less innovation; on the other hand, it makes people ignore the defects of products, which is harmful in the long run. For example, Tencent has never registered QQ number to send small gifts, but in Hong Kong, it has started the activity of registering WeChat to send gifts (disguised subsidies). But as a result, the latter still has little effect. Wechat was frustrated in Hong Kong because of the appearance of competing products. Wechat did not reflect the value of differentiation, which could not be achieved by increasing the number of registrations through subsidies, and this gave people a feeling of cheapness, which was even more unfavorable to the brand. If WeChat is not so rich, it may be able to think of more creative ways to promote products.
under the capital, the understanding of the essence of business is lacking, and deliberately amplifying the value of the project is also a common method. Therefore, many entrepreneurs talk about subversion rather than cooperation, which is reflected in internet plus and O2O. But now, no matter in which field, disruptors have not appeared, such as the so-called catering O2O, there are few survivors, and the takeaway platform continues to lose money. Uber, the benchmark of enjoying the economy, has begun to transform. In fact, this means that the original business model (enjoying the economy of cars) has gone bankrupt, so it has to tell new stories to maintain the high valuation of the project. In fact, this is an overestimation of technology. Many people take the analogy from carriage to car to taxi to online car, but in fact, the latter is far from an order of magnitude with the former, and it is more appropriate to use online reservation and telephone reservation analogy. In other words, online booking is only used as a new car-calling technology, so the German network car Blacklane has a better understanding in this respect, so it is more promising.
The excessive worship of technology is also reflected in business methods. For example, many startups are used to controlling the quality of products and services with big data and evaluation, instead of training and culture. The results show that many companies are ignorant of customers' psychology and habits. See? Why is the mutual evaluation mechanism a technical trap? .
therefore, the cheapness and availability of capital is not entirely good for startups. And it needs to be recognized that the power of capital is limited, and the fact that the entity business is not good has been illustrated by facts. Just like the real economy, startups need to continuously improve their products and services, and their knowledge of business and management will determine the height of the enterprise. And under this cognition, all walks of life have great potential opportunities. ;