friends: Good afternoon, everyone, today we are very honored to have invited the managing director of Qiming Venture Kuang-ping, Kwong total.

Duane Kuang: Good.

Wang friends: Today I will be in large measure on behalf of entrepreneurs and the general users to ask a lot of problems Kwong, I would like to brief you before the formal question of the basic Qiming Venture I, as well as the total experience Kwong.

Duane Kuang: Venus is a focus on science and technology investment in China's venture capital funds, we are set up in February this year a 200 million U.S. dollars of investment funds, there is a very young should also be considered a partner, may be selected in our五十强, many of the entrepreneurs, we also do business, this is my own first venture fund, so everyone from the mood and feeling with the business is the same. We focus on areas of investment is a relatively early stage in China's science and technology companies here. I am blind in the creation of the previous six years, has been responsible for Intel's investment in China's investment here, it may also be compared with the domestic entrepreneurs and VC counterparts, IPO understanding friends here for many years, but also blind hope in the future investment in China to continue on the road and then the things we do together.

Peng Wang: Yes, I would like to add a simple click here Kwong total experience. Kwong total is now managing director of Qiming Venture Partners, he can be said that before the total in China VC industry is very experienced venture capitalists, but also it can be said that the Chinese venture capital industry predecessors, I would like to Kwong total here experience is very rich, of course, include the total before Kwong at the technical level is also very rich experience. So, I think, from another level, when it comes to venture capital may be thought of all the most direct high-tech, high growth, so today we may be subject to a large extent the risk of investment will be around the whole inside, at the technical level, technical factors on the related issues, so I would like to ask a question of total Kuang, Qiming Venture from its own preferences in terms of investment, particularly in the business model, you are more like technical innovation of the company or model-based innovative companies? Have some monopoly or resources? Or a complex background of the company?

Duane Kuang: This question is a good question, often a friend of mine asked me this question, simple answer, from the blind side, we emphasize that innovative, but innovation in the the field, I think the lack of technological innovation, a venture capital industry can not be bigger, of course, not every enterprise must have a high technical component, but the industry as a whole is concerned, from the VC, from venture capital to the industry speaking, the importance of technological innovation, there is no technological innovation I think is short-term, even if the VC industry is booming, it is not possible long-term sustainable development. So companies from speaking, for us, innovation is very important, very much want to see a lot of innovative technology companies, but frankly these companies in terms of current or less.

Wang Peng: Qiming Venture here in the company's entire operation and management team experience is very rich, can to some relatively more prominent technology CEO what recommendation? In his own growth as a highly qualified CEO, or the Company's operations throughout the level which of these recommendations?

Duane Kuang: I think technology CEO strong analytical skills are often very strong, in fact, a lot of technical ability of the CEO's vision of the market is also quite accurate, they With the spur of the moment will not do a thing on, but often their biggest problems is dealing with people, not good at the time to manage this team, not to do something good ... ... they are more and more time is not 0 1, but the management team, and when the time to boost morale, a lot of things on the 0 and 1 is not so simple, you can say that these things are true, but in a team, the team's morale, and cohesion of these are very important . As a result, my investment in the past seven years the company had been successful, I think most of the CEO are very appealing, and their appeal, cohesiveness, influence is very strong. In this regard, as I do so often technical, who suffer a little more. Of course there is also a lot of other things can be the CEO technical background, who have other suggestions, but I appreciate the most is this, how to leave your program, leave your technology into a company called Force leaders, I think this is very important to the development of the company.

Peng Wang: As I mentioned earlier, technology and team, in addition to just the area you mentioned, on the other hand, may be in communication, there will be a little bit of expression issues, there are some cases, especially in technology-based case, there is no possibility of financing the value of their talk so clear, could lead to his understanding of VC there are some deviations, such as you look at this case, in the second round of financing, when you What the general point of view?

Duane Kuang: First of all, I set up on the title you just do not necessarily agree with, often the most persistent of the value of the company, who is the technical background of these entrepreneurs. Love him too because he created the invention of this thing, he would think I am the technology no one can really compare. On the contrary, more market-oriented entrepreneurs, they often overflow to call a price, but their role would be more often, in weighing the pros and cons after the faster they will be more important to enter the market or take 10% more important. Comparison of pure and often a technical team will be looking for a strong reference to the past with the Google reference to what, Google make a discount, we are. Therefore, in this context, technology does not necessarily talking about who will lose value.

Wang Peng: Suppose we can see that case, after the first round of financing, equity as defined in more than 50% overall, in the case so when the second round to see if such a case, where your concerns?

Duane Kuang: two in the past reasonable unreasonable, is not generally taken into account my, I will consider the two more, one is in control over there the VC, their thoughts, their way of doing things, we are not recognized, it is important that they are VC, they are not the team, team you are done after due diligence either you believe him or就不信him do not believe he would not vote, but in a VC company is a majority, VC-led, it will then become a team on the one hand, you have to do due diligence, it is important to also look at the idea of VC is kind of how, This is important, the more we will spend the time. On the other hand very important is that the management team they have not enough enthusiasm and motivation to do a good job of this. Because if the company has been going to the market, that is one thing, but if the company is still in the early stages of development, and that no one can predict the market be like next year, next year if there is a relatively big ups and downs, and this edge management team have been emptied of light, but also left seven VC sitting there, we are not able to anything. Therefore, these two may be the most crucial.

Wang Peng: You also talked about the due diligence of companies, I would like some more at the technical level of due diligence, the general will be to investigate what level? A how to assess the advantages of the company's technical level, technical level than B, a greater number of advantages?

Duane Kuang: This topic is also relatively large, one is the development of enterprises related to the same stage, if the business is more mature, and before that the basic right, If it is a relatively high technology companies, then we will certainly spend more time, first in the enterprise's internal technology to listen to their presentation, a relatively large number of other cases may be heard is the ah, yes, financial forecast of things. If it is relatively high technological content, it may one day we spent about a half-time technology expertise to the department to talk with us, his technique, there is something that some may be our own because of their background can be heard understand that some may have gone beyond the scope of our familiar, perhaps we will find some more professional people to help do this thing, so this is the Introduction. If this business a little bit mature, then we will spend more time on the client side to understand how they have done, there is no technical aspects. The third we will certainly do is to ways and means of technology, if it is a chip design company, their personnel background and the way they do things is kind of how, if it is a software company, their process is, how Therefore, ways and means they will is another way of due diligence. In rare cases where we will really do a technical evaluation, the experts we are looking to do, and this has a certain degree of difficulty, one is in terms of resources it is difficult to find exactly who you are in this respect, but he knows with this business will not have any competing interests, you can not say that I am here to have a chip company, I went back to my old boss to do the other side to find a chip engineers to listen to his views, so that will not do. If he has done is very early, and he has indeed done something revolutionary, may be as much as possible we will try to come to the experts to do this more in-depth investigation.

Wang Peng: Speaking of due diligence may sometimes be more sensitive, we are aware of many companies at this time investors will want to sign an agreement, but some Perhaps when the business requirements of confidentiality agreements signed as early as the comparison may only be seen with a side of a VC in the time to provide some information on the proposal to sign such a thing, but this time may be sometimes, there are some communication problems, resulted in some stiff, so speaking from your experience, you proposed in VC to investigate what it can be executed when the confidentiality agreement?

Duane Kuang: I think in this matter, there are two, confidentiality agreements should be signed, but before you sign a confidentiality agreement is the key point is that you should have knowledge of the VC because the confidentiality agreement is in the law there is a protection for you, but still the most critical, so if the business feel that he has a very core of the technology, it may save a little selective drugs VC went to talk to, it is one. Second, I think the best way confidentiality agreement not to communicate at all when not required to sign confidentiality agreements because the VC every day here then a lot of cases, if a phone call from each and every E-mail from that , we here have a look at you on the very encouraging things, a revolutionary, but now I can not tell you that, please make a confidentiality agreement, and then I tell you. I happily signed, after signing, he told us to be prepared to do is a very simple thing, it is not on the finished. So you give us a confidentiality agreement does not see the need to do things, the company should be the core of information to the other side of things a little bit of respect, it was revealed a little bit, and then when we are interested can sign a confidentiality agreement.

Wang Peng: Simply put, in the VC considerations, technical considerations or criteria more important?

Duane Kuang: It should be so, the technology should not be the purpose of the enterprise.

Peng Wang: It is a way, a means.

Duane Kuang: Technology can bring you what? First, technology can bring to an enterprise is the best case is that it can do some of the past have been your customers, audiences are able to do and hope that things can not, that is to say they are want to do this, but because in the past have not you have this kind of innovative technology, you make us, through you, the technology to do this thing, this is the benefits of technology to one. Second, the technology is you set up your competitors a competitive advantage, a barrier, so the adoption of technology, you can set up their own advantages, but ultimately, you hope that through these technologies to market to users, to meet the their needs.

Wang Peng: So this should be a demand-oriented model, rather than we often see the so-called technology-oriented, because we often see a lot of companies and VC in exchange, the stresses of their technological advantage how how strong, and too much emphasis on its own technology, the technology itself may seem very interesting, but in fact may not have more to learn about his customers, not to dig the user's needs, at this level will be relatively weak, they might cause some problems.

Duane Kuang: Yes, but this is not absolute, and any one company must be a market for customer service, but many of my friends talked about often, but there are many similar enterprises precisely on this point in time, technology can play a very important role.

Wang Peng: We talk about it specifically, if a partial technology company, in your experience, do you think a more suitable technology-based companies should have What are the conditions?

Duane Kuang: just also mentioned, a good technology-based company the first one is generated by its new technology is in the settlement of a market or the needs of users, and more satisfactory In fact, this demand is that we always want to have, but have not produced as a result of this technology, we all do not even know this thing is possible, the market may not have been formed, but the demand is in the.

Wang Peng: But have not been very good to meet too.

Duane Kuang: Yes, as it is impossible to meet, there is no such demand. Such as mobile phones, mobile phones have in the past, you say you have no process in the mobile call needs? In fact, yes, but in the absence of a mobile phone before he can not, because with this technology, you created a new market, this is the first, there is such a demand, but the past can not do because of technical reasons, you do as a result of the technology, which is very, very desirable. Second, the market must be sufficiently large, if you only can this technology in 3000 for the whole of China do something personal, in this sense is not great, but if they are to address the needs of 300 million people, then the market on the VC, the prospects for this market very, very big. So first is to address the needs of the market; Second, the market is large enough; third is to have a good team. Of course it is very difficult to achieve such an ideal situation, but if I can find an ideal technology-based companies, I would say, do these three things.

Wang Peng: I think we may have often heard, in the VC when considering your team is a very important consideration of the target. May be technology-based companies in the more common problem is very obvious technical advantages, but perhaps in the company's operations in the market, marketing will be relatively weak, such as for example, if you see a project, technology is indeed good, but just talking about really as a result of technology innovation, mature technology to a large extent, an objective to meet the demand, but the team itself may, indeed, is a purely technical sense of the team, is actually relatively weak in other areas This item general attitude towards you?

Duane Kuang: This is a very real problem, there are a few points. First, I have the feeling that we often can not be very definitely to say that this is a technology-based managers, or say that this is a market-based or non-technical managers, as you just mentioned, in you, I am also engineers, I made a lot of years of accumulation, and engineers for many years, but I feel that technology has the technical background of the origin of the entrepreneurs, should not and can not because I am a technology-based So I manage things, the market does not need to understand things, so I feel that a management capacity of the CEO is not a good CEO, management ability to understand technology but also the CEO is a very good CEO, I am very would like to see more from a technical background from these CEO, in the management of their ability to further upgrade themselves. Not be ruled out because of the technical background to become a good manager.

Duane Kuang: to go back to the question you just asked, if we see a company that there has been a three-point I mentioned earlier, his technology can solve a great really the market, in which case the time being there is not a strong manager, we will carry out follow-up of the company, even in very early to do some investment, we dare to do so is one of the reasons we Several of my colleagues in the team all the way through this period, we feel that perhaps some of our help here, can be in the company's early stage of development, is not he need a lot of marketing capabilities, we can help here 1. After a certain period of time, or is the CEO in the process of learning has changed a good leader, the leader in the market may not necessarily be a good staff, but it is good to find a different talent to help him start. If we can come to this step is the best, if it走不到step, we can sit down and talk about him, you hope, and our hope is to expand this business, and now the CEO in the absence of suitable time , we look for a common good in this business make a big CEO.

Peng Wang: Just now we are talking about more than technology, the time-to-business audit, the financial aspects of the investigation when the confidentiality agreement can be signed?

Duane Kuang: all OK. Confidentiality agreement on our view is that as we feel that we should be very respected VC company this side of the intellectual property rights, respect the confidentiality of information, so we did not sign any confidentiality agreement, but I do not wish to sign the confidentiality of the different agreement, because every day we see many different cases, each company gave me a preparation for his own confidentiality agreement, which may have different terms, and slowly to see, so we would prefer to sign a very standard You tell me things I do not乱讲with people, I tell you things you do not want to trouble people乱讲very simple page, a simple sign on our access to the theme better than this on both sides.

Peng Wang: Yes, I would like from now on in terms of the overall market environment, the entire VC industry, VC of course, are more honest, a lot to look at every day cases, it is unlikely that a case to the very core of the information went to other people talk about, I would like from the perspective of entrepreneurs, at this level so he does not need a particularly large number of concerns. With your experience do you think of a technology-based companies should be how to set up his own technical barriers? There are several ways you may be a way to provide him with their own products, allows users to have a very strong dependence, the client would like for other companies products and services, it may lead to high cost of his transfer, or any other a better way?

Duane Kuang: I basically feel that you are not tied to a long-term customers the competitive advantage of, maybe you can convert the relatively high costs, all kinds of things that can make your customers in your stay here more than six months or a few months, the most critical, I think in particular the relatively high technology companies, the most critical one is the continuous innovation. If you can force the building of their own, using its own team continue to have a new technology, new innovations come out, the only way you can continue to lead in this area. Of course, there are some fundamental things that can or should do, such as patent protection, if you really have to apply for, and you think that your competitors have a competitive advantage if the patent or application should go. But the final analysis, they can not build something out of nothing, after thinking about how people inside the circle on the wall very high note, this is not possible, continuous innovation.

Wang Peng: or from the core in order to try their very best way others can not achieve a greater degree, to better meet the needs of users, so the user can be enough for your loyalty rather than the user's lack of choices, you can only choose.

Duane Kuang: I think that one is constantly to meet the needs of users, while continuing to explore one of today's users, the new, no one needs to serve, when you aware of your competitors have been very successful in today's one thing to do to copy your current time of this matter, you may have to do a user is not aware of a thing to do. Well, this gives your competitors to create a new trouble, they may have to be a year or six months in order to make new things.

Peng Wang: In your assessment of a strong technical background of the company, the valuation of the company, there is not some special consideration?

Duane Kuang: no. Whether or not this is a technology-based enterprises, non-technology-based, market-oriented, we do not have to run or a few things. One is to look at the development stage, is an early or a business has a long history of business. Therefore, the early, high risk, assess its stage of development, to assess the risk of it, this is the same approach. The second is to assess how high the threshold of access, from the technical aspects of the possibility of adopting your technology, your competitors are able to do this step you are now, he wants to cross this threshold is very high, so this path should be relatively higher. This is not simply through technical means to achieve the other will have the same view. Third, we will look at some of the more, we have all of the industry will find a number of comparable companies, so basically no matter which type of companies, basically it will look at several factors.

Peng Wang: At present, there are also some may be partial domestic technology firms, at least in the domestic market in terms of technological advantages appear to be more obvious, they also have a number of possible the idea to open up overseas markets, the international market, this type of company you have any suggestions?

Duane Kuang: I think this is a very good thing, we would very much like to see more of this type of company, that is what we hope to be able to help the blind side of the busy one aspect, because we in the United States also has a sister company, we are also very much hope that through this link across the Pacific and to the international companies to bring some value. Companies from the services likely to be truly out of the local culture around the world such as the demand for all that we need a relatively high number, I think that in this technology, we Chinese enterprises the opportunity to go out or high. This of course, it must be accumulated, including the target market for your understanding, on the target market, understanding the other side of the target market to do the preparation of social knowledge, all of which are very important.

Peng Wang: Just now we are talking about a lot of the so-called technology-based companies, I would like to be it before or now Qiming Intel should have seen a lot of cases, should also saw a considerable number of non-technology-based, technology-based companies, do you think of non-technology-based companies should be how to create their own unique core values, set some of the barriers?

Duane Kuang: several aspects, one must think of ways to do branding, brand it could be tens of thousands of households are aware of a mass brand, but it may also be in five, 10 customers in the brand. If you are a chip company, perhaps Intel has a very successful, so the tens of thousands of households, while Intel is also true that users of its downstream manufacturers, PC manufacturers, even if you do thousands of families, your Direct brand is also very important.

Duane Kuang: The second is the development of your company, you see how to find a way to give you the user to provide a better service, the establishment of a more loyal user base I think these two very important, and then I think it should be a return to our chat today, the theme of innovation. Not be able to stay in a concept, the concept of eating every day, in the Chinese market during the development of such a rapid and soon there will be 2, 15, 76 companies from doing the same thing, if you are not constantly in your The service delivery model, innovative business model, then, even if the company does not a strong technical content, you have to be constantly innovative.

Peng Wang: Just like you just mentioned, China's enterprises may be relatively weak innovative ability, and so the business model to copy when the United States more, especially in the Internet industry, So some people say that the Internet industry itself, there is no absolute technical barriers, the model more. Therefore, the Internet industry, more specifically, Web2.0 industry, the more often how you are evaluated?

Duane Kuang: It should be so, I do not pass (laughter). This one I think, first of all, these concepts are not the United States will not be able to move to China, I think some of the concepts to the United States in his early look at the development of Qualcomm see through, and the environment in China to digest it, the pattern of moving to China, I think this is a good thing, in a sense, this is a small innovation. However, the current side have been doing 20, do you do when 21, but also the basic things to do, I feel that this is no longer an innovation. I do not object to the model to learn from the United States, we also see, Web2.0 company, we have recently seen a lot. But there is, in this process of comparison may have to pay attention to all of us is doing this type of company, I often ask a user that it is like to use the feature? Or that is in itself a business? In the United States, you can do the function of a very successful out, and you want this feature when you do it well when you bought it was the past, do not buy low price. Also able to provide your own for your team, your investors good returns. I also seem to talk about a project on how many reports of how much money. But in China, I think, as entrepreneurs must not be sold, acquired from the channel as you, and if you think this is the only channel, then the company I think you should not do. Because it is currently in China and less than perfect from the link, so we do not see this type of comparison will be more careful. In other words, as an independent company, you can start to accumulate a large number of users, to the user of your love to these favorite users to pay through their own, through advertising, what the reasons for the enterprise zone to a lot of revenue, generate profits, or even one day can be listed, if we look at the road barrier, then I may consider.

Peng Wang: Just now you said that the value of mergers and acquisitions, we find that, to a certain extent, China's Web2.0 may be expensive, for example, in the United States, for example, Youtobe Fire in China has been a mess, Youtobe melt in the United States only two rounds of financing. In China we often see a lot of cases, doing the first round of financing is often a time when three million U.S. dollars, five million dollars, claiming to sell more than 20% of the shares, how do you see?

Duane Kuang: I was so looking at the price set by the market, I also saw a lot of VC I peer in the complaint that the hot Chinese market, the price is too your price is not too expensive, the price is always reasonable, it was willing to buy someone willing to sell it, so this is a market. At this point, I think from a corporate VC, do you think this price is unreasonable, irrational you can not do so, if you reasonably do, so this point I think it should be fair, side-to-business entrepreneurs have any suggestions, I think in the financing, and when the time may depend on the pricing aspects, good aspects of this later, so how do high, the higher the better, of course, there are several aspects of this I think you look better:

First, you set a price later, how long can you do a good job in this round of financing? Time is also important because, if I set the price, one day someone will recognize, you may need a year and a half, or lower my side that it was possible to identify three months, this time on how important you are? This time must be taken into account.

the second to be taken into account, for the price of VC interest in who would be? Different VC can give you a different value, it is possible that some VC were very interested in the industry, he has a strategy for your value-added, but he was not really mind the price, in which case, it prices can be higher. However, in this industry if you think you can bring added value to the VC on the price you are not interested in, you have to think twice this time, and what price in the end.

third is that you set the price, I think to the healthy development of a business, you have to consider your next round of financing, in your time of the next round of financing Is there room for improvement, if you go too far this time-to-edge, then you calculate your money back round do I do when the next round of financing is what kind of situation, if in the next round of financing, when I have the IPO is something grand, but if you calculate, you may do a lot of disk, but it will produce a great deal of profit, that time is not doing more round of financing. You will have to consider these.

Wang Peng: You compare the recommendations, especially the first round of financing to do business, about the amount of financing? Or how to weigh the amount of budget?

Duane Kuang: this issue is now increasingly difficult to answer because the market is not hot, we more and more money, which is more important is that the involvement of VC Now, more and earlier point, prior to 2067 in China, the relatively large number of all VC in the enterprise has been relatively mature when do the investment, so a lot of my foreign friends told me about China's venture capital how is it profitable? That was the last time point than that of late intervention. Now we are better than the earlier point of intervention, so in this case, may be of some financial companies are likely to 1-3000000, in the past may be the one million families, such as angel investors, so a company more difficult to generalize how much should be melting. Conversely, if a company, I think that in the absence of revenue when the number of units of millions is more satisfactory. To achieve a certain stage in the future, companies, teams have been relatively stable, and he can have something to get the feeling in the market, and at that time and then melt a little.

Wang Peng: speaking from their own, prefer to vote blind items? About how much of the investment amount?

Duane Kuang: We simply hope to have voted early into it, however, so we invested in the project will be more in phase A (initial segment) on the entry, in each case the volume of investment may be from one million to five million U.S. dollars around, but when we enter into a company, we usually set aside 8-100 follow-up to the investment company. If we vote in a million of the A-stage companies, after a year we will point to lead a larger company, will vote at that time a bit more, so we hope that such an approach.

Wang Peng: So you see now is a lot of the early projects, I would like from the enterprise perspective, I think companies, especially in the financing phase of the enterprise for at least lack of two, a possible lack of development funds, and the lack of time, the financing of the more important point is, what your proposal in time to determine that he is not ready to finance? If you do not find the right time, then financing may lead to him take a long time to find a financier.

Duane Kuang: time and the factors that we mentioned earlier also, we let us not refer to traditional companies, such as the enterprise has been in operation for three years, seven years have been a profit, and to prepare the market.