Source: deep burning

What are the new opportunities in 2023? The investors who are most sensitive to trends are already on a business trip and looking for a road.

Under the impact of the epidemic and the economic downturn, the venture capital circle in 2022 is not easy. With weak consumer investment, an investor who used to invest in consumption began to switch to hard technology and make up lessons in physics and chemistry. Some investors in the science and technology sector said that no projects were launched in the second half of the year, and the number of projects invested in the whole year was 1/3 of that of the previous year, while the number of new projects was only single digits.

In the new year, investors will judge that the market will certainly be better than in 2022, and venture capital will rise slowly. Some people describe that 2023 will be a year in which the spring breeze will still flourish, while others conclude that the key words are de-bubbling, recovery and gestation.

However, "venture capital opportunities are still very scattered." some investors take the science and technology sector as an example, saying that although they can see a single breakthrough in the science and technology sector, there is a lack of global consensus on the general trend of technology.

Where is the "power" in 2023 and where is the money going? This is probably the most discussed issue among venture capitalists since the beginning of the year.

In the past month, Shenzhen Shengjing has communicated with more than a dozen investors in the field of technology and consumption, trying to dismantle the four "long tuyere" of new energy, intelligent manufacturing, meta-universe and going out to sea from the perspective of venture capitals. what are the new trends and opportunities?

Three trends of new energy: great opportunities for energy storage, "replacement heat" of power batteries, and intelligence of commercial vehicles.

The hottest track in 2022 is undoubtedly "new energy". Investors who pay attention to the field of science and technology without exception say that this trend will continue until 2023. It is believed that under the joint efforts of technology, market and policy, there are many new opportunities in the industrial chain.

Summing up the views of many investors, at present, there are three major trends in new energy: hydrogen energy, controllable nuclear fusion and energy storage technology, innovative technological opportunities; power batteries have new opportunities under the background of material substitution; passenger vehicles and commercial vehicles accelerate electrification and intelligence.

In the context of dual-carbon goals, hydrogen energy in green energy, controllable nuclear fusion, and a variety of energy storage technologies have attracted much attention from investors. Mi Lei, founding partner of China Science and Technology Co., Ltd., said that it will continue to pay attention to these areas, and its investment in China Reserve Energy ranks first in the field of compressed air energy storage (a typical large-scale, long-term, physical form of energy storage); in the fledgling field of controllable nuclear fusion, China Science Chuangxing also sells frequently.

Generally speaking, these investment opportunities are more likely to belong to PE (PrivateEquity) or later VC (Venture Capital), because infrastructure-side projects require a large amount of capital.

The key word for power battery is "substitution". Shen Zhi, investment manager of Jiahe Sheng Asset Management, concluded that using sodium ion battery (sodium battery for short) to replace lithium electricity and perovskite to replace crystal silicon, China's sodium battery and perovskite technology are leading at home and abroad, which can bring a big window of investment opportunities.

Due to the rising price of lithium power raw materials and the imbalance between supply and demand, sodium batteries, as one of the alternatives, will be accelerated commercialization in 2022 and may enter the first year of sodium power industrialization in 2023 to achieve small batch shipments. Compared with sodium ion batteries, sodium batteries have more potential applications in cost-sensitive areas, such as distributed grid energy storage, two-wheeled vehicles, low-speed vehicles and so on.

A wave of sodium battery craze from giants to colleges and universities. Ningde era and other leading battery enterprises competed to take the lead in the layout. In the primary market, the valuation of Zhongke Heiner increased eight times a year, and the share price of Chuanyi Technology in the secondary market nearly tripled in four months. "scientists and university teachers start a business. The valuation of the project goes up." one investor who pays attention to new energy bluntly said, but there is a bubble. "an early project, the team is not sound enough and the technology is not very mature. The starting point of the valuation is 200 million.

Another "new favorite" of the new energy industry is perovskite, which is just a decade old. As a photovoltaic material, it is considered to be likely to replace silicon and is the "ultimate answer" for the next generation of photovoltaic routes. Shen Zhi analysis said that the current pain point of the photovoltaic industry is that the power generation efficiency of crystalline silicon solar cells has reached the limit, it is difficult to continue to break through, while perovskite solar cells have higher theoretical efficiency and lower expected cost.

However, Shen Zhi is optimistic and cautious about the "subverters" of sodium battery and perovskite, because as a new material, the stability of performance and the ability of mass production have not been verified, and industrialization is still in its infancy.

Let's take a look at the new opportunities of the new energy vehicle industry chain, the theme is still new energy + intelligence.

Both passenger cars and commercial vehicles should be accelerated to be intelligent. As for self-driving companies, "it is a very certain trend to seize the time for mass production and loading," Liu Yujia, senior vice president of investment at Hongtai Fund, told Shenjing. In just a few years of technological innovation, Chinese self-driving companies have reached L2 and are close to L3 or even L4, but commercialization has not yet landed on a large scale, testing the patience of investors. Xiong Weiming, who invested in Wenyuan Zhixing, analyzed the reason: it is not stuck in technology, but in consumers' concerns about safety and laws and regulations.

Next, focus on the field of new energy commercial vehicles (including trucks, logistics vehicles or distribution vehicles, etc.), which is considered to be the next investment depression. Following the explosion of new energy passenger car sales, the penetration rate is more than 27%, and the head company completes the stock cashing, and the stock price begins to fluctuate, "the focus of the primary market on the whole vehicle may gradually shift to new energy commercial vehicles," Liu Yujia said. however, the demand side and the supply side are influencing each other, and it is the key for the relevant participants to help prospective customers calculate the input and output clearly and be able to implement it.

Heavy trucks (heavy trucks) in new energy commercial vehicles have become a must. In 2022, various types of head enterprises, such as mainframe factory giant Geely, self-driving companies, Xiaoma Zhihang, and established truck company Sany heavy Industries, are increasing their investment.

These new forces of heavy trucks often pay more attention to self-driving ability from the very beginning, choosing to take into account both new energy and intelligence, which also promotes the trend of in-depth cooperation and complementarity between algorithm companies and mainframe factories. When more new energy commercial vehicles enter the market, commercial vehicle autopilot is also expected to enter the era of large-scale production data collection.

In addition, Liu Yujia mentioned that the new opportunities in the new energy vehicle industry chain also include core components and key components, vehicle-road coordination, and so on.

Statistics show that new energy vehicles, coupled with hydrogen energy, energy storage and intelligent driving and other fields, the market size of the entire new energy industry chain will exceed 10 trillion, which is expected to become the first pillar industry of the national economy. There will be more room for development in the above areas in 2023.

Intelligent manufacturing: chips from "electronics" to "photons", industrial robots from monomers to swarm intelligence

Standing at the starting point of 2023, in the face of the full recovery of China's industry, a number of investors said that they would continue to pay more attention to and invest in intelligent manufacturing, focusing on opportunities in the fields of semiconductors, industrial robots and commercial aerospace. This is the direction in which China has the opportunity to change lanes to overtake.

First, let's look at semiconductors. This is a cyclical industry in a certain sense. 2022 has gone through a difficult and fluctuating year, with Russia-Ukraine war, chip blockade, epidemic on the one hand, and a large number of enterprises entering the market and expanding production on the other. "Materials such as iron phosphate and lithium iron phosphate may have overcapacity in 2023," Shen Zhi told Shenzhou.

However, a change is in the pipeline. The mainstream chips use silicon-based electronic chips, the 3nm process is the most advanced chip technology in the world, and the development of silicon-based electronic chips to 1nm approaches the physical limit of silicon atoms. In the research and development of new materials for chips, our country has focused on "photonic chips". Compared with electronic chips, it has faster computing speed and lower power consumption. Shen Zhi mentioned that more crucially, the photonic chip production line is expected to be completed in 2023, which is expected to accelerate the large-scale replacement of domestic photonic chips.

Milei is also optimistic about the development of optical chips in 2023. "the conversion of chips from 'electricity' to 'light' is a new technical route for domestic chips to achieve a breakthrough." According to him, China Kechuangxing has more than 150 investment projects in the field of optical chips and semiconductors, and will continue to increase investment. In December last year, Yuanjie Technology, an optical chip company invested by China Science and Technology Chuangxing, landed on Science and Technology Innovation Board. Yuanjie Technology recently said that on the basis of the field of optical communications, it will expand the application scenarios of optical chips and explore the layout of lidar, consumer electronics and other fields.

Although the share of domestic optical chip manufacturers is steadily increasing, more than 25g optical chips are still dominated by overseas manufacturers. The development of optical chip industry is still in a very early stage. According to Shen's analysis, on the one hand, the optical chip cannot carry out complete information processing, and it still needs to be integrated with the electric chip, that is to say, its substitution needs to be verified; on the other hand, similar to the situation of the electronic chip, domestic optical chips participate in many companies in the design and application side, but the manufacturing, equipment and material ends are relatively weak.

For robots, the consensus among investors focused on hard technology is that they are more optimistic about the To B direction. According to Xiong Weiming, a partner at Huachuang Capital, industrial robots will develop faster than individual robots both on the technical side and on the demand side, and Chinese companies will have the opportunity to overtake at the same level at home and abroad.

He mentioned that on the technological side, industrial robots are in the climbing state of the previous round of innovative AI vision, coupled with the bearing and mechanical innovation represented by Boston Power Robots, it is possible to enter the next stage, realizing recognition intelligence and movement intelligence at the same time. Generally speaking, equipment can be used for multiple purposes such as handling and assembly. At the same time, rising labor costs are creating a demand for replacement of industrial robots.

The characteristic of the field of industrial robot is that the research and development of technology is important, and how to apply it to the production line is equally important. Xiong Weiming, who invested in Mecamand Robotics, observed that in many fast-running projects, the founders have a master's degree, and "I have seen few PhDs (educated entrepreneurs)."

Starting from the more practical needs of the factory production line, "better coordinated scheduling needs to be formed among the purchased robots." Liu Yujia analyzed deep combustion, from "single intelligence" to "swarm intelligence." this will be the next trend of industrial robots, and the realization path will be the combination of software and hardware of industrial software and industrial robots, and 2023 will be the key year.

In addition, commercial aerospace is also a high-frequency field mentioned by investors.

For aviation and aerospace in 2023, Milei pays more attention to landing. "whether you can fly or not is the most important thing." A month ago, there was good news from both aviation and aerospace: the domestic large aircraft C919 was officially delivered to China Eastern Airlines, and some analysts said that the industrialization of large aircraft will be accelerated, which is expected to break the monopoly of Boeing Co and Airbus; and the acceptance of the Changguang satellite Science and Technology Innovation Board IPO means that "China's first commercial aerospace unit" is coming.

Meta-universe: value the underlying technological innovation, the integration of application layer and AIGC

"in 2023, the meta-universe without bubbles will continue to warm up and heat up again." Chen Fu, a researcher in the cosmos industry of a large factory, said to Deep Combustion. Although the ultimate form of meta-universe is uncertain, it is essentially a three-dimensional "container" in which people can work, play, socialize, exist figuratively and experience immersively.

Meta-universe is generally regarded as the next generation Internet after the mobile Internet, brewing a large number of opportunities for innovation and commercialization. However, even if a number of technology giants have made frequent moves in meta-universe, the attitude of capital has obviously turned cold in the past year. Metacosmos-related projects have experienced an early surge in valuations and a pullback in valuations since the second half of 2022. "at one point, the correction was as large as a 30% or even 50% drop in valuations, but even so, they may not be able to raise money," Wang Sheng, a partner at Yingnuo Angel Fund, told Shenjing.

By 2023, investors were cautious, saying they would only pay for projects with technical barriers and business prospects. We look at the potential opportunities in the meta-universe in three parts: front-end, back-end and application.

The busiest entrepreneurial opportunities at the front end are AR/VR/MR on the device side and the underlying infrastructure that provides virtual content production. In this regard, many investors think that it is worthy of real-time attention.But the investment decision is conservative.

Chen Fu explained that at the current level of technology, the experience effect of equipment and the time cost of educating users are all problems. according to the current technological path, it is very difficult to achieve a key breakthrough in the short term, while the stringent requirements of high-quality content for computing power and communication technology have become two weaknesses in the underlying infrastructure.

More than one investor is looking forward to the MR (mixed reality) that Apple Inc is expected to launch in the spring of 2023. "Apple Inc represents the best level of user experience in the industry, of course, the price is very expensive, and it takes enough time to bring the experience cost down," Xiong said.

Some investors are more optimistic about the opportunities for technological upgrading at the back end of meta-universe.

The back-end innovation is a dedicated chip on the device, and the infrastructure includes a new generation of engines, such as physics engine, action engine, etc., as well as derived tool platforms, such as 3D reconstruction, new rendering technology and so on. In addition, the extension opportunities in the cloud layer also include making digital virtual assets in Web3.0.

If meta-universe is compared to a paradise, "the infrastructure such as water, electricity and coal must be built before the front-end innovation opportunities can be opened up." Wang Sheng's investment strategy is to focus on the underlying technology and tools rather than content. He judged that in 2023, large and even subversive innovations will be made in the infrastructure and production tools at the bottom of the meta-universe; even if the innovation is completed, it will take two to three years to use the production tools of the meta-universe to produce high-quality content and commercial applications.

From the perspective of applications and business scenarios, areas such as content, social networking, gaming, etc., will continue to be active in 2023, but we still need to overcome the problems of insufficient content experience and too little user base.

A number of large Internet companies and start-ups in China have upgraded the product experience, enriched the business scene, and launched and laid out meta-universe image carriers such as digital man. But referring to the development of the virtual idol's ancestor, Chuyin Future, Chen Fu pointed out that the problem is that "there is too little user participation in co-construction."

The slow development of meta-universe at present is directly related to this. He explained that as we move towards meta-universe, we need a lot of digital content, and manual development alone cannot meet the demand. I'm afraid the key to this content door is AIGC (generative AI,Generative AI).

Compared with PGC (professional production of content) and UGC (user-produced content), the biggest advantage of AIGC is that it can reduce the threshold and cost of creation, so that the creation market can not only be engaged in by a small number of people to the public, but also be put into the meta-universe, which can not only enrich content ecology, but also stick to users.

From the perspective of commercial upgrading, this is a "two-way rush" between meta-universe and AIGC. Because AIGC, as a rare tuyere in the past year, has a prospect but no "money view".

In the past year, AIGC has made a breakthrough, with the emergence of phenomenal tools at home and abroad, the most famous of which is the conversational AI ChatGPT based on GPT-3.5 launched by the artificial intelligence laboratory OpenA.

But the attitude of many investors to the AIGC project is to do a lot of research and be cautious. In addition to "squeezing out the industry bubble" and waiting for the basic model to become more mature, but also because the industry is too early, commercialization is considered to be the biggest issue.

From a deeper dimension, Xiong Weiming believes that AIGC innovation is very active, but there are few entrepreneurial opportunities, AIGC is an opportunity for large companies to "pick peaches", even if it is not commercial, it is of great value for internal staff reduction and efficiency. Huachuang Capital has not yet launched the AIGC project, just looking for what else startups can do in the gap between large companies.

Wang Sheng has a positive attitude towards the AIGC project. Yingnuo Angel sent SPA (Investment Agreement) to an AIGC company just before the Spring Festival. In his view, AIGC will become a productivity tool for transforming a large number of industries in the future, and the scope of application is not limited to the digital industry.

To sum up, meta-universe is brand new, and the development process is bound to be ups and downs. The cooling of financing in the second half of last year does not mean that it is not optimistic. In 2023, capital is generally more optimistic about its underlying technological innovation and long-term imagination.

New species to go to sea: consumer robot, energy storage, e-bike

When it comes to the direction of attention in 2023, more than one investor mentioned "going out to sea" and is optimistic about Chinese enterprises going abroad and exploring overseas emerging markets. The core logic is "advantage spillover".

Wu Shichun, founding partner of plum blossom venture capital, said that plum blossom venture capital is in the direction of going out to sea, and it is better to see the overseas replication of China's advantageous categories, tools and models. Arrow, an early incubator who follows Web3.0 and goes out to sea, says, for example, that overseas markets like Southeast Asia are not just consumer goods, but the new energy market under the trend of power exchange and the financial technology of the Indonesian market are reusing the business model that runs well in the Chinese market.

From the point of view of investors, after the boom in 2021 and the cooling in 2022, the new opportunities for the restart in 2023 can be summarized as three categories of new species and three new directions.

The first new species are intelligent household appliances and consumer robots. Sun Jialiang, a fund investor, has discovered the trend of intelligent household appliances going out to sea since 2021. Since the second half of 2022, the outbreak of new consumer robots and pet care markets (including automatic cat sand basins, pet physical wool, etc.) confirms this. "the fever [of this new species] will continue until 2023, with at least one more year of investment opportunities," he judged.

Under this trend, consumer robot is also a popular category, which is a very typical Chinese supply chain capacity spillover, which brings new opportunities. Judging from the investment and financing events in 2022, robots have extended from the floor to a wider variety of scenes, such as lawn mowing, pool cleaning, home patrols and so on.

The other two new species that go out to sea are consumer-grade energy storage and e-bike, which are popular in Europe and the United States. Sun Jialiang's analysis, which focuses on these two tracks, shows that their popularity is directly related to the epidemic factors since 2021, the energy shortage in Europe and the United States in 2022, and the rise in the prices of electricity, natural gas and crude oil.

In 2022, the most popular products in cross-border e-commerce are consumer-grade energy storage products, and head projects are frantically "robbed". Different from B-end industrial energy storage and power generation energy storage, consumer energy storage includes portable energy storage, RV energy storage and household energy storage. Portable energy storage (portable energy storage power, referred to as "outdoor power") companies EcoFlow Zhenghao and Delaminghai have grown into new unicorns, each valued at more than $1 billion.

In the travel track, the hottest investment target is e-bike, that is, electric bicycle. It is not a "two-wheeled electric car" that can be seen everywhere in China. On the basis of traditional bicycles, with batteries as auxiliary energy, it can realize pure bicycle trampling mode, pure electric mode, or stampede electric power. The price ranges from $1000 to $3000. E-bike 's hot logic is not difficult to understand, it steps on almost all the concepts sought after by the capital market, "carbon neutralization + consumer electronics + short-distance electric travel + new energy".

To sum up, the three promising new species going to sea all belong to terminals that require certain technological capabilities and mature industrial clusters, but do not involve cutting-edge science and technology. Sun Jialiang analyzed that these were initially product trends led by European and American markets, but based on China's strong supply chain, Chinese companies have advantages in cost control and efficiency improvement, product iteration and definition, and operational capability. found and seized the opportunity.

The three new directions for going out to sea, in a nutshell, are the segmentation of service providers, cross-border big sellers and new opportunities for the Latin American market.

The fast-growing overseas e-commerce track is constantly giving birth to new opportunities for subdivided service providers. Sun Jialiang said, for example, just as the export of a large number of e-commerce products gave birth to overseas warehouses and freight forwarders, so he invested in Titanium and Manulife. In popular terms, it means to continue to swim down, looking for opportunities to "others dig mines and sell water," or even to see service providers, such as Weiss Technology, which uses AI technology to empower freight forwarders, and pay attention to new service provider opportunities. for example, he predicts that there will be an obvious inflection point in overseas celebrity marketing this year.

Following the Saiwei era, after the IPO meeting of three-state shares in 2022, many investors, including Sun Jialiang, will focus on the short-term opportunities of cross-border big seller IPO. Before this, there is no precedent for store sellers to go public, Seville's case undoubtedly gives investors a shot in the arm, and investment in cross-border e-commerce also has a clearer exit path.

When it comes to emerging markets in 2023, Latin America cannot be ignored. There are great cultural differences between here and China, logistics and payment are relatively backward, but the stage of economic development is close to that of Southeast Asia, and the market potential is considered to be as good as that of Southeast Asia. Sun Jialiang is concerned that the volume of e-commerce packages in Latin America is rising at a considerable rate, and the unit price of shoppers in places such as Brazil and Mexico can reach more than US $100, which is dozens or even a hundred times higher than that of Southeast Asian markets.

In addition to "advantage spillover", there are other areas where going out to sea is a "have to" choice.

Due to compliance issues, "since 2022, many Web3.0 projects and investment institutions focused on this direction have been densely located in Singapore, and many projects have focused on the Hong Kong market in China and the US market," Jiang Yiyu, an investor in Arcane, a VC institution in Singapore, told Shenjing.

By 2023, Arrow believes that the encryption world will never return to the frenzy of 2022, but the market will improve in part. Web3.0 is actually a new generation of digital capabilities that digitize trust, ownership, power, and incentive relationships between people. He believes that it must have its value.

For example, "the current meta-universe lacks a set of operating mechanisms and economic systems, while Web3.0 can provide a whole new set of business systems and management standards, but without a bearing space." Chen Fu judged that in the future network world, the integration of Web3.0 and meta-universe is considered to be an inevitable trend. However, both are still very early, so there is still a long way to go to truly integrate the two to achieve a complete new generation of Internet.

Conclusion

Behind the above four plates, there are four major trends of innovation and entrepreneurship.

Trend one, the field is more hard-core, the investment in science and technology is very frenzied, and the proportion of hard technology is increasing.

Wu Shichun told Shenjing that the current investment ratio of plum blossom venture capital is "82 percent" in science and technology and consumption. Mi Lei said that China Science and Technology Chuangxing will insist on investing in eight industries of hard technology, but there is an increasing demand for projects and entrepreneurs, who are either head scientists or industry leaders born in the head. China Kechuangxing invested nearly 70 projects in 2022, focusing on new energy, semiconductors and other fields.

Trend two, specific to science and technology investment, the standard has become higher, it should be driven by policy or industry cycle.

The two themes of Xiong Weiming's investment bet are "domestic substitution" and "straight overtaking", which well illustrate this point. According to him, 60% to 70% of Huachuang Capital's investment is in "domestic substitution", that is, to solve the problem of "neck jam", such as intelligent manufacturing, biomedical upstream materials, and so on, while 30% to 40% of the investment is in "straight overtaking". Such as self-driving, commercial aerospace and so on. He believes that these two themes are the "long tuyere" of science and technology investment in the next 10 or 20 years, and behind this is a unique opportunity in the era of great science and technology and competition among great powers.

Trend 3, including hard technology, meta-universe and other areas, projects that verify the ability to commercialize are more popular.

In addition to the requirements of the environment for reducing costs and increasing efficiency, it also lies in the technical orientation of these two major fields. Shen Zhi mentioned that unlike the market-driven in the Internet era, these two major areas are often technological breakthroughs in academia and the maturity of basic models, promoting the development of the industry. Therefore, if the investment is too cutting-edge and early, there is a risk of commercial landing and difficult exit.

Wu Shichun warns against technology self-interest. Areas with a long R & D cycle, such as autopilot, will sell to order-driven companies rather than paying for projects that are entirely R & D-driven.

Trend 4, the offshore section will become more and more lively, and the tentacles of Chinese start-ups and investment institutions will gradually shift from European and American markets to Southeast Asian markets, as well as African and Latin American markets, which are beginning to show some signs.

Sun Jialiang said that he is very happy to see early-stage institutions such as Plum Blossom Venture Capital and Castle Peak Capital that focus on the domestic market enter the sea track. However, the current overseas investment is more lively in the early and later stages, and it is hoped that more medium-term institutions will enter the racetrack in order to form a virtuous circle.

After the trough of investment in 2022, a number of investment institutions are regrouping. An investor in To B judged that the investment market will pick up in 2023, especially state-backed industrial guidance funds, including some head RMB funds to speed up the pace of investment.

New opportunities and good projects in the market are always scarce, and the development process in many areas may be ups and downs. Entrepreneurs and investors should actively explore, precipitate and accumulate, and believe that time will give generous returns to those who work hard.

At the request of the interviewees, Chen Fu is an alias in the article.

Edit / Corrine