Investing online, time for rational thinking
With the uncertain economic environment that has dominated 2016 so far, the internet industry has not been immune. Following the rapid growth that we saw in 2015, this year has been marked by a drastic slowdown in financing and investment, as business startups and investors become increasingly cautious.
Regardless of the platform and their model - consumer to consumer (C2C), business to consumer (B2C), business to business (B2B), micro-ecommerce and online to offline (O2O) - no one has been left unscathed. O2O in particular has seen a drastic decrease in finance following a booming 2015 which saw unparalleled levels of investment.
Be calm about Virtual Reality (VR)
In 2014, Facebook acquired Oculus, a virtual reality technology manufacturer, making a bold statement of intent about their intentions in the VR sector. The subsequent buzz that this created saw unprecedented levels of investment in the Chinese VR sector, with dozens of startups popping up over night.
However, in line with the economic slowdown, the industry is experiencing it’s first bump in the road, with grave concerns around the ‘money burning’ nature of VR startups. Indeed, the number VR hardware companies shrunk by around 70%, going from around 200 in 2014, down to 60 by the end of 2015. Skully, who were subject of acquisition interest from Letv, announced bankruptcy. Concerns around the technologies long term use persist, with many investors viewing the hardware being developed as nothing more than a gimmick.
The online education crisis
Another popular growth area of 2014, domestic online education startups rapidly emerged at an astonishing average rate of 2.6 companies per day, booming long into 2015. Fast forward to the present, Beijing Business Today recently released a report detailing that only 5% of online education enterprises had turned a profit, with a staggering 70% reporting losses and the other 15% closing down. Financing options in the sector have been significantly reduced, with Zeshi, Manfen, Ladder and Nahao all struggling.
People of our generation indeed experienced the great revolution era of the rising of internet. Some people say we learn and graduate by studying Mayun’s legend. It is true, but the success of people standing on altar admired by us is not replicable. In the internet wave, we could have feelings and be emotional, but we must learn to think and do rationally.