The capital winter isn't a shortage of money — it's everyone waiting on the sidelines
‘Capital winter’ gets declared every two or three years, and usually passes in six to eight months. This time is different: the dollar pipeline that ran abroad at both ends has been cut. It's not that there's no money — it's that nobody knows how to invest it.
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The phrase ‘capital winter’ has been worn out
Her judgment is that ‘capital winter’ has been worn out as a term. From 2000 to now — the 2000 internet bubble, the 2008-09 financial crisis, the 2015 O2O and sharing economy, the 2017-18 new retail and unmanned shelf wave — it comes every two or three years. The mechanism: someone manufactures a trend, many people follow and push valuations up, and once they hit the peak everyone discovers there's no money to be made, so the money pulls back, all the way to excessive conservatism. The so-called winter is really a six-to-eight-month psychological state of collective caution and conservatism in the market. What actually dies are the small and mid-sized funds — check size not big, fund size not big, and invested in unreliable industries; if they can't raise the next fund, they're gone. The top 30, top 50 funds aren't short of money, they just choose to be more cautious for a while.
— Meng QiuThis isn't a small cycle — the pipeline has been cut
She separates this one from past small cycles: the most important thing this time is that the broader environment has undergone a deep-rooted change. Most of the money that used to be active in the primary market was USD, running abroad at both ends — raise in dollars, list abroad; and the chain reaction triggered by Didi's listing, the collapse in China concept stock market caps, and US-China friction have turned whether a lot of the old basic investment methodology still works into a question mark. Her conclusion: the problem now isn't that people have no money, it's that people don't know how to invest. The divergence between two types of players proves the point: Tiger is even doing angel rounds in India, while the PE firms with money aren't anxious at all — they have cash in hand and are waiting for these assets to fall to a reasonable price so they can harvest them: buy control, rebuild the performance, then list and exit.
— Meng QiuThe golden twenty years began with a hiring freeze
Graduating from Stanford in 2001, what she caught wasn't a boom but the bursting of the bubble: Yahoo, Microsoft, Sun, Oracle — the big companies that used to funnel graduates in like an assembly line — all froze hiring, no head count. She could only go to a Silicon Valley startup of a dozen-odd people making routers, and a year and a half later the company failed to raise its next round and dissolved. How bad was the economy? A large number of Silicon Valley engineers went to Hollywood to write websites for porn sites. She came back to China and joined Baidu because Liu Jianguo was her teacher at Peking University and Lei Ming was her college classmate; she asked nothing, figuring it was good enough to have somewhere to work. Her own retrospective: if not for that run of bad luck, she would most likely have gone to Yahoo, and her fate would have been completely different. So she later said that sometimes people should keep their thinking a bit simpler.
— Meng QiuHard tech investing has only two time scales
Asked about the next theme, she first says ‘I don't know’, then offers finding certainty within change: consumer is still a continuing focus, but she won't invest again in categories she's already invested in — what she's looking for are new needs emerging with new lifestyles, like camping catching fire overnight, but with no systematic brands or channels yet; second, Chinese supply chains going global — China leads the world in flexible apparel supply chains, and categories with mature supply chain capability will replicate that going-global advantage; third, technology, in two tiers: within five years, where the tech is just ready and needs to scale production, and capital can help; and another tier of ten years or more, things that will bring deep-rooted change to society, where you shouldn't expect output in the short term. She has already invested in cultured meat, and has recently been looking at quantum. Whether you can bear a long cycle depends on where the money comes from: USD LPs can, RMB is not OK — though she also says RMB isn't necessarily unworkable.
— Meng QiuThe ideal hard tech founder is an honest person
Judging people for consumer and for hard tech are completely different standards: consumer founders have all kinds of backgrounds, any education, any work experience, as long as the person matches the role; hard tech basically requires a very good educational background. But a good educational background doesn't mean investable. She says the ideal is the ‘smart honest person’: willing to focus on this one thing, willing to work steadily for five or six years without getting restless, genuinely believing in what they're doing. The reason is that many people with good educational backgrounds have minds that are too agile. The founders she meets in energy and materials, about to produce results, are all people who have quietly worked in the industry for many years — and capital simply hasn't seen them.
— Meng QiuA founder's posture in winter is to squat
What's the best value in a winter? Her answer is investing in yourself: spend money on yourself, read more, learn more, even spend more on travel and meeting more friends — ‘investing in yourself is the best value.’ The posture she gives founders is squatting — not lying flat on your stomach, not lying down; squatting means first keeping yourself alive, while still having the strength to jump at any moment. Concretely: consumer companies this year should ideally be profitable and self-funding; tech companies should store grain, develop more products and customers, and find ways to raise more money. She explicitly does not recommend selling three apartments to start a company — there's no need to bankrupt your family to start a business.
— Meng QiuThe best founder in the Grand View Garden is Tanchun
Asked which of Lin Daiyu, Jia Baoyu and Wang Xifeng she'd invest in, she says the first two could never be founders, and Wang Xifeng is a businessperson, not an entrepreneur; the best fit for starting a company in the Grand View Garden is Tanchun: born of a concubine, with the drive to urgently change her own fate, she has seen money but doesn't have much herself, and she's smart, has ideas, and is educated. As for putting Lin Daiyu and Wang Xifeng in today's world as Bilibili creators and asking who could become a top creator with ten million followers, her judgment is that the core of being a creator is pushing one thing to the extreme — you can't be steady and balanced; someone like Xue Baochai won't work, because she has no distinctive feature; Lin Daiyu being extreme in her sensitivity has plenty of people who love to watch, and Wang Xifeng being extreme in her abrasiveness, cursing people out the moment she appears, also has plenty of people who love to watch. She also says the post-00s don't necessarily have a unified aesthetic, and both of them could have fans.
— Meng QiuBy cycle theory we're moving from prosperity to depression
At the end she pulls the camera back: by Dalio's cycle theory, not just China but the whole world is in a downcycle moving from prosperity to depression, and there's no way to judge how far we are from a global depression. She thinks this cycle is different from the last one, because you don't know whether technology will accelerate or delay it — but she leans toward technology possibly accelerating the formation of this cycle. Looking back at the twenty years she's lived through, her two reflections are: have I lived too long — in twenty years I've already been through three financial crises on an eight-year cycle, and I can actually see such huge social change in my lifetime; and have I also lived too short — her parents' generation is much calmer than she is, so reading more history makes you calmer.
— Meng QiuIn their own words · checked verbatim
So now I think the problem with this capital winter isn't that people have no money — it's that people don't know how to invest.
所以现在我认为这资本寒冬的问题 也不是大家没有钱 是大家现在不知道该怎么投
Meng Qiu14:05
A large number of Silicon Valley engineers went to Hollywood to write websites for them, to do PoreHub, to do those porn sites. Right — a lot of people were actually unemployed in Silicon Valley.
就大量硅谷工程师跑到好莱坞去 给他们写网站 做PoreHub 就是做那个色情网站 对 就很多人其实在硅谷就失业了
Meng Qiu29:09
Actually for us the ideal is what's called the smart teacher — this teacher isn't a teacher to us; this teacher means someone willing to focus on this thing, willing to do this thing steadily, five, six, seven, eight years without getting restless.
其实对于我们来说最理想的叫做聪明的老师 这个老师不是对我们老师 这个老师是说人家愿意focus做这件事情 他愿意踏实做这件事情 五六七八年不浮躁
Meng Qiu42:13
Squatting means you can jump at any moment. So what is squatting? It's that you first have to keep yourself alive, and you still have the strength to jump.
蹲着的意思就是 你还可以随时起跳 那什么叫蹲着呢 就是你得先让自己活下去 而且你还有余力能起跳
Meng Qiu45:19
I think if we're talking about who in the Grand View Garden is suited to starting a company, I think it's Tanchun, right? She has entrepreneurial motivation — because she's born of a concubine, she has the drive to urgently change her own fate.
我觉得如果说 大观园里头适合创业的人 我觉得是探春啊 对吧 又有创业motivation 因为他是输出 所以他有急于改变自己命运的动力
Meng Qiu49:19
Have I lived too long? In the past 20 years I've already been through three financial crises on an eight-year cycle.
我是不是活得太长了 我在过去20年 已经经历过三次 就是八年为周期的金融危机
Meng Qiu51:20
Figures
| Years she has been doing VC | about 8 years | 5:01 |
| Market cap decline of the worst company in the internet bubble | 98% | 9:03 |
| Time for NetEase's share price to go from around 1 to a normal level | 24 to 28 months | 10:03 |
| Duration of a small cycle in the primary market | two to three years | 11:04 |
| Time the market stays cautious and conservative in one winter | 6 to 8 months | 12:04 |
| Number of deals that passed committee in the first half of 2022 | 3 | 21:08 |
| Size of the Baidu user-facing product line engineering team | 11 to 12 people | 31:10 |
Glossary
- Bubble Burst
- The bursting of the internet bubble, which she graduated right into in 2001, and which is why she treasures every job.
- Holding cash and waiting to buy
- Her phrase: it's not that funds have no money, it's that everyone is waiting for assets to fall to a reasonable price before acting.
How to listen
Founders and LPs watching the primary market, especially those who want to know whether this winter is a psychological cycle or a structural change — and whether now is the time to start a company.
22:03 A day in the life of an atypical investor (cutting flowers, reading The World Atlas of Wine) — low information density.