Chapter 233 Finally, investors’ money can be spent
Before the Internet winter, a large number of international capital came to China like a market.
After 2000, these capitals disappeared without a trace like bubbles, but a few of them persisted, such as IDG and DFJ.
DFJ is an investor in Baidu and recently became an investor in KongZong.com.
At this time, there are not many investors to choose from in domestic products, and some famous institutions of later generations have not yet appeared, such as Hillhouse Capital and Today Capital, which were only established in 2005.
When Xiong Xiaoge found Defengjie, Zhou Yunfan may have played a role. They were very interested in this platform with the weird name "Maiwo".
But when analyzing it in detail, everyone feels a headache.
The first is valuation.
There are many valuation methods, which are too complicated to discuss here. One of the more commonly used methods is the "price-to-sales ratio method."
That is, predict the future earnings of the company and what the stock price will be after listing, so as to determine the amount of investment. So how to predict?
Generally, it is compared with similar products on the basis of revenue.
Then trouble arises.
Counting from the start of SARS last year, in less than a year now, Maiwo Mall has sold more than 10 million yuan. And of this more than 10 million yuan, it competed with Joyo.com for the New Year's gift package, and 98% of the share was sold in two times.
In other words, according to normal operating calculations, this mall is just a pile of junk.
The key is that it is unconventional!
It lives on the brains of Boss Yao, one person drives a platform.
Let’s look at the comparison of similar products, domestic Dangdang and Joyo, the B2C leader and the second. Dangdang’s sales last year were 80 million, and Amazon recently intends to acquire Dangdang with a price of US$150 million.
That is to say, its valuation is RMB 1.2 billion, which may be a premium.
Based on this comparison, the valuation of Maiwo Mall is very easy, but again, it is not a conventional product!
First of all, it is not a start-up company. It has a boss with a lot of cash behind it. Secondly, it is embedded in a huge community with more than 10 million members.
No one has ever seen this type of product.
Second, investment institutions cannot predict its development prospects.
No one has ever seen a platform that can sell more than 10 million yuan in sales through just two activities. In particular, Yao Yuan and Xiong Xiaoge also described a plan for Maike to build a self-operated brand Balabala in the future.
This makes the community and the mall inseparable, and it is extremely inaccurate to value the mall alone.
"..."
At this moment, the negotiator was thinking about these nonsense while rehearsing today's negotiation in his mind.
After a while, he heard footsteps outside and was startled when he saw the person coming. You are not a small and broken company. Why are you talking to the big boss in person?
Hey, Yao Yuan likes to talk in person.
"Mr. Yao!"
"This is the representative of DFJ."
"Hello, hello, please sit down!"
Yao Yuan made tea with his own hands and said with a smile: "It seems that the first round is yours. To be honest, I have been approached by other investment institutions. I always feel unreliable. I still lean towards you. I hope there will be a good result."
.”
"Of course, in a sense, our goals are the same."
After being polite for a while, we went straight to the point. This kind of negotiation is just about data, so there is no need to talk nonsense.
"Our research results are that if you invest a total of US$10 million in the first round, accounting for 20% of the shares, you must reserve at least 10% of the option pool."
The option pool is a portion of shares reserved for management, senior talents, and ordinary employees. For example, if a particularly awesome talent is recruited in the future and someone asks for shares, they can be divided from the option pool.
"$10 million?"
Yao Yuan shook his head after hearing this and said: "To be honest, I really don't lack your 10 million US dollars. Although my e-commerce platform requires money, I can still be self-sufficient for a long time."
"What do you mean?"
"At least $30 million."
"Mr. Yao, this is the first round of financing, 30 million is too high."
"I don't think it's high. My mall is supported by a community, and the next step is to convert users. At your price, I don't feel sincerity."
"But the mall + community model has never been done before. We are taking huge risks by investing in you. If you don't ask for 30 million, that's fine. We want 60% of the equity."
"Just because no one has done it before, it has real value. Our product is unique. It can be seen from the two events that community users are very willing to spend money in the mall."
Tencent once built an e-commerce platform called "Paipai.com".
In the C2C model, Xiaoma’s idea at the time was: I have hundreds of millions of users on QQ, how can I build an e-commerce business? But I was slapped in the face.
There are many reasons for the failure, but in the final analysis there are two: failure to convert QQ users into e-commerce users, and poor platform performance.
It's inconvenient for sellers, it's also inconvenient for buyers, and the experience is terrible.
Yao Yuan is cheating at the moment, but he is not cheating. Maiwo’s user positioning is accurate, and those who are involved in the community prefer online shopping than those who are involved in QQ. He also attaches great importance to user experience and is confident that he can do it.
We fought like this for several times, but no one was able to convince anyone.
The negotiation team said goodbye and will fight again tomorrow.
In the next few days, the other party kept adjusting the price and conducting various tests. Yao Yuan became impatient and simply said: "Don't always talk about Dangdang and Zhuoyue. How much profit can they make by selling books and audio-visuals?
After seeing how popular Amazon was in selling books, I started to learn how to sell books in droves. After selling books for several years, I still behaved the same way, with no changes at all.
Excellence is even more watery. I beat me to a complete defeat last year and shamelessly boasted that my sales exceeded 100 million. HE...TUI!
Lei Jun is not afraid of flashing his tongue. He only dares to brag about 15,000 orders per day. My New Year gift package sold 23,000 yuan in one day!
If you just look at those rubbish data that do not reflect your true strength, with all due respect, I think you are unprofessional!"
"..."
This time HE...TUI, the other party won't be able to deal with it.
Are they elites or gangsters?
The most annoying thing about investment institutions is that their bosses have money in their hands and cannot appreciate the pleasure of investing at all.
Yao Yuan looked at the situation and said: "Book profits are low and there is no future. I am planning to launch an electronic hypermarket this year, using Zhongguancun as a base to fully attack 3C products.
I understand that you are afraid of risks, but you can agree on an agreement. You invest a part first, and I will invest another part when I reach a certain sales volume."
He gave in a step, and the other party went back to discuss it again and also gave in a step.
Not long after, word came again: IDG and DFJ invested RMB 200 million for a total of 20% of the shares, and Commander Yao wanted to reserve 10% of the option pool.
However, this 20% belongs to "convertible and redeemable preference shares". What does it mean?
If the investor feels that the company is developing well, it will officially convert it into 20% of the shares; if it feels that the company is not very optimistic, it will not exchange it and will ask the company to redeem it - which is equivalent to borrowing money.
No one is stupid, it is equivalent to giving yourself insurance.
The first round of investment is 200 million yuan, which is a very, very large amount.
Before the second and third rounds of investment, it will be calculated based on the valuation at that time, and it will be even more. For example, Alibaba raised US$102 million in Series C financing this year.
After signing the contract, wait for the funds to be received, which can be as soon as one month or as long as half a year.
In any case, Yao Yuan can finally spend investors’ money!