"Yida, Kuaishou is very similar to your DouYu. They also make short videos. They only have user growth but no business income."
Shen Beipeng took a sip of tea, cleared his throat and said: "Didn't Ruixiang also participate in Kuaishou's B+ round of financing last year? At that time, DST led the investment, and Heishi and you Ruixiang also participated in the investment.
You should still know something about Kuaishou, can you use it as a benchmark against DouShi?"
Zhang Yida nodded. This is indeed the case. Ruixiang invested 30 million US dollars in Kuaishou last year and took 5% of the shares.
However, it is really inappropriate to compare Kuaishou and Dioshu.
However, Zhang Yida did not refute and continued to listen to Shen Beipeng's explanation.
"Didn't Kuaishou complete a US$250 million Series C round of financing last month? Qiandu and CMC invested, valuing Kuaishou at US$2 billion.
Kuaishou’s DAU is 20 million, which means one daily active user is US$100.
Pushing the timeline back to last year’s B+ round of financing, Kuaishou’s daily active users at that time were 6 million to 7 million, and its valuation was US$600 million. In total, one daily active user was US$100.”
Speaking of this, Zhang Yida also understood what Shen Beipeng meant, that is, a daily active user of 100 US dollars, and 40 million daily active users of DouShi, which is 4 billion US dollars.
Zhang Yida retorted: “Kuaishou’s users are all in China, but we still have more than 10 million daily active users abroad?
If the advertising is monetized, the foreign users can earn US dollars and Euros. Based on the exchange rate, one overseas user can be worth six or eight domestic users."
"Having said that!" Shen Beipeng said with a smile, "However, your overseas users are basically teenagers, and their purchasing power is inherently insufficient.
Don’t say you haven’t started monetizing ads yet. Even if you start monetizing ads, what kind of ads can you push?
Toys? Games?”
"Don't underestimate the purchasing power of children." Zhang Yida gave another example, "Look at Penguin's game, isn't it supported by domestic children?"
"Yida, are you planning to follow Penguin's example and launch the game overseas? Or are you just doing advertising?"
Xu Xiaoming interjected.
Zhang Yida shook his head, "I definitely can't produce a game by myself. Without such a deep foundation, good game studios can't afford it now.
But the vast majority of our overseas users are teenagers, so they are very suitable for promoting and attracting traffic to game companies."
"If there is a chance for games, we must develop them. EA, Vivendi, Ubisoft, Activision Blizzard, Valve...these companies are all good." Xu Xiaoming began to give Zhang Yida advice.
Seeing that the two of them were getting off topic, Shen Beipeng coughed twice as a reminder, "Don't go too far, let's get back to the valuation!"
“The valuation of US$6 billion is definitely not high. The nearly 30 million daily active users in China are US$3 billion compared to Kuaishou, and the 10 million daily active users abroad are US$6 billion after adjusting the exchange rate.
That adds up to $9 billion!"
Zhang Yida said with a smile: "The people invited today are all relatives and friends, that's why I didn't quote US$9 billion. They were all given as friendship prices."
"Are you paying attention to Kuaishou's Series C financing?" Shen Beipeng suddenly asked.
"Not much attention!" Zhang Yida smiled and shook his head, "Ruixiang is just a financial investment. After the completion of the C round, our shares were diluted to only 4%.
I only sent an investment representative to participate in their Series C financing negotiations and just went through the motions.
Su Hua probably saw me shaking my head and became wary of Rui Xiang."
Blackshirt Capital has participated in many rounds of financing of Kuaishou and is considered one of the very important investors, so Shen Beipeng knows some inside information.
But now that DouShi has become Kuaishou’s opponent, it’s hard for him to point out these inside stories directly.
Shen Beipeng thought for a while and asked in a roundabout way: "Do you know why Qiandu invested in Kuaishou? And gave him a valuation of US$2 billion for a company with less than 100 people and no revenue?"
"I remember Su Hua came from Phoenix Nest?"
Shen Beipeng nodded, "Yes, it's the Phoenix Nest of the search marketing system.
After Su Hua dropped out of his Ph.D. at Aoki University, he worked at Google and Qiandu, responsible for the research and development of back-end technologies such as search and recommendation algorithms and system architecture."
Zhang Yida thought for a moment and asked: "You mean Qiandu wants to lay out short video ads?"
"I didn't say!" Shen Beipeng waved his hand, "This is your own guess."
Zhang Yida remembered, didn't Qiandu work with Kuaishou on the advertising system in his previous life?
But later, Kuaishou chose live broadcasting as a monetization method, so short video advertising did not start, and Qiandu also changed from a strategic investor to a financial investor.
“The recommendation algorithms of Kuaishou and Douyin are different. They are based on people rather than content consumption.
But DouShi is just the opposite, we are based on content consumption rather than people."
Zhang Yida recalled as he talked that in his previous life, Kuaishou and DouShi had seemingly similar but completely different models and strategies.
Kuaishou focuses on user participation opportunities, and its video recommendations are scattered and sinking, striving to allow ordinary users’ videos to be seen;
DouShi, on the other hand, focuses on the user’s viewing experience and focuses on video recommendations, focusing on a few broadcasters with large fan groups.
Therefore, for ordinary users, Kuaishou may be more fair, which results in the uneven quality of Kuaishou's videos. They may not look so good, but they are more real and closer to life.
TikTok is to give more recommendation opportunities to videos that are exquisitely shot and have various high-level content. They can be seen as a kind of performance and are more enjoyable to watch.
Zhang Yida is now a little worried. Pinduoduo’s style obviously matches that of Kuaishou. They are both for sinking channels, but it doesn’t match that of Douyi.
"What about commercial realization? Do you plan to do advertising or live broadcast?" Shen Beipeng asked.
“Don’t worry now, let’s wait until the daily active users exceed 100 million!”
Once commercial monetization is started, the user experience will definitely be worse.
Zhang Yida could tell with his fingers that users would definitely be dissatisfied if they saw an advertisement after watching a few videos.
As DouYu's leading position has not yet been fully established, he does not dare to rush into commercial monetization.
Competitors like Kuaishou have not yet started commercial realization, so why is he anxious?
Isn't it just a waste of money? Sooner or later, it will be earned back in a few years.
Shen Beipeng nodded and expressed his understanding of Zhang Yida's approach. This is typical Internet thinking!
"Okay! 6 billion is 6 billion, how much do you want to raise?"
After speaking, Shen Beipeng looked at Zhang Yida.
“Let’s raise $600 million!”
Zhang Yida began to make arrangements, "Ruixiang invested US$300 million, I personally invested US$150 million, Huayi, Blackshirt, and Zhenke each invested US$50 million!"
Shen Beipeng was unhappy. He frowned and said, "Such a small share? US$50 million doesn't even account for 1% of the shares."
"Yida, be more generous, we have all agreed on a pre-money valuation of US$6 billion, why do you have to open a financing line of US$1 billion?"
Xu Xiaoming has great confidence in Zhang Yida. Chen Ou has been plagued by fake goods recently, and he no longer uses Chen Ou as a case study when participating in various investment forums and carrying out investment work.
The development of Zhang Yida's companies is better than the last, which has helped him earn face and various reputations.
Seeing that Yimin Wealth is about to go public again, Zhenke Fund will make tens of millions of dollars again.
Therefore, his confidence in Zhang Yida rose to an extremely high level.
"Then let's do this!"
Zhang Yida thought for a while and decided to get it right in one step and no more financing in the future.
He stated his plan, "Ruixiang Industrial Fund will invest 500 million, I will personally invest 200 million, and each of the three of you will invest 100 million."
"Can!"
Shen Beipeng no longer asks for too much share. In his opinion, a US$6 billion start-up company will not have much room for growth and will not make much profit.
However, Zhang Yida's co-investment of US$200 million still impressed him.
In this era when founders are scrambling to cash out, Zhang Yida dared to personally invest US$200 million, which shows that he has great confidence in the success of this project.
Xu Xiaoming also nodded in agreement. The scale of Zhenke Fund was not large to begin with, far less than that of Heishi, a large company. The share of 100 million US dollars was already very difficult for him, and he could not afford any more.
After all, one fund cannot be heavily invested in one company. Investors may have to withdraw their capital if they find out.
Lan Lan and Lei Dongming also had no objections. Zhang Yida had strong control over both companies, so they just followed his arrangements.
After completing a series of due diligence procedures, Zhang Yida signed a Series A investment agreement with Sifang in a low-key manner.
The Cayman Holdings Company of DouShi and Musical.ly received a joint investment of US$1 billion from five parties including Zhang Yida based on a pre-money valuation of US$6 billion, bringing the company's post-money valuation to US$7 billion.
The equity structure of Douyin before financing is that Zhang Yida personally holds 90% of the shares, and there is also an option pool of 10%.
After acquiring Musical.ly and opening up operation centers in North America and Europe, DouShi added company executives such as Ma Jun, Yang Lu, and Rui Rui.
These people are all conscientious and diligent in starting a business with Zhang Yida. Take Ma Jun for example. After opening up the North American operation center, he rushed to Europe non-stop and did not return to China during the New Year. It can be said that he did not work hard.
They work so hard, all they want is options, hoping to make a huge fortune after the company goes public.
So this 10% option pool is set up for these people to encourage them to work better.
In addition to company executives, middle management and key employees also have the opportunity to obtain options.
There are relatively few lower-level managers and employees. If no outstanding achievements are made, they will generally be given some consolation options.
After all, the cake is so big, and the biggest share must go to the employees who contribute the most.
After completing the A-round financing of US$1 billion, Zhang Yida’s equity did not drop much because he personally invested US$200 million, and he still holds 80% of the shares;
Ruixiang obtained 7.14% of the shares, Blackshirt Capital, Huayi Capital, and Zhenke Fund each held 1.43% of the shares;
The option pool has shrunk, from 10% to 8.57%, but it is still valuable, worth a full US$600 million.
The financing was conducted in a low-key manner. Zhang Yida did not invite any media or reporters. After all, the US$1 billion Series A financing was quite shocking.
If the outside world knows about it, it will inevitably attract more hot money to invest in the short video field, bringing about a lot of unnecessary vicious competition.
But this kind of thing cannot be kept secret for too long, especially after completing the financing, Zhang Yida gave a round of option incentives to the company's senior executives, middle-level, and key employees.
When implementing option incentives, you have to tell employees how much they are worth! Even though they have signed a confidentiality agreement, it is inevitable that some employees will brag to their former colleagues and peers.
The national conditions in China are like this, and legal awareness is weak.
But Zhang Yida didn’t plan to keep it secret for long, maybe one more month!
In addition, Zhang Yida is also very concerned about Zhang Ming's actions. Toutiao has its own algorithm and technology accumulation, so it is not difficult for them to launch a short video.
There was already Kuaishou as a competitor, and if Toutiao joined in, it would be a Three Kingdoms killing.