2003: Starting with Foreign Trade

Chapter 297: Attention from Venture Capital

The market is unpredictable. After entering May, it seems that major manufacturers in the industry have accelerated their efforts in order to catch up with the peak sales season.

Whether it's a coastal city with a relatively complete industrial chain or a typical inland city, news of a new factory being built comes out almost every few days.

However, these are all relatively small-scale projects. For example, Laiwu, with an investment of 1200 million yuan and an estimated annual output of 10 electric vehicles, is considered to be of medium to large scale.

"It feels like an equipment competition," Tan Jincheng said to Wang Qinghua with a smile.

These past few days, Tan Jincheng's phone has been ringing non-stop.

After a few days of development, it's no secret that FlashTech received another 1 million yuan investment from Beicang City Investment after its restructuring. In addition, the acquisition of Bafang Electric was done through cross-shareholding, and the actual cost was only 2000 million yuan in cash.

In addition, FlashTech's cash flow has always been commendable. Furthermore, after the restructuring, Tan Jincheng also had a trading company with a large amount of cash and even foreign exchange in his hands, which also came to light.

A company that has assets, cash, and business is highly sought after by local governments.

Regardless of whether they had any connections or not, anyone who could get Tan Jincheng's phone number would call to test the waters and invite him to observe the area.

In addition, some venture capital firms have begun to take notice of this rapidly rising physical manufacturing company, which seems to have a completely different operating model from traditional physical enterprises.

"On the surface, Flash Group's core business is electric vehicles, but have you noticed that this company is diversifying its operations, including import and export trade, end products, and even the internet?"

"Yes, their self-developed battery is actually a lithium battery, which is similar to the research direction of ATL Technology in Shenzhen. In addition, they also have an automotive business, although it accounts for a small percentage, but Zhongtai Auto has been selling very well in the past two months, and it will be a very profitable business in the future."

"Have you noticed that the technical team at his Orange Technology company all comes from CEO Ding's company? The leaders are at a pretty high level, but I don't know why they weren't incorporated into the whole group?"

“I know that. I contacted Beicang City Investment, and they said that the investment direction of the city investment company and Orange Technology is different, so they suggested that Mr. Tan of Flashpoint take out Orange Technology.”

"That makes sense, but we don't know Orange Technology's financial situation or what projects they are currently developing. Let's ask around some more."

"In addition, their company's main projects, apart from import and export trade, should all have investment value. We can send someone to contact Mr. Tan of Flashgate to see if there is an opportunity to meet and talk."

"Will they accept it? So far, Mr. Tan values ​​his shares very much. Besides Beicang City Investment and his friend, who can get a certain number of shares, the only other option is the cross-shareholding with Bafang Electric, which allows outsiders to get shares."

"I don't think so. Judging from the cooperation between Flash and Bafang Electric this time, this President Tan doesn't value the shares as much as the rumors say. Your so-called 'valuing' is just a facade. The key is to see what he can get in return for the shares. If he can't get anything in return, he naturally won't give them to you."

The exchange of Flashpoint's shares for Beicang City Investment's resources and cash was the key to Tan Jincheng's success. He gained a successful strategic joint venture partner from Bafang Electric.

As for his business partner, putting aside personal relationships, Flash doesn't lose out either. That partner is also a trading company with ample cash flow, which is of great importance to Flash's cash replenishment.

"Shall I try contacting them?"

"Hmm, let's try contacting them. It's okay if the cooperation doesn't work out; we can still be friends. To be honest, I'd really like to get to know this young founder."

Dong Mingyuan graduated from overseas and has an international background. Having worked in international investment banks, he returned to China to establish his own venture capital firm when he saw development opportunities abroad. Unlike other venture capital firms that focus on the Internet, Dong Mingyuan's firm is different.

He himself is a second-generation factory owner; his father owns a sizable factory. Dong Mingyuan has a certain interest in investing in physical enterprises, believing that investing in physical enterprises at this stage is just as profitable as investing in the internet.

In fact, the risk is much lower, with a fixed dividend ratio every year. If a company goes public, you can make a fortune. Dong Mingyuan has already invested in several emerging physical enterprises, and they are all operating well.

Such small investments carry the least risk for small businesses in their early stages and for venture capital firms like theirs. They simply can't afford the kind of investments that can easily reach hundreds of millions, like those in the internet industry.

Dong Mingyuan has been following FlashChi privately for a long time. Ever since FlashChi first appeared in the public eye last year, Dong Mingyuan noticed that the company's founder was very insightful and did an excellent job in marketing.

By hiring celebrities as spokespeople and launching a nationwide marketing campaign, they broke through the competition and aimed for the entire country from the start. This approach was significantly different from the typical operational strategy of small factories. Once the product sales channels were established, they were able to leverage their disadvantage of insufficient production capacity.

Originally, Dong Mingyuan intended to take advantage of FlashTech's need for funds after its expansion this year to seek investment and acquire a certain share. Who would have thought that only four months into 2006, FlashTech had already expanded to such an extent.

Each of its low-end and mid-range products has its own spokesperson, it has also secured a spot in the Olympics, it has developed its own batteries, and it has acquired one of its main suppliers for motors.

Finding bargains is no longer an option; in fact, even if you approach investors, they might not be willing to take your money.

FlashTech really doesn't lack money.

Indeed, Dong Mingyuan's investment style is "picking up bargains." He proactively approaches promising companies that are short of funds, acting as a strategic investor, without interfering in the company's operations, simply waiting for dividends. When necessary, he can also provide networking assistance.

"Unfortunately, it seems that the best opportunity to invest in Flash Technology was before October last year. Tan Jincheng must have really been short of money back then, otherwise he wouldn't have emptied Jinpeng Trading's funds."

Dong Mingyuan stared at the documents in his hand and said softly.

Suzhou.

“Mingyuan Investment? A venture capital firm?” Tan Jincheng asked Zhao Xinyi with some doubt.

“Yes, the company is in Hangzhou. Their boss would like to meet with you and ask if you have time to talk.” Zhao Xinyi nodded and handed the documents sent to her to Tan Jincheng.

Zhao Xinyi and Zeng Jixiang now have a clear division of labor.

Zhao Xinyi was more responsible for external liaison, while Zeng Jixiang needed to deal more with government departments.

In Tan Jincheng's view, men are less likely to suffer losses when dealing with government departments, while women are usually somewhat timid or even worshipful when faced with absolute power.

Men are relatively better off, and therefore safer.

"Don't you know whether we have time or not? We're going to Tianjin in a few days. We don't have time to talk to venture capitalists right now. We'll talk about it later."

However, Tan Jincheng still accepted the documents handed to him by Zhao Xinyi.

It's quite unusual for a founder with an overseas background to invest in small, traditional businesses.

Tan Jincheng had never been in contact with venture capital firms, and he never intended to raise funds from them when he started his business. He believed that no venture capital firm was kind; if you approached them with your idea but did not have your own funds, you would be met with hostility.

They would want a large number of shares. In the real-world companies invested in by this Mingyuan Investment institution, the shareholding ratio is relatively large, ranging from 40% to 15%.

With just a quick glance, Tan Jincheng knew the company's strength.

“They’re a small-time venture capital firm that only picks up bargains. They can’t afford to invest in us, so we should ignore them.”

Each investment is only a few million, clearly indicating a preference for high-risk, high-reward investments. The owner may have some wealth, but probably not much.

If it were FlashTech from last October, he would have given it a try, but now FlashGroup is a company he can't afford to invest in. With his few million yuan, which company could he possibly invest in?
"Okay, another thing is that Mr. Zhang and Mr. Jin from Boneng called to ask when you will return to Beicang. They would like to visit you there."

Flashspeed's acquisition of Bafang Electric has caused quite a stir among parts suppliers.
After learning about the valuation offered by Flashpoint, some suppliers are already eager to sell, which means they also want to sell. Among them is Zhang Mingcan of Mingcheng Industrial.

Zhang Mingcan currently holds 72% of the shares in Mingcheng Industrial, and he also wants to transfer a portion of them to cash out.

It doesn't matter if we lose control, since we're still running the factory ourselves. Besides, even though Zhang Mingcan is worth tens of millions, he doesn't have much cash at his disposal. His wife controls the company's finances.

The Audi A6 that he had been wanting for a long time was provided under the name of Mingcheng Industrial. If it had been from his previous plastics factory, given his wife's personality, he would never have been able to get it.

With the stake reduced from 72% to 49%, that's 23% of the shares. Surely you could cash out enough to buy a villa?

Among the suppliers of Flashpoint components, the most important is Boneng Environmental Power, which supplies batteries, and their identity is now quite sensitive.

FlashTech's self-developed battery technology focuses on lithium batteries, and it has also signed a five-year supply guarantee agreement with Boneng, so it doesn't have to worry about orders. At the same time, Jin Chuanling is not like other company bosses who want FlashTech to take over.

The supply guarantee agreement was indeed signed for five years, but it only applies to the Flash and some Fengchi Feiyi series electric vehicles. In addition, the production capacity is guaranteed based on an annual production capacity of 20 electric vehicles.

Boneng also wants to take over the extra production capacity.

In addition, Jin Chuanling recently received news that major battery suppliers like Chaowei have been proactively contacting FlashTech, hoping that their batteries can be used in the upcoming Fengchi Guanneng series.

Compared to industry leaders, Boneng's Yazhen series batteries are internally considered to be of comparable quality, but unfortunately, the other brand is a well-known name.

This is also why Jin Chuanling and Zhang Yunhua are so eager to meet with Tan Jincheng.

(End of this chapter)