2003: Starting with Foreign Trade

Chapter 491 The Big Shots' Verbal Battles
Capital is profit-driven. When they set their sights on a company's shares and want to acquire more, it's because they believe they can earn more.

Even if they misjudge the situation and suffer huge losses afterward, they will not give up this opportunity at this moment.

If the Series C financing proceeds through the normal process, Tan Jincheng and Gu Qingqing's shareholdings will remain high. At most, they can only make additional investments to ensure that their existing shares are not diluted.

If that's the case, then the biggest winners after the IPO will always be Tan Jincheng and Gu Qingqing. Their companies have made a lot of money, but it's still far less than what Tan and Gu have made.

As a professional investment institution, it would be somewhat embarrassing if we didn't have a high school student or a girl who hadn't even graduated from university yet earning more in the secondary market.

Tan Jincheng proposed to secretly complete the Series C financing through the transfer of their shares, keeping it as confidential as possible, which was agreed upon by Sun Tongyu and others.

The procedure is simple and hassle-free, and it can also dilute the equity holding ratio of the two individuals.

How could they possibly let such a golden opportunity slip by? 5% split among three parties, averaging less than two percent, barely enough to feed a beggar.

On this issue, the three who had been kept in the dark by Tan Jincheng were surprisingly in agreement. As for Sun Tongyu, his interests were guaranteed; the 10% shareholding was promised to him by Tan Jincheng, so he remained a spectator throughout.

"Five points isn't enough for you? You really are rich and powerful. I wish I were that rich."

Giving up a little more is not out of the question, but there has to be some back and forth. Tan Jincheng's bottom line for shareholding is to maintain around 33% after the Series C financing, while Gu Qingqing maintains 5%, and the two of them, who have a concerted action agreement, maintain a shareholding ratio of 38%.

In addition, Tan Jincheng also holds the voting rights for the eight percentage points of employee stock ownership.

Based on this ratio, Tan Jincheng and Gu Qingqing can transfer up to 20% of their shares, Sun Tongyu gets 10%, and the remaining 10% is split among the three of them.

It can be considered a win-win situation, since the IPO requires the cooperation of these capital tycoons. Whether it's the Hong Kong Stock Exchange or Nasdaq, the three of them have considerable influence and connections.

The four parties engaged in heated debate over the issue of equity transfer. Initially, the three parties reached a consensus that Tan Jincheng and Gu Qingqing should contribute more shares.

"That's a bit low. According to the normal shareholding structure after a Series C financing, the two of you together would hold 37.6% of the shares. In addition, the voting rights of the employee stock ownership plan would be in Mr. Tan's hands. The two of you would be able to completely control the entire company. Besides, we are investors. There's no need for you to be so wary of us. We don't want your company."

"That's right, Mr. Tan, don't apply your mindset from running a physical business to internet companies. Look at how many shares Mr. Ma holds at Tencent. Does that affect Tencent? The environments are completely different, okay?"

"Damn, I've already conceded so much. What's the difference between 37.6% and 38%? You won't even let go of 0.4%? That's too ruthless!"

"You said it's only 0.4%, so if you give it to us, we can divide it more so that it's a round number."

"Yes, yes, that's right."

The financing plan proposed by Tan Jincheng was an unexpected event for the three of them. But whether it was an unexpected event or not, when it came to large sums of money, they were no different from the aunties buying vegetables at the market.

The so-called difference is simply that they usually have subordinates to negotiate on their behalf, which allows them to maintain a respectable image.

"Alright, alright, 0.4 it is. Let's make it 20 points. Mr. Sun, you get 10, and you can divide the remaining 10 among yourselves. Don't even think about getting any more. I've already gone all out."

Tan Jincheng was too lazy to argue with them; 20% was the bottom line in the plan all along.

However, after several rounds of this tug-of-war, things become even more interesting. Things that are easily obtained are not cherished, but those that are obtained through struggle are different.

A 20% share was the limit, and the three knew that. By uniting, they got what they wanted, and the Unification Alliance was dissolved.

Tan Jincheng didn't let them off the hook. Time was of the essence. He had finally managed to gather everyone together today and had to settle this matter. If it dragged on for too long, it would easily be leaked.

The number of people watching the play increased from one, Sun Tongyu, to three.

It's quite interesting to see these bigwigs personally debating this. With 10% of the shares allocated among the three parties, it's impossible for them to be evenly divided. There's never been such a thing as an even division in the capital market; it's always the case that whoever is the most powerful gets the most.

"Orange is definitely going to IPO soon. I think going to the Nasdaq market would be better. Besides, our CEO Tan started out making money in US dollars. According to CEO Tan, the most satisfying thing is to fleece the Americans. Right, CEO Tan?"

“That’s right, what’s the point of exploiting domestic companies? Exploiting foreigners is much more satisfying.” Tan Jincheng had no nationalist sentiments.

However, earning money from foreigners is definitely more fulfilling than exploiting domestic consumers. It's like making US dollars through foreign trade. This is an innate sense of honor for any Chinese person, regardless of their social status.

"That makes things simple. If we go to Nasdaq, our Red Shirts team can definitely provide more help, so taking half is no problem." "Going to the Hong Kong Stock Exchange isn't necessarily a bad idea for taking advantage of foreigners. Mr. Shen, you're wrong. If you ask me, I'd say go to the Hong Kong Stock Exchange, Mr. Tan. I'll protect you."

"Actually, we have some connections in both the Hong Kong Stock Exchange and Nasdaq. Mr. Tan, don't forget that I, like Mr. Shen, am also a returnee from overseas."

"Forget about it. Look at the projects you've invested in. The best one right now is Orange Technology. The rest are just rubbish. The internet dating market? How do you make a profit? By charging referral fees? You're just trying to fool idiots."

Shen Nanpeng showed no respect whatsoever. Qiming Venture Partners is a newly established venture capital firm, and currently it is not considered a particularly large-scale firm in China. The most famous investment project in the Internet field that Kuang Ping is in charge of is Orange Technology.

It was precisely because of the huge profits gained from investing in Orange Technology that Qiming Venture Partners and Kuang Ping himself gained considerable fame in the domestic internet industry.

Qiming Venture Partners provided some assistance to Orange Technology in its early stages, but their help became limited after Series C. Normally, they wouldn't have included him in this round of follow-on investment, which is why Kuang Ping approached them.

Shen Nanpeng retorted without holding back, but Kuang Ping didn't care at all. Why would someone be so thin-skinned as to make investments? His bottom line was to maintain a 12% share, but he'd take whatever he could get, since he wouldn't lose money anyway.

Whether or not we give each other face is not important. Anyway, we are all rational investors, and we are focused on the issue, not the person. After the business is done, we can still have a good time drinking and chatting in private.

"You can't say that. The fact that I was able to find Orange Technology shows my foresight. As for the others you mentioned, who knows without verification? You've invested in a lot of failed ventures, haven't you? That's what venture capitalists do."

"That was for the venture capital round, but we've already reached Series C, so it's time to show our strength. Talking about those things is useless. This time, we're taking shares directly from President Tan's pocket. If it were a normal situation, you wouldn't have a say."

"I can only say I was lucky. Just like when I first invested in Orange Technology, luck is also part of investing."

This statement is truly speechless. Luck is indeed very important in venture capital. Industries that can be invested in are all good industries, and the people who can be invested in must have been thoroughly investigated and are all excellent.

But many companies go bankrupt, and Kuang Ping's luck is truly unparalleled. He stumbled upon such a non-mainstream internet company, and even after the Series C funding round, the founder still had a large number of shares to transfer, and he actually encountered an opportunity to transfer them.

"I don't want much. I admit that I'm not as strong as you, but since I've seized this opportunity, it shouldn't be a problem for me to increase my share by 1% while keeping my original shareholding, right?"

12% is the target, 13% would be even better, and Kuang Ping certainly wants more, but he is obviously aware of his own limitations.

"Alright, then I'll give you 1 point, and I'll split the rest with President Shen. What do you think, President Shen?" Little Ma chimed in at this point.

He has many opportunities to meet with Kuang Ping, and helping him out would be a good thing for Tencent, as it might lead to some joint investment opportunities.

After a moment of silence, Shen Nanpeng accepted the offer of just one percentage point. It was satisfying to argue, but sharing profits was one of the principles of investors. However, he was still a little unhappy about only getting 4.5 percentage points.

Why should Tencent share the profits equally with itself?
Shen Nanpeng's eyes darted around, and he smiled, "President Tan, how about I discuss something with you?"

"What are you discussing? Returning the money? Don't worry, we'll just deduct it from the transfer payment." Tan Jincheng, who was thoroughly enjoying the gossip, could only think of this one thing.

"Mr. Tan is smart. This is exactly what I want to discuss with you. I'll waive 5 million yuan for you, and I'll take 500% of the profits, how about that?"

Before Tan Jincheng could react, Little Ma was stunned: "Holy crap, you're cheating! How shameless!"

If Tan Jincheng wanted to give Hongshan a little more, they really couldn't say anything. Tan Jincheng hadn't participated in their share distribution at all, and besides, they had just squeezed 0.4 points out of him, so they definitely had to give him this half point as a courtesy.

"You're going to fight for even half a point, you must be eyeing its value, so this value is only worth 500 million? Mr. Shen, your vision is too limited." Tan Jincheng's eyes lit up.

Half a point is definitely not worth 500 million based on the current valuation, but since Shen Nanpeng has spoken up, how could Tan Jincheng let this opportunity pass?

"Exactly, how about I have this half point? When Mr. Sun can announce his joining the company, I'll waive the advertising fees for Tencent."

"Forget it, your vision is even lower. Your advertising fees are worth very little. Here's what we'll do: I'll cover the 500 million plus the advertising fees," Shen Nanpeng said magnanimously.

"No problem, deal. Thank you for your generosity, top donor."

500 million can buy a super luxurious villa in Beicang, not to mention the advertising costs, so why not take it?

(End of this chapter)