N-M Chapter 262 Capital Games
Chapter 262 Capital Games
A soft knock sounded on the door. "Mr. Ling, they've arrived," came the receptionist's voice.
"Please ask them to come to the conference room, I'll be right there." He stood up, straightened his shirt collar, and then pushed open the door and went out.
The sounds coming from the conference room could already be heard in the hallway. A baritone voice, speaking rapidly, with a New York accent.
Ling Yun walked to the conference room door, paused for a second, and then pushed the door open and went in.
Four people stood in the conference room. The one in the lead was a white man around fifty years old, over six feet tall, with broad shoulders, wearing a dark blue suit, a light blue shirt, and a yellow tie. His hair was gray but meticulously combed, and he wore a well-trained smile. This was Richardson.
Standing next to him was an Asian man in his thirties, wearing frameless glasses, with a cautious expression. The other two were white women, one holding a laptop and the other a voice recorder.
"Mr. Ling." Richardson extended his hand, his palm broad and his grip strong. "It's so good to see you again. It's been a long time since we last met."
"Mr. Richardson, welcome." Ling Yun shook hands, then turned to the other three, "Please have a seat."
Everyone took their seats. Carly sat to Ling Yun's left and opened her laptop. The two women from Goldman Sachs sat on either side of Richardson, while the Asian man sat a little further away.
"Coffee?" Ling Yun gestured.
"No need, thank you." Richardson unbuttoned his suit jacket, leaned forward, and rested his elbows on the table. "Let's get started; time is precious."
A typical straightforward approach.
"Okay." Ling Yun nodded.
"First, I'd like to confirm a few things." Richardson took a document from his assistant but didn't open it. "How many full-time employees does Xingyu currently have?"
"Eighty-seven people."
What percentage of that team is technically skilled?
"Sixty-two people, about 71%."
What percentage of monthly expenses does server cost?
"Last month it was 43%."
What is the user acquisition cost?
"The average cost per new user is $0.37, primarily through word-of-mouth and built-in promotions within the Starry Sky system."
The questions came like bullets, almost without pause between each one. Richardson's eyes were fixed on Ling Yun, his pupils a pale gray, like a frozen lake in winter.
Ling Yun answered calmly and accurately. The data was all in his mind; he didn't need to look at the documents.
"Very good." Richardson finally leaned back in his chair. "The data shows your operational efficiency is good. But the problem is also obvious—you are completely reliant on financing and have no real revenue. Although you have surpassed Microsoft's ICQ in terms of functionality, they have Microsoft's financial backing, allowing them to burn money until you collapse."
"So we're raising funds," Lingyun said. "And we have something that Microsoft doesn't."
"Oh?"
"Ecosystem." Ling Yun gestured for Carly to turn on the projector, and a diagram of Xingyu's architecture appeared on the screen. "ICQ is just a chat tool. Xingyu is a platform. We open our API, allowing third parties to develop plugins. Enterprises can use it as a collaboration tool, and developers can build vertical applications based on it. Microsoft may follow this path in the future, but we are at least a year ahead of them."
Richardson's expression didn't change, but Lingyun noticed that his fingers tapped lightly on the table.
"The vision is wonderful," Richardson said, "but realizing it takes time, money, and luck. In the internet industry, far more companies die on the path of their visions than they succeed."
"That's why we chose Goldman Sachs," Ling Yun smiled. "Goldman Sachs not only provides funding, but also resources, reputation, and access to the stock market. What we need is not just money, but a partner."
This remark eased the tension in the meeting room, and Richardson's lips curled into a slight smile.
"Then let's talk about valuation." He finally opened the document in front of him. "You gave a pre-money valuation of 8.5 million. What's that based on?"
Carly picked up the conversation and switched the projection screen. "Based on four dimensions: First, market benchmarks. Microsoft acquired ICQ for 4.3 million, with 300 million users, averaging $143 per user. StarTalk has 427 million users, with higher activity and more complete features, so its valuation per user should be higher."
"ICQ's valuation includes a strategic premium," the Asian-American Goldman Sachs representative said calmly. "Microsoft is doing this defensively, to prevent competitors from acquiring it. This premium cannot be simply transferred."
"But we also have strategic value." Carly turned to the next page. "Secondly, the growth curve. Star Language's average monthly growth rate over the past six months has been 18%, and the acceleration trend is obvious. At this rate, the number of users will exceed 1000 million by the end of the year, at which time the valuation will at least double."
"Growth may slow," Richardson said. "Every product has a ceiling."
"Third, the ecosystem potential." Carly ignored this and continued switching. "We estimate that the third-party plugin market on the Star Language platform will reach $5 million in annual transaction volume within three years. If we take a 30% cut, that's $1.5 million in revenue, and that doesn't even include the enterprise subscription fee."
"Predictions need to be proven," said a woman from Goldman Sachs.
"So we need money to prove ourselves," Ling Yun continued. "$5100 million is enough for us to build a corporate sales team, improve the developer ecosystem, and expand into international markets. Eighteen months from now, we can deliver our first financial report with revenue."
Richardson was silent for a few seconds, and the only sound in the conference room was the faint hum of the air conditioning vents.
"Let's say we accept a valuation of $8.5 million," he finally said. "Goldman Sachs is willing to lead the investment, but we have a few conditions."
"Speaking."
"First, the right to co-invest. In subsequent financing rounds, Goldman Sachs has the right to invest proportionally to prevent equity dilution."
"Can."
"Second, a board seat. Goldman Sachs wants a board seat."
Ling Yun and Carly exchanged a glance. "The board is currently planned to have seven seats: two for myself, two for the management team, and three for the investors. If Goldman Sachs leads the investment, we can allocate one seat."
"Third," Richardson leaned forward, "the IPO underwriting rights. If Starry Sky goes public in the future, Goldman Sachs will be the lead underwriter."
This is a crucial question. The air in the meeting room tensed up again.
Lingyun picked up her water glass and took a sip. The water was at room temperature, and she felt nothing as it slid down her throat.
"Going public is still a long way off," he said.
“But it will come eventually.” Richardson stared at him. “We need a promise.”
"I can promise that, all things considered, Goldman Sachs has priority," Ling Yun said, putting down his water glass. "But the final choice of which investment bank to underwrite will be decided by the board of directors based on the offer and service terms."
"Not enough," Richardson shook his head. "We need an exclusive commitment."
"That requires consideration," Ling Yun said. "If Goldman Sachs is willing to make concessions on valuation or be more flexible on investment terms, we can consider it."
The negotiations had entered a substantive phase of maneuvering. Richardson's fingers began tapping on the table again, this time at a faster pace.
"The valuation is 8 million, pre-money," he said. "We led the investment with 5000 million, accounting for 5.88% post-financing. We also secured board seats and a sole underwriting commitment for the IPO."
"8.5 million, pre-investment," Ling Yun said. "We can offer board seats and priority underwriting rights for the IPO, but not exclusive rights."
"8.2 million."
"8.5 million." Ling Yun didn't move. "Moreover, we need Goldman Sachs to coordinate with other investors to help us complete at least $1.7 million in this round of financing."
Richardson smiled, a shrewd smile that didn't reach his eyes. "You're using our money to get us to find you even more."
"This is a win-win situation," Ling Yun said. "If Xingyu succeeds, Goldman Sachs' return on investment will be more than tenfold. Your reputation in the field of technology investment will also be enhanced—after missing out on Yahoo and Amazon."
These words hit a nerve, and Richardson's smile vanished.
Silence fell over the meeting room. The Goldman Sachs team members lowered their heads to take notes; no one spoke.
The clock on the wall points to 9:47.
"I need to make a phone call." Richardson stood up. "Give me ten minutes."
"Please go ahead." Ling Yun nodded.
Richardson walked out of the conference room with his phone in his hand, and the door closed softly behind him.