novelden Chapter 67 The Game of Pulling Together
Chapter 67 The Game of Pulling Together
As time went on, all seven investors had reviewed the documents.
The Sequoia Capital representative was the first to speak, saying, "Mr. Lin, we can accept some of the terms in your financing proposal, but the vast majority are unacceptable."
He glanced at the materials in his hand: "I agree with the premium buyback plan in principle. A fixed annual premium of 50% is indeed a very high rate of return in the venture capital industry, but I cannot accept the mandatory buyback clauses, etc."
An IDG investor agreed, saying, "Normally, buyback rights belong to investors, but Mr. Lin is demanding that the founders have a mandatory buyback right. Moreover, investors can't refuse. What's even more outrageous is that he decides whether or not to buy back the shares."
He looked around at his colleagues and continued, "For investors, whether in the short or long term, there are huge risks involved, but the returns in the early stages are the lowest. To obtain a higher rate of return, it is necessary to hold the stock for five to ten years."
He then looked at Lin Chuan again: "If DeepBlue Technology develops well, and you buy it back early, the investors will suffer a huge loss. If DeepBlue Technology fails to take off, and you keep refusing to buy it back and won't let us resell it to a third party, it's like we're stuck with nothing."
Other representatives from the funding institutions present also nodded in agreement, stating that they could not accept such an outrageous financing plan.
Fang Xu, the head of Jinsheng Capital, looked at Lin Chuan: "Mr. Lin, the basic logic of venture capital is to exchange funds for equity, and equity for exit channels. You cannot deprive us of our most basic exit rights. The forced repurchase right is in your hands, and we are completely passive."
The Sequoia Capital representative added, "We are indeed very optimistic about DeepBlue Technology's prospects and highly value your technical team, but cooperation should be two-way and fair. Mr. Lin, your proposal puts almost all the risk on the investors."
The Matrix Partners representative chimed in: "That's right. We've invested money, but we can't transfer our shares, we can't decide when to exit, and there's no performance-based agreement. What's the point of our investment?"
The people from these venture capital firms were all shaking their heads, expressing their inability to accept the proposal.
Lin Chuan listened without saying a word, and his expression remained unchanged.
When everyone fell silent and looked at Lin Chuan, he slowly spoke: "I understand what you all mean, but my conditions will not change."
The air in the conference room froze for a moment, and everyone looked at each other in bewilderment.
The head of IDG Capital was about to speak when Lin Chuan waved his hand to stop him, then said slowly and deliberately:
"Gentlemen, DeepBlue Technology is not short of money. Financing can simply allow the company to expand its market share as quickly as possible, but it doesn't matter if we don't raise funds. We're not worried that being a little slower will cause our competitors to eat up our market share."
"The plasminogen lysate technology is a proprietary technology of DeepBlue Technology, and we can gradually advance it."
At this point, Lin Chuan added with an extremely confident smile, "I'll put my word here today: Deep Blue Technology will not apply for patents for the phagocytic microbial community technology. If anyone can crack it, I, Lin Chuan, will truly acknowledge it."
His words surprised the seven investors present, as they had indeed checked and found that DeepBlue Technology had not applied for any technology patents.
They're absolutely certain that no one in the world can reverse engineer DeepBlue Technology's technology.
Next, the two sides will continue to engage in a tug-of-war and game of strategy.
The negotiations lasted a full day.
We discussed the framework in the morning and worked out the details in the afternoon.
Representatives from the seven investors took turns speaking, raising increasingly pointed questions.
However, Lin Chuan remained unyielding on the core issues.
There are three most pressing points.
The first is the repurchase premium. The investors want to increase the annual premium by 50% to 100%, which means doubling the premium every year.
The second issue is the vague start date for the repurchase. The investors have proposed that the repurchase process should be initiated only after a lock-up period of at least ten years.
The third issue is the pre-investment valuation. The investors believe that the valuation of 750 billion yuan is outrageous. If 20% of the equity is sold at this valuation, the post-investment valuation will soar to 937.5 billion yuan, and the investors will have to spend 187.5 billion yuan to acquire that 20% equity.
The Sequoia Capital representative said, "Mr. Lin, the valuation of DeepBlue Technology's backdoor listing, as far as I know, is 186 billion yuan. Your current pre-investment valuation of 750 billion yuan makes no sense no matter how you look at it."
Other funding agency representatives echoed their agreement.
Lin Chuan calmly said, "The valuation given for the backdoor listing is because I owe Shenhong a favor, and all the costs of the backdoor listing were borne by Shenhong Group, including the shell resources provided by Shenhong. That's why the valuation was reduced to below 200 billion."
At this point, he looked around at everyone and added, "Leaving aside these factors, for a company with monopolistic technology and huge market potential, a valuation of 750 billion is only low, not high."
The head of Sequoia Capital immediately said, "A valuation of 750 billion is equivalent to a price-to-earnings ratio of over 200. Looking at the world, there is no environmental protection company with a price-to-earnings ratio of more than 50, not to mention that this is a price-to-earnings ratio of over 200 given by the primary market."
Upon hearing this, Lin Chuan looked at the other party and smiled, "President Zheng, don't try to fool me. Using the price-to-earnings ratio of traditional environmental protection companies to price DeepBlue Technology is just being dishonest. Our technology is a revolutionary breakthrough and a monopoly. Only DeepBlue can provide it, and our competitiveness is unmatched."
He then countered with, "Mr. Zheng, which environmental protection company in the world meets all these criteria?"
The head of Sequoia Capital remained silent.
Lin Chuan surveyed the attendees and said casually, "Furthermore, who told you that DeepBlue Technology is an environmental protection company?"
Upon hearing this, everyone was stunned for a moment and turned to look at Lin Chuan.
"Mr. Lin, what makes you say that?"
Lin Chuan smiled and said, "The Plastic-Eating Bacteria Project is not our company's first project; it is our second project. Our first project was also monopolistic."
Ok?
Everyone was taken aback.
They always thought that the plasticizing bacteria business was DeepBlue Technology's first project, but they didn't expect that there was another project before that.
The key point is that after conducting background checks for so long, they couldn't find any information related to it at all.
The IDG Capital representative couldn't help but ask curiously, "Mr. Lin, what's the other project?"
Upon hearing this, Lin Chuan replied with a smile, "It's a trade secret, I can't say, it's not the time to announce it yet."
Everyone looked at each other, seeing that Lin Chuan was keeping them in suspense and refusing to say anything, and they were at a loss as to what to do with him.
After a moment, Lin Chuan looked around at everyone and smiled, "Gentlemen, the higher the pre-investment valuation of my plan, the greater your future returns will be. If you invest 5000 million, the repurchase price after one year will be 50 million at a 10% premium. But if you invest 1 billion, the premium after one year will be 5 million."
The investors were speechless. "Are you kidding me?"
The initial capital has increased, but the risk has also increased, yet the number of shares has not increased. You haven't mentioned any of this, have you?
……