King of Capital

Chapter 20 Question Equity Investment
It drizzled in the early morning, and the sticky, moist, slightly hot air made people feel listless.

The interns yawned and lined up in a hurry to wash up and go out together. Feng Shuo drove a Cayenne in a low-key manner, and together with Xie Jingxing, there were exactly eight people in two cars.

It was still early when we arrived at the company, so we all ran to the tea room to have breakfast. After some hesitation, we sat down at our workstations. Our minds finally cleared up, and we started staring at each other with our own thoughts.

After a night of thinking, everyone had more or less made up their minds and were just waiting for someone to speak first.

"In addition to the two-way selection of mentors today, the next assessment topic - equity investment (PE) - was also announced."

At 9:30 in the morning, Tang Man played the role of the starting gun in the conference room and said, "I have three projects here. You will automatically divide into four groups according to your instructors. Each group needs to meet with two of the founders, divided into primary and secondary options. Later, each group will select one company to participate in the project discussion meeting."

"PE?" Xie Jingxing confirmed with a little surprise and interest.

The financing stages of an enterprise can be roughly divided into: seed round/angel round, A round/B round, C round - listing.

Seed/angel round companies are in the early stages of entrepreneurship. Usually, the founding team consists of only a few people with only one entrepreneurial idea or project online for testing and operation. At this stage, the investment risk is high and the demand for funds is low. Companies raise funds in order to accumulate projects.

From the perspective of professional investors, what they pursue is high risk and high return with small investment.

Anyone who dares to invest money in seeds that have not yet sprouted is truly an angel. That’s why they are called seed rounds and angel rounds. The most famous project incubator is YC in Silicon Valley abroad.

The A/B round companies themselves are becoming more perfect, at least the project product has no problems and has initially gained market recognition, the risk is reduced and the capital demand increases, and corporate financing is all for the purpose of expanding the market scale and further improving the product.

This stage is called venture capital (VC). A large number of institutions such as Sequoia, DIG, Taihe, etc. are VCs. Mihoyo, which Xie Jingxing wants to invest in, is a typical A-round venture capital.

It is worth mentioning that Sequoia has been growing in size over the years, and has been involved in rounds A to C and beyond, with a strong momentum to take over from the beginning to the end. In contrast, Hillhouse Capital originally only focused on round C - equity investment (PE) at the listing stage, but has also started to do VC in recent years, taking over from the end to the beginning.

PE investment has relatively the lowest risk, and companies have the highest need for funds. The business model is basically running smoothly, and the only thing left to be solved is the profitability issue. At this time, a lot of money is needed to burn and kill competitors in order to get listed.

He Chuan was right last night. This is indeed the job that many people in finance initially dream of doing. Investing billions of dollars at a time, changing the industry landscape and even potentially affecting the world brings an unparalleled sense of accomplishment.

"After the meeting, I will send the business plans of the three projects to your email, and report them to me together with the results of the mentor selection. First come, first served."

After briefly explaining the rules, Tang Man gave a final reminder and then adjourned the meeting.

Back in the public office area, Feng Shuo immediately went to his good brother to confirm: "Brother Chuan, are these projects real?"

"Of course, the reason why we asked you to choose your instructors first is because we are originally looking at these projects." He Chuan emphasized.

Shen Xin was full of resentment and said, "Keep calm, don't be too stressed. These projects are only related to equity investment business and are actually in the early investment stage. Our company receives tens of thousands of business plans every year, and we can only invest in one ten-thousandth of them."

"brave."

Xie Jingxing, who understood the hidden meaning, couldn't help but give a thumbs up to show his respect.

Leading securities firms, including large institutions such as Sequoia and Temasek, would rather spend huge amounts of money to invest in a startup with lower risk of verifying its business model, but are unwilling to take high risks and spend small amounts of money to invest in an early-stage startup that seems to have unlimited prospects but has not been verified.

This logic is based on the fact that they have money, and providing investors with a stable rate of return is above all else.

Moreover, some small and unknown PE institutions specialize in investing in companies that have already achieved profitability and are just waiting to go public. They will only have a chance to go public if they allow me to invest in you. If I don’t, you will never be able to go public.

Juntai certainly cannot perform such amazing operations, but they do have considerable listing resources to bring to the company.

Combining the two aspects, Juntai can make a living by just lying in the PE stage, and it can be said that it is very brave to enter the high-risk VC stage.

"If you don't move forward, you will fall behind. As the industry leader, Juntai always maintains a sense of crisis." Shen Xinshang values ​​​​the advantages of display.

As she was talking, Su He came out of the office and said, "Xie Jingxing, come over here and let's talk."

"Think clearly about what you really need, instead of just treating this month as an internship show."

Xie Jingxing reminded the interns beside him from the bottom of his heart, and walked towards Su He's office under their gaze.

Her perfume today was very light, and the faint scent of bitter orange made her look a little younger. There was a cup of green tea on the coffee table, which was this year's Mingqian Anji white tea.

"I heard from Shen Xin that Yunshan has a spin-off and listing project that he wants to entrust to Juntai?" Su He asked directly.

Xie Jing Xing also answered directly: "It's still early, it depends on the bidding results. Yunshan is in the north after all."

"I understand. I happened to meet Mr. Liu Qiming from Taihe after get off work yesterday. He also mentioned this to me. He also told me about your idea. In a short period of time, mergers and acquisitions should be the business that is easiest to demonstrate your ability."

Su He calmly turned the ring on her middle finger and spoke at a moderate pace, convincingly: "Apart from external factors, everyone wants to bring interns with excellent abilities."

"Boss Su, actually I want you."

Xie Jing Xing paused, and continued: "Including President Tang and President Luo (the head of the research institute), we can talk about joining Taihe."

"Huh?" Su He frowned, sat up straight and looked carefully. She thought she had heard it wrong.

Xie Jing Xing explained sincerely: "I regard Juntai's arrangement of you mentors to be on the show instead of others as some kind of in-depth talent screening. Mr. Liu Qiming is going back to Yunshan, and someone has to take his place. Talent is also needed to develop new businesses."

Not everyone can take over the job of deputy general manager of Taihe, and the MD of a leading securities firm cannot just change jobs.

Everything has a process. If he waits until he actually takes charge of Taihe before making a major personnel change, it will be like eating shit while it's still hot.

Su He was interviewing him, and he was also interviewing Su He. Their purposes were different but the processes were the same.

"From my father's perspective, in the short term, there is no better way to demonstrate my ability than to recruit Juntai's MDs to Taihe in batches."

After a few words, the identities were reversed. Xie Jingxing took a sip of tea and said with a bad taste: "Putting aside external factors, I want to work with colleagues with excellent abilities."

Su He let him walk away with the teacup, not knowing what to feel. He turned around and called Song Anli into the office.

She had been running around wearing Xie Jingxing's coat these past two days and everyone had seen her. Killing the chicken to scare the monkey when updating the division of labor in the prospectus turned out to be a good thing.

The method is a bit low-level, but it works.

Tang Man thought the same, so after Su He called Xie Jingxing first, she quickly reacted and called Song Anli to the office for a detailed discussion. Qi Tian and Stanford received the intention from the head of the research institute, and the wealth advisor business instructor who was filling in the shoes first mentioned Zhao Mengche's name. This little princess's figure is absolutely beautiful when dancing ballet.

The second thing is to recruit Xue Haoran. He doesn’t have to do anything else. He just needs to carry his Peking University graduate degree certificate with him as a table leg when playing Texas Hold’em with clients.

Xie Jingxing interviewed several instructors, except for the wealth advisor's instructor.

Today, wealth advisory business is ignored, while securities firms are making a lot of money from channel business. It was not until ten years later when the profits from channel and brokerage business became thin that they began to pay attention to wealth advisory business.

Regardless of whether they are good or bad, most of the interns have found jobs, leaving Feng Shuo and Fan Haonan alone, looking at each other in confusion.

Back in the office, facing many inquiring eyes, Xie Jingxing gave his answer: "I choose President Su."

Song Anli smiled, the clothes were not worn in vain!
After the dust settled, Zhao Mengche remained calm and turned to strive for the right to have priority in selecting projects. Feng Shuo and Fan Haonan, who were passively assigned to form a group with Tang Man, particularly agreed with this.

A chain milk tea brand, a stranger photo social APP and an overseas shopping platform.

Xie Jingxing roughly looked through the catalog of business project books. Sure enough, the three start-ups were all looking for early-stage financing, not PE but VC.

Zhao Mengche and Qi Tian's group both chose overseas shopping platforms as their first choice, the former chose social apps as their second choice and the latter chose milk tea shops as their second choice.

Feng Shuo's group was still at a loss. He Chuan suggested that someone with something to do with milk tea and chemistry might be the first choice.

In fact, the financial industry welcomes talents with cross-industry professional backgrounds. The financial threshold is low and professional knowledge can be learned from scratch after entering the industry. Professional knowledge from other industries cannot be learned in the financial industry.

For example, a fund manager who is known as the "No. 1 in public offering" has a bachelor's degree in medicine, a master's degree and a doctorate in biomedicine, and is still effective even though she changed her career path late.

"What do we choose?"

Song Anli watched other groups pick and choose eagerly, and couldn't help but remind them.

Xie Jingxing flipped through the business plan catalog and said thoughtfully: "The main choice is milk tea and the secondary choice is a photo social networking site."

Several e-commerce giants have proved that if you don’t have money, don’t engage in cross-border e-commerce, so first rule out overseas shopping and purchasing agents.

As for the remaining two companies, the milk tea industry has just gone through nearly ten years of fierce market competition and is about to start the next even crazier "ten-year war".

Now is a critical period of transition as corpses are everywhere and each brand is preparing to expand its armaments by stepping on the corpses of its peers.

Without mentioning specific companies, it is interesting to just look at the entire industry.

He Chuan and Shen Xin accompanied four groups of interns to meet with the founders of the main projects. Zhao Mengche and Feng Shuo's group got there first, and Xie Jingxing took Song Anli to meet the founder of the photo social networking site project first.

The meeting was held in a deserted coffee shop, which was small and decorated in a retro style. Several lattice windows, the same style as those in the old Shanghai villas, allowed the sunlight after the rain to form beams that shone on the table, and tiny dust particles floated in the beams.

The founder is a middle-aged man in his thirties with neck-length hair. He is wearing a khaki black plaid shirt and is staring at the beam of light in a daze.

When Xie Jingxing and Song Anli came to him, he raised his head and stood up, glancing at the tiny traces of sewage on the edges of their shoes. He clenched his hands, relaxed them, and hesitated for a few seconds before extending them: "Hello, I am the founder of 'Jihe', please take a seat."

"Hello, Mr. Chen, I'm Song Anli, an intern at Juntai Securities, and this is my partner Xie Jingxing." Song Anli politely handed over the freshly-made business card with both hands.

Mr. Chen, a middle-aged man, put his business card aside and said, "I pay more attention to whether the communication with investors is smooth. Now I will give you one minute. Can you briefly introduce yourself?"

"I graduated from the London School of Economics and Political Science in New York with a degree in finance. I'm currently interning at Juntai, working close to the investment banking business line... I think in terms of age, our understanding of and interest in social software are enough to support us in in-depth communication." Song Anli introduced herself as if she was in an interview.

Mr. Chen didn't express his opinion. He tilted his head and asked seriously, "What about you?"

"Juntai Securities Xie Jingxing, I'm sorry Mr. Chen, I didn't prepare a business card. We're just meeting for the first time today so let's just chat casually. You don't need to feel too much pressure."

Xie Jing Xing opened the computer with his eyelids drooping: "It's mainly my colleagues who are communicating with you, and I'm responsible for taking notes. Is there any problem?"

"……no problem."

Mr. Chen picked up the water cup and took a sip. He clearly felt that he had left his safe zone and was no longer strong.

"Mr. Chen, what is your motivation for wanting to create a photo social APP?" Song Anli asked questions step by step according to the "100 Questions for Meeting Founders" taught by He Chuan.

Mr. Chen organized his words and said, "For art. I am an art student. I fell in love with photography while drawing and sketching. I could not find tools suitable for ordinary enthusiasts when retouching photos with PS. So I wondered if I could make a fool-proof photo retouching software that ordinary people could use."

"But judging from the current main business of the APP, you seem to prefer stranger social networking?" Song Anli continued to ask.

“Just like our name, ‘Instant Match’, we hit it off right away.”

Mr. Chen was silent for a few seconds and then stopped talking and asked, "What do you think is the meaning of taking photos?"

"Record the beautiful moments in life and make them last forever." Song Anli answered thoughtfully.

Mr. Chen nodded: "What is the significance of these recorded moments? Is it just a memorial?"

"Uh, I think I understand what you mean. You mean sharing photos."

Song Anli was a good student. Mr. Chen showed a teachable expression and asked again: "Have you ever used 'Instant Match'?"

"I didn't have it before. On the way here, I specially downloaded 'Jihe' and took a lot of photos. After using it, I found that..."

Xie Jing Xing couldn't listen any more, so he interrupted and said, "After using it, I found that you have a romantic temperament. I don't know if you have heard of a foreign photo social software called ins. As far as I know, the founder of ins is also an art student."

"We are different. In my opinion, Instagram's filters are very simple! They just took advantage of the mobile smartphone market and have a large amount of user image data. If the popularity of mobile smartphones in my country increases to the same level as in the United States, we will do better than them."

When Mr. Chen was accused of plagiarism, his expression changed instantly and he blurted out: "Only people who work in technology understand how important data is!"

Xie Jingxing turned off the computer screen, raised his chin slightly and asked calmly: "Juntai has someone to do macro market analysis. The market is there. You just need to tell me why it's you and not someone else?"

(End of this chapter)