King of Capital

Chapter 6 Valuation of million

The Magic City Science and Technology Entrepreneurship Center is an entrepreneurial incubation base supervised by the Ministry of Science and Technology. A large number of high-tech enterprises such as Titan Technology and Dongsheng New Materials have emerged from here.

Mihoyo is also like this. Two years ago, it participated in an entrepreneurial competition and won an interest-free loan of 15 yuan and the right to use a -square-meter office in the Science and Technology Innovation Center for half a year for free. At the same time, it received a seed round of financing of million yuan from Song Tao, chairman of Sky Network, in exchange for % of its shares.

That was two years ago, and now the office space needs to be rented out, and all the money has been spent.

Before returning to China, Xie Jingxing contacted Liu Wei, one of the founders of miHoYo, on Weibo. Liu Wei was skeptical about his identity, but became 70% convinced after meeting him.

The trust comes from a two million Patek Philippe and a four million Bentley Continental, as well as Liu Qiming, deputy general manager of Taihe Capital.

The venture capital circle is neither big nor small. Taihe is an early player in the circle. Currently, there are few financial institutions in China that are larger than Taihe and also engage in venture capital. This is the advantage of family offices. You can do whatever you want with your own money.

Liu Wei has the characteristic appearance of the Xianghu region, with the same square face as Lei Xiaomi and some gray hair. Judging from his facial features, he is the same age as Lei Xiaomi.

As soon as the two sides met and got to know each other, he explained that the other two founders of miHoYo, Cai Haoyu and Luo Yuhao, were night owls and were catching up on sleep at home after working overtime too late last night.

Xie Jingxing didn't take it to heart. He had enough goodwill towards this gaming giant that would produce the hit game "Yuan Shen" and whose corporate value was 50 billion.

In the 50-square-meter open office, office seats are arranged in a circle against the wall, and the simple conference table in the middle is cluttered with comics, novels, and figures - even the second-year student needs to fall in love.

Xie Jingxing took the novel in his hand and flipped through it: "The concentration of the second dimension here is too high."

"Tech geeks change the world, this is our vision." Liu Wei didn't care and shouted the slogan with a smile.

Xie Jingxing nodded: "Sword Art Online is good, you have good taste."

"Are you watching too?" Liu Wei was very happy to meet an investor who knew the business and there were no communication barriers.

After Xie Jingxing returned to China, he specially watched "Sword Art Online" for more than ten hours on the plane, but he did not take advantage of the situation and simply denied it, "I don't watch it."

"......?" Liu Wei was speechless for a moment.

"Do you know SHN48? They are little idols in offline theaters, and they are the otaku culture from Japan. Taihe is discussing financing with them, and they gave me a few signed copies of Sword Art Online."

Xie Jingxing looked at Liu Qiming and said, "Taihe is an early player in the domestic VC circle. The domestic market was like that in the past few years. There were no innovative startups, so it mainly focused on investing in traditional fields such as finance, culture and entertainment, and medical technology.

"It's different now. Taihe will turn its attention to the cultural trends of young people."

Liu Wei did not immediately get excited about the common pie-in-the-sky trick, and cautiously emphasized: "We are a game production company."

"As far as I know, the sales of MiHoYo's only product, Honkai Academy, are not very good."

Xie Jingxing took out his phone, opened the Apple App Store and found "Honkai Gakuen". The number of downloads made Liu Wei a little embarrassed.

He said to himself: "Since you mentioned games, let's talk about the most important issue of game distribution and sales. I can help you arrange a meeting with Chen Rui, the chairman of Bilibili, anytime."

In fact, Chen Rui is the next founder he wants to meet, as well as ByteDance's Zhang Yiming, Didi's Cheng Wei and a series of other future outstanding entrepreneurs who are in the making.

Venture capital is like getting married. You can’t get married tomorrow if you want to. Investors and startups need to get to know each other first, get to know each other, and fall in love. When the startup is short of money and needs financing, then we can talk about whether the two parties are attracted to each other.

If yes, then we can discuss the betrothal gifts and dowry, prepare for the wedding, and walk hand in hand into the marriage hall. "So now let's get back to the topic. Do you agree with Taihe's future strategic direction?" Xie Jingxing asked again.

Liu Wei was a little confused. During the first meeting, instead of talking about product understanding, revenue, and the founding team, he immediately showed off his own strength. This was not an investment, but a sponsorship.

But he couldn't say no against his will. The traditional sales channel in the Apple Store was too ineffective. Mihoyo's current production of "Honkai Gakuen 2" urgently needed to change its distribution method. Station A and Station B, the two old nests of the second dimension, were their ideal distribution partners.

"Sixty million. MiHoYo's current valuation is sixty million." He reported the price with a slightly red face.

Xie Jingxing was dissatisfied: "A 50-square-meter office, a five-digit product download volume, and a founding team of five people, and you want me to value it at 60 million?"

Thanks to Steve Jobs, the emergence of the iPhone 4 changed the ecological environment of the entire domestic gaming industry. Large-scale online games were dug up, and PC-side "come and kill me if you're a brother" web games and mobile phone games were ready to take off.

Listed company Shanda Games acquired the popular mobile game "Da Zhangmen" at a whopping price of 17.39 billion yuan, with great ambition to integrate the mobile game business. Its stock price rose in the secondary market.

In other words, what Shanda Games bought for 17 billion yuan was not just a game, but also the stock price.

But even in this case where listed companies have inflated the valuation of the mobile game industry, MiHoYo's valuation of 60 million is still too exaggerated.

Xie Jingming thought it was normal to cut it in half.

Liu Wei was not convinced. He thought that only his own family knew his own business. The valuation of 60 million was a bit high, but the excellent capabilities of their founding team were beyond doubt.

Song Tao, an investor in the seed round, listed Sky Networks on the Nasdaq in the United States, claiming to be the first Chinese Internet stock; Shanda Networks, a dominant player in the gaming industry, took a fancy to them and wanted to acquire them in full, but the company rejected the offer without much hesitation; even now, Innovation Works, a venture capital firm founded by Mr. Kai-Fu Lee, also wants to invest in them.

MiHoYo has not reached the end of its rope, and Taihe is not its only option.

"Your core profit model, game art, and product design cannot be solved by program code alone."

Liu Qiming stood up and criticized them from a business perspective: "It is true that every member of your entrepreneurial team is excellent, but the entire team is not perfect."

To put it bluntly, even if you are better at writing code than Lei Xiaomi, you are not worth 60 million. What we want to invest in is a complete startup company, not a small workshop run by a few students who have delayed their graduation.

Being rejected by an industry leader at the level of Taihe's deputy general manager, Liu Wei instinctively blurted out: "These are not difficult, we can learn them."

"Of course, as long as you can solve the core profit model, a valuation of 60 million is not out of the question." Xie Jingxing made the final decision.

The words that Liu Wei wanted to say went around in circles and he swallowed them back into his stomach without saying them out loud. In fact, they have already been thinking about the profit model of "Honkai Academy 2" - copying Tencent's signature skills, making the game free to download and selling character game skins.

"Honkai Gakuen 1" is an extreme all-female character game, but unfortunately they simply thought that it would be fine to buy it out on the Apple Store and didn't spend any time on this aspect. As a result, the consumption habits and cognition of domestic game players taught them a solid lesson.

There is no rush to reveal this. Let's first try to influence Taihe. Whoever can take the initiative in the negotiations will have the advantage.

Finally, Xie Jingxing agreed to help Liu Wei arrange a meeting with Chen Rui from Bilibili, and today's meeting came to an end.

　Thank you for the monthly ticket, bow

　　
　
(End of this chapter)