King of Capital

Chapter 90

Cheng Wei's eyelids twitched when he heard the familiar and unfamiliar dialogue. Yesterday afternoon, when he tried to probe the financing situation, Xie Jingxing gave him a perfunctory response, which made him determined to introduce a strong management team to balance the voice of external investors.

However, if the grudges between the two sides lead to internal strife, it would go against his original intention of gaining actual control over the company.

Goldman Sachs has 800 MDs. He offered the president position and shares to 1% of the 800 whom he had only met twice. Does he value his work ability? Don't mess with the princess. He just wants to hold Didi in his hands and move forward.

Liu Qing is optimistic about Didi. With its strong founder, excellent marketing and promotion team, and excellent resource integration capabilities, Didi is almost a complete copy of Uber.

In comparison, the founding team has a Silicon Valley work background and is more inclined to win through technology, so Kuai seems a bit mediocre. It is okay in all aspects, but just okay.

So when Cheng Wei made the invitation last night, she only weighed it for a minute, or a dozen seconds, and made the decision in her mind.

Her ability to integrate resources can make up for Didi's worst shortcoming. The two parties are simply a match made in heaven. Uber has achieved a valuation of 3 billion US dollars abroad, so there is no reason why it cannot be the same in China with a population of more than one billion.

The question is how much of the $3 billion valuation she can get and what the ceiling of her future career path will be.

These are things that she and Cheng Wei cannot decide on their own. The attitude of investors such as Tencent and Taihe, who have invested real money to help Didi grow to a valuation of US$3 billion, is very important. Xie Jingxing has led the WhatsApp acquisition, Didi's current round of financing, and the current money-burning battle for online ride-hailing services both in front of and behind the scenes.

Xiao Ma Ge showed great trust in him, and he also showed a strong style.

Therefore, Liu Qing's laughter and anger were all intentional, all for the purpose of gaining more benefits for herself, testing whether Xie Jingxing welcomed her arrival, and where her bottom line for bargaining was.

At the end, she was a little emotional. She had been in the workplace for more than ten years, but was she really not as good as a young person who had just started out...

Song Anli couldn't figure out for a moment why Cheng Wei had such a wry smile on his face, and why Xie Jingxing and Mr. Liu from Goldman Sachs were bickering and laughing. But the only thing she could confirm was that Mr. Liu dared to call her "Little Xie", and was on the same level as Professor Zhang from Fudan University. This woman was definitely not someone who could be easily dealt with.

So the change in the amount of financing and share transfer is because of this matter. How much does this woman want?

"If Mr. Liu joins Didi, does the existing option pool need to be adjusted?" She asked what Xie Jingxing wanted to ask.

Cheng Wei looked at her with a smile on his face: "Uh, I remember you are Mr. Tang's..."

"Song Anli, I have been transferred to be Mr. Xie's assistant." Song Anli sat upright and took the initiative to introduce herself.

Liu Qing smiled and said, "You are so pretty and likable, why don't you come to Didi and be my assistant?"

"She is now the chairman's assistant. If your position is too low, it will not be attractive." Xie Jingxing gave way at the right time.

"As long as Mr. Xie is willing to let him go, Mr. Liu's first requirement for joining the company must be met no matter what."

Upon seeing this, Cheng Wei quickly stepped forward and made an offer: "Assistant Song, do you find it attractive to be the assistant to the co-founder and president of Didi?"

"If it doesn't work, I can add the title of director of the board of directors, and be on the same level as Mr. Xie. It won't be shameful to be my assistant, right?" Liu Qing added.

Song Anli thought that he was not easy to please. His appetite was much bigger than Professor Zhang's. She acted shy on her pretty face and said, "I am satisfied, but it depends on whether Mr. Xie agrees or not."

Being a co-founder means having equity rather than options. Having equity means entering the board of directors is a natural thing, while the position of president is a minor matter, and it all depends on how much management rights Cheng Wei is willing to give to Liu Qing.

Xie Jingxing's thoughts raced as he watched the two people in front of him making a fuss. From a long-term perspective, Liu Qing's entry into Didi was a good thing. Domestic policy risks were temporarily vague, and future overseas policy risks were also difficult to predict.

In this regard, her ability to integrate resources is impeccable. Out of respect for the leader of the underworld, it is very reasonable to give her some options and equity. She will have to think carefully about it only if she enters the board of directors.

"My assistant is my right-hand man, you guys want to tear my arm off?" Xie Jingxing raised his hand and put his arm around the shoulder of the person next to him.

"..."

Cheng Wei and Liu Qing were speechless.

Song Anli's face was covered with pink. She held up the draft beer cup with both hands and took a sip of beer. Her expression became more and more shy. "I think that we should take one step at a time and drink one sip at a time. We should first divide Mr. Liu's shares and then talk about the arm."

"Assistant Song, you decide. Let's talk about shares first. Mr. Liu will be given 3+5% equity and options when he joins Didi. The 3% equity will be given in one go, and the 5% option rights will be valid for two years." Cheng Wei said excitedly.

At present, he and the founding team hold about 50% of Didi's equity structure. Matrix China and Jinshajiang have been diluted by a total of 10% in three rounds, Xiyou 8%, and Tencent was diluted by one round to 18.4%. He holds 15% of the option pool on behalf of Didi.

The 5% options given to Liu Qing will be taken out of the option pool and redeemed after two years, and the 3% equity will be settled after this round of financing.

Based on the post-investment valuation of this round of financing, the princess can get equity options worth 20 to 30 million US dollars as soon as she enters the game. When the two were negotiating last night, he would rather give more equity, but Liu Qing, on the other hand, was full of confidence in the company's development and wanted options.

"Have you talked to Tencent's strategic investors?"

Xie Jingxing leaned back in his chair and fell into deep thought. Financing is a very complicated job. Tang Man and his lawyers and financial team are working overtime and their heads are about to smoke. Based on Didi's current round of financing of $35 million and the transfer of % of its shares, Taihe led the investment of million, a fund under the Construction Bank system wanted million shares, and Tencent followed with the remaining million.

Using the most rough method of counting on one's fingers, we can estimate that Taihe obtained 17% of the shares, CCB-affiliated funds obtained 10%, and Tencent was diluted in one round to a total of 19%.

All other shareholders were diluted, and the founding team barely got actual control with about 33%, Grapefruit 5%, Jinshajiang and Matrix China 6%, and the option pool 9%.

To determine who will suffer a loss or not, we have to carefully analyze it down to the 0.1% point. It is equivalent to drawing a 100% target first. In the end, no matter how we analyze it, it must be 100% aligned, otherwise it will not pass the regulatory review and cannot be registered.

With this calculation, 17%+5%, he became the largest shareholder besides the founding team. Liu Qing wanted to come in after this round of investment, so he had to say a few words.

In other words, as long as he nods, it doesn't matter even if we have to fall out with Tencent.

"Not yet. Last night, Mr. Liu and I went out for dinner and discussed this idea, and you were the first person I thought of." As expected, Cheng Wei restrained his expression and gave the expected answer in a sincere tone.

Xie Jingxing did not comment and asked, "Board of Directors, do you have any ideas?"

"The board of directors is based on the original management team with two seats, Xiyou, Tencent and Jinshajiang with three seats, and now with Mr. Liu." Cheng Wei's attitude towards the board of directors is indifferent.

Xie Jingxing nodded slightly. Taihe would not join the board of directors, and Xiyou would be the main investor in the subsequent rounds. He had already promised Tang Man in advance that there was no reason to go back on his word, so she would serve as a director of Didi's board of directors.

"Because time is tight, there is an idea I haven't discussed with Mr. Cheng yet. I think after this round of financing, Didi's equity structure needs to be adjusted to AB shares." Liu Qing said the key point that had been hidden all night.

AB shares are a two-tier equity structure, which divides the company's 100% equity into two types, A/B, according to the priority of equity, leaving aside miscellaneous rights such as cashing out, management redemption, etc.

The most important right is the "voting right". Taking Didi as an example, the Class B shares held by Taihe and other investors have 1 voting right per share, and the Class A shares held by the management have 2 voting rights per share.

A simple calculation shows that Didi’s management can hold more than half of the voting rights with 33% of the shares, thereby gaining absolute control over the company.

In actual applications, the voting rights ratio of A/B shares is often as high as 10/1. For example, the founders of giant companies such as Alibaba, Facebook, and Google all use this equity structure to achieve actual control of the company with a low proportion of equity but super high voting rights.

Internet giants often need to raise huge amounts of money during their development phase, which can easily dilute the founders' shares. After the millennium, this approach has often been used by Internet companies.

No one here is a fool. It is foreseeable that Didi's future financing will be exaggerated. A/B shares are a natural and inevitable thing. Too much dispersion of equity is not conducive to corporate management.

The prerequisite is that investors such as Tencent and Taihe who have spent a lot of money are willing to do so. After all, they spent 10 yuan but the most important right is only worth 1 yuan. This is how everyone has been playing in recent years. Ten years ago, investors would probably have called the police directly and claimed it was a scam.

Of course Xie Jingxing was willing. He invested to make money and was not interested in the actual control of Didi from the beginning to the end.

Put yourself in his shoes. He is not interested in the actual control of Didi, so whether Cheng Wei is interested in him is a question... This is exactly why I think it is necessary to think carefully about whether Liu Qing should join the board of directors.

Xiao Cheng talked to Liu Qing about many things before coming to him. He did not respect him much. Didi and Tencent have a strategic partnership, and he is a pure investor.

Introducing new investors in subsequent financing rounds will sacrifice the interests of previous investors. Will Xiao Cheng sacrifice Tencent and state-owned funds, or will he prioritize sacrificing the pure investors who are the second largest shareholder? What's more, Liu Qing has basically replaced him since he has joined the game.

Jinshajiang's Zhu Xiaohu personally helped Didi to conquer the entire Beijing market, but in the end he did not follow up in any subsequent rounds of financing. This is certainly because Jinshajiang itself did not want to bet all in, but it is also interesting to think about what the management team represented by Cheng Wei was thinking.

Xie Jingxing was willing to let Liu Qing in, but everyone had to be honest and make a good attitude and negotiate the price in advance, and not use people forward or backward, and then grow up after the crisis and throw him away like toilet paper.

"It would be great to have a professional investor like you join us to help Didi sort out its equity structure."

Xie Jing Xing paused, then looked down at the light orange-yellow foam in the wine glass: "Didi has a promising future."

“Thank you Mr. Xie for your optimism. Mr. Liu and I would like to toast you on behalf of the founding team. Please take good care of us in the subsequent rounds of financing.”

Cheng Wei listened to the instructions and raised his glass to accept the offer without any hesitation. The investment share of Grapefruit Capital could be negotiated later and would be directly written into the agreement for this round of investment.

To be fair, he was very reluctant to have a conflict with Xie Jingxing at the moment, but some things had to be set early, otherwise it would be too late to talk about it later.

"Boss Liu, do you have anything to say?" Xie Jingxing looked at Liu Qing nonchalantly.

Cheng Wei was so happy that he let Tang Man worry about how to negotiate the subsequent rounds of financing. It would be stingy for him to roll up his sleeves and fight for every inch.

On the contrary, Liu Qing mentioned A/B as soon as they met. He had a strong attitude, but what about his ability?

"I'm new here so I'll give Didi a small gift."

Liu Qing raised his glass and drank it all: "Baidu went to steal Alibaba's home."

(End of this chapter)