2003: Starting with Foreign Trade

Chapter 388 Series B Funding

After several days of negotiations among the three parties, the final cooperation agreement was reached with Sequoia Capital leading the investment and ByteDance Capital following suit, acquiring 15% and 5% of the shares from SF Express respectively.

Tan Jincheng now only owns a few stocks and some properties, including the 100 houses he rented to Flash Motors. He doesn't even own a car.

In addition, there are some savings. If you really think about it, he doesn't seem like a rich person. However, that's not how you calculate wealth. Tan Jincheng's own and even his family's daily expenses can be included in the company's accounts.

Therefore, there is no such thing as investing under a personal name; it's much easier to invest through a company than under a personal name.

There is no possibility of ByteDance going public, and the control is clear. As long as there is no conflict with Orange Technology's equity, Wang Wei's side is naturally fine.

Wang Wei maintained a dominant and relatively strong position throughout this investment activity.

Wang Wei's strength comes from his confidence. As a very powerful logistics and express delivery company in South China, even if he wants to expand nationwide and seize the market, he does not need to bow down to capital.

my country's private express delivery industry started in 1993, when SF Express was founded, along with STO Express. The period from 93 to 02 can be considered the nascent stage of the private express delivery industry.

After passing through the nascent stage, the express delivery market enters the growth stage, gradually expanding in scale. However, it is still dominated by mid-to-high-end business time-sensitive express delivery, such as sending invoices between cities.

The average price of express delivery tickets is also relatively high. In 2006, the average price of express delivery tickets was 28.5 yuan. Online shopping rarely includes free shipping because the average price of tickets cannot be negotiated down. Netizens who had online shopping experience a few years ago should remember that, for example, when they bought clothes online, they would often ask for an extra 10 to 15 yuan for express delivery, which was also due to this.

But everything changed after Tan Jincheng entered the game. He was one of the first people to offer free shipping online. Firstly, his clothing costs were extremely low, and he bought many export surplus items by the kilogram.

Secondly, at the time, Tan Jincheng never thought about making money through the online store. He only thought about increasing sales volume and star rating so that he could sell the online store at a high price. Therefore, he didn't care how much money he could make from a single piece of clothing.

Doing business without aiming to make a lot of money from users, coupled with low costs, is akin to a game-changer.

This year, Orange Technology's model of helping farmers deliver fruits and vegetables has perfectly combined business with small online shopping orders. Through the free delivery model, users have begun to develop the habit of placing orders online.

This is somewhat similar to the food delivery wars where companies cultivated the market through subsidies. However, Orange Technology's approach is on a smaller scale. But whether it's free shipping on Taobao stores or delivering fruits and vegetables in Happy Farm, these are all very novel approaches at present.

In the internet world, whoever comes up with the most innovative approach can gain exposure in a short time. Orange Technology's innovative approach not only benefits them but also brings the express delivery industry into a new dimension.

Currently, the private express delivery industry is dominated by three major players: SF Express, ZJS Express, and STO Express, which respectively occupy the South China, North China, and Yangtze River Delta regions. Among the express delivery companies now owned by Jinpeng Industrial, STO Express is the most widely used.

The method of packaging small orders together, negotiating a lower average price with courier companies, and then sending them to online shoppers with free shipping is nothing new, but the prerequisite is that you have that many orders.

Orange Technology already has this capability, and Jinpeng Trading, which operates five Taobao stores and is about to launch the GXG online store, also has this capability.

We can ignore ZJS Express; it will be obsolete in a few years. It's true that STO Express is currently the most ideal partner, but it has too many franchise stores, and its service can't keep up. Later, it was taken over by Cainiao.

ZJS Express is now SF Express's most direct competitor, and Tan Jincheng doesn't really understand why it cooled down so quickly.

In fact, ZJS Express is the absolute king among private express delivery companies. Its founder returned from studying abroad and received funding from ZJS Express to establish the express delivery company. The business grew rapidly, and the founder is even known as the father of private express delivery.

Tan Jincheng didn't bother to delve into the specific reasons; he just needed to know that it wasn't working. So, the only option left was to gradually switch from franchising to direct operation, with SF Express, which focused on service, being the most suitable.

Redshirt has assessed all three major express delivery companies. Although they did not know that ZJS Express would go out of business, there is no doubt that in the express delivery industry, which directly faces customers, the direct operation model is superior to the franchise model in terms of both service quality and profit.

The downside is the high investment cost, but cost is never a problem in the face of capital. Once you've tasted the sweetness of capital, few people can control themselves. When you're short of money, you'll naturally turn to capital again.

红衫给顺丰的整体估值是25亿，以3.75亿的资金入股顺丰获得其中15%的股份，巨量引擎以1.25亿的资金获得其中5%的股份。

While SF Express's market capitalization of hundreds of billions in a decade or so is incredible, its current valuation is already extremely high. It's equivalent to half of ZTO Express's valuation six or seven years from now, which is somewhat unexpected for Tan Jincheng.

Even six or seven years later, it was not uncommon for people to spend one or two hundred million to buy a courier company. A valuation of 25 billion was indeed generous. No wonder these investors' assets expanded so quickly.

They're really willing to spend money. Sequoia Capital's valuation is reasonable; as the king of South China, and with the addition of Orange Technology's business, SF Express's rapid development will definitely outpace its two main competitors.

At this point, what's needed is a large investment of capital. Instead of manipulating the valuation, it's better to take a gamble. 5 million yuan is enough for SF Express to burn through.

In addition, since the valuation was a bit high, more money was lent to Tan Jincheng. Since the favor had been given, it had to be reciprocated in full.

Tan Jincheng was too lazy to argue about it. He said that if you're going to co-invest, you have to be prepared to accept whatever valuation the lead investor gives you. Otherwise, you shouldn't invest. Besides, you can get at least several dozen times the return without having to spend your own money.

However, this money cannot be entirely considered a loan, because Orange Technology's Series B financing has already been launched, and Tan Jincheng's trip to Hong Kong these past few days was not purely for leisure.

I spend my days shopping and my evenings writing business plans when I have free time.

A business plan is a very important part of fundraising. When Tan Jincheng was raising Series A funding from Kuang Ping, he also submitted a supplementary business plan. The quality of the business plan often determines whether or not a company can get funding from investors, and how much money it can get.

It's impossible for everyone to believe you; you can't just try to scam money with empty words.

The fake accountant is good at making PowerPoint presentations, which is why he can fool so many investors into investing in him. Even if he goes to the United States, he can still do very well.

As the developer of the currently hottest game Happy Farm, Orange Technology launched its Series B financing round. This news had already spread in the internet and investment circles after Tan Jincheng and Gu Qingqing came to Shenzhen and met with Pony Ma and Shen Nanpeng respectively.

Kuang Ping was also waiting for news in Guangzhou. After Tan Jincheng confirmed the investment intention with Shen Nanpeng, he also informed him that the Series B financing would be launched soon.

In the Series A funding round, Kuang Ping paid out $400 million and lent out another $200 million. Orange Technology had already fulfilled the preconditions for the loan in advance, so in reality, the $200 million was given to Orange Technology for free.

However, with the start of the Series B financing, the 15% stake held by Qiming Venture Partners has increased significantly, and those who previously mocked Kuang Ping for giving up too much are now extremely envious.

The investment yielded returns in just a few months.

Kuang Ping, who had reviewed the business plan during the Series A funding round, observed that the immense popularity of Happy Farm after its launch matched Tan Jincheng's expectations in the business plan. From a financial perspective, Kuang Ping could also see that if it weren't for the launch of the agricultural assistance program, Orange Technology could have achieved profitability in 2007 solely based on the Happy Farm game.

It's quite remarkable that a social networking site can become profitable within a year with just one game.

It has to be said that Mr. Tan's positioning of Happy Farm is very accurate, and his judgment is very clear. It is indeed a small game that can get people hooked. With the help of MSN, QQ, Renren, and other traffic-generating tools, the number of users and daily active users of Happy Farm are getting higher and higher.

The outside world is very curious about the profitability of Happy Farm, but Orange Technology never discloses Happy Farm's revenue to the public, and even within the company, only a few people know about it.

The only remaining glimpse into Happy Farm's potential is Tencent's financial report. The capital market is waiting for Tencent's first-quarter financial report, focusing on the revenue from its internet value-added services, and trying to find out the proportion of Happy Farm's revenue.

Some people were waiting, while others were too lazy to wait. Sequoia Capital took action. Of course, Tencent knew the contents of the financial report. In addition to Orange Technology's involvement in e-commerce, the revenue from Happy Farm was also one of the reasons they decided to invest in Orange Technology.

After learning that Tan Jincheng had met with Shen Nanpeng, Tencent's review process for investing in Orange Technology immediately entered an accelerated phase.

Tencent also paid attention to Shen Nanpeng's subsequent itinerary. He went to SF Express, and a few days later, Tan Jincheng returned from Hong Kong. As soon as he entered the country, he went straight to the SF Express headquarters, which also confirmed Orange Technology's layout in the logistics field.

From its investments in investors to its logistics strategy, everything Orange Technology has done proves that it is truly preparing to enter the e-commerce sector.

After receiving the report, Pony Ma immediately instructed the investment department to contact Tan Jincheng and express their willingness to invest in Orange Technology.

Just as Shen Nanpeng and Wang Wei finished signing the contract and walked out of the SF Express building, a call came in from Tencent.

"No wonder he's known as the Invincible Warrior of Nanshan, his nose looks like a dog's."

(End of this chapter)