Reborn, back to a small county town to become a wealthy family

Chapter 772 The Difficult Amateur Actor

“Mr. Cohen, I have three questions before making a decision.”

Two or three minutes later, Luo Yang looked up at Vic Cohen: "First of all, there's the cooperation method. You just mentioned the equity distribution ratio. Is this determined when the company is established, or will you join as angel investors after I've established the company?"

The answer to the question is simple: Luo Yang was asking IDG whether they wanted to be investors or founders.

"We are not founders."

Vic Cohen clearly told Luo Yang, "After you establish your company in the United States, IDG will invest in this project as an angel investor. At this stage, we agree on a valuation of 20 million US dollars and will acquire 2000% of the equity. When the bike-sharing project expands beyond US campuses and begins to deploy in cities, the project will launch its Series A financing round, with a tentative valuation of 1 million US dollars. IDG will acquire 25% of the equity in this round."

"According to Mr. Cohen's plan, you also intend to acquire about 10% of the shares during the project's Series B financing?"

After a moment's thought, Luo Yang understood why this old fox was doing this.

If IDG appears as a founder on the shareholder list of a partner company, how will other Wall Street institutions view this?
If your investment firm becomes the largest shareholder at the very beginning of a project, holding 50% of the shares, other investment firms will inevitably have reservations.

People are probably wondering to themselves, is IDG setting a trap or digging a pit for us?

If we switch back to the previous approach, it immediately becomes clear that IDG is extremely optimistic about the bike-sharing model and is willing to invest heavily in the project's future prospects.

At that time, everyone might get involved and compete with IDG to seize equity in the bike-sharing project and appropriately inflate its valuation.

That's really amazing.
In Luo Yang's view, perhaps Vic Cohen never intended to acquire 50% of the equity. Perhaps after investing in the first two rounds, his main task in the third round was to inflate the valuation and maximize his own profits.

"Yes, we will acquire the remaining portion during the company's Series B funding round."

Vic Cohen smiled and said, "Mr. Law, what are the other two questions?"

"I haven't communicated with Sequoia Capital about the maximum 15% stake, so I can't give a definite answer at this time."

These words imply that Luo Yang is not confidently guaranteeing that he can secure Sequoia Capital.

“They’re not Sequoia Capital in the US. The fact that they’re giving us 15% equity this time is already because of your reputation.”

Vic Cohen insisted, "You know, besides money, they can't really help much in the US. I was even thinking that if you need it, I can introduce you to a small to medium-sized investment firm in the US. They can help our bike-sharing project, both financially and in terms of their network in the US."

The old fox applies pressure in reverse.

He wanted to tell Luo Yang that, apart from Luo Yang, the founder, even Sequoia Capital could be replaced by other investment institutions.

Not to mention individual investors like Han Dongming.

Luo Yang remained silent.

After a long pause, he looked up at Vic Cohen: "Mr. Cohen, if I may be frank, IDG was able to acquire shares in the second round of financing for the bike-sharing company, China, thanks to Sequoia Capital. This was obtained after discussions with Mr. Shen Nanpeng, and I agreed to some conditions for them."

The condition is that Sequoia Capital can acquire no less than 30% of the equity in the company in the United States.

His idea was simple: large investment institutions would check and balance each other, allowing him to play both sides and ensure the company could operate smoothly in the early stages, thus preparing for a later exit.

“Mr. Luo, you don’t need to break your promise because of the Sequoia Capital issue.”

Vic Cohen suggested, "As for China Company, IDG can directly take 5% of your shares. Moreover, on behalf of IDG, I promise that this equity can be paid at a premium, as long as it does not exceed 50% of the valuation, we will definitely accept it."

This is blatant temptation.

According to his words, even if the valuation of the shared bicycle company Huaxia was only 4 million yuan, they would be willing to buy 5% of the shares from Luo Yang for a valuation of no more than 6 million yuan. This part alone is worth 3000 million yuan, which can go entirely into Luo Yang's private pocket.

"Are you going to give up the shares I hold?"

Luo Yang took a few puffs of his cigar, then frowned and looked thoughtful.

After a moment, he looked up and said, "How about this, for the Chinese company, you don't need to buy 5% of the shares from me separately. Firstly, it's not appropriate, and secondly, I'm reluctant to do so. As for the US company, let Sequoia Capital take 10% to 15% of the shares during the angel round, and then take about 8% to 10% during the Series A round. As for what IDG wants to secure, you can wait until the Series C round, at which time I will give up an additional 5% of the shares to IDG."

"Ha ha ha ha."

After hearing Luo Yang's solution, Vic Cohen burst into laughter.

"Mr. Luo, I like your meticulous personality."

Vic Cohen leaned back in his chair and chuckled, "The Chinese company's second-round valuation was around 4 million RMB. Even with a 50% premium, it would only be 3000 million RMB, equivalent to about 450 million USD. However, the US company's valuation during its Series C funding round was at least 5 million USD. To acquire 5% of your shares, IDG would need to come up with 2500 million USD, which is roughly a little over 1.6 million RMB."

Luo Yang showed a slightly embarrassed expression.

But who knows, he did it on purpose?

On the surface, it seems that Luo Yang is making a lot of trouble to earn more money for himself, but in reality, he wants to reduce his shareholding as much as possible before the company goes public through an IPO, so as to achieve a perfect exit plan.

In his fragmented memory, the bike-sharing project was not perfect in this wave, and might even collapse for various reasons.

This is also why he has been thinking about getting out of this project as soon as possible.

However, the intellectual exchange with Vic Cohen led him to a different approach than the fragments of memory.

When bike-sharing accumulates enough registered users, these users become a huge resource.

What resources will be most important on the internet in the future?

Ultimately, it all comes down to user volume.

If, as he envisions, a relatively complete ecosystem can be built around this huge circle of registered users, these users will become more than just customers of shared bicycles.
When talking about these things today, Luo Yang had a fleeting thought: could the ecosystem built by these registered users be embedded into Pinduoduo?
If this goal can be achieved, it will be a revolutionary change to both the promotion and expansion of e-commerce platforms and the maintenance of shared bicycle projects, as well as the scenes in Luo Yang's memory fragments.

Therefore, he does not want to lose more shares in domestic companies for the time being.

As for the US side, to be honest, he doesn't dare to keep any shares in his hands.

If the company barely survives, that's fine. But if it can really build a complete ecosystem and become a big and powerful company, let's see if the US will mess with it!

The US version of TikTok is the most prominent example. It almost came down to openly stealing it. If Biden had remained in power, it's hard to say what would have happened.
This is the truest thought hidden deep in Luo Yang's heart.

This operation, disguised under the guise of greed, was a double-edged sword. Vic Cohen, however, was unaware of Luo Yang's true intentions and believed he was seeking to maximize his profits.

For these US investment institutions, the thing they fear least is your greed.

“Mr. Luo, as the founder of bike-sharing, taking an extra 2000 million US dollars is not a big deal, but the premise is to make this market grow.”

After laughing, Vic Cohen said, "Let's set a few thresholds. First, the Chinese company must achieve initial success in establishing a comprehensive presence in first-tier cities and smoothly launch its Series C funding round. Second, the US company must successfully launch its service on campuses and smoothly launch its Series A funding round. Third, the European company must be successfully established and complete its angel round funding round. If you can achieve these three goals, IDG will agree to acquire 5% of your shares during the Series C funding round of the US company."

Luo Yang thought about it and felt there were no traps inside, so he nodded in agreement.

After all, it's not a betting agreement, so the risk is minimal.

It could even be said that the bike-sharing project is about to launch its Series C funding round in the United States, which means that its promotion in American cities has achieved initial success. Even if IDG does not acquire the equity held by Luo Yang, other investment institutions will still be willing to rush to buy it.

After reaching an agreement on this point, both parties raised their glasses, clinked them together, and took a small sip of whiskey.

"Mr. Luo, didn't you just say you had three questions?"

Vic Cohen asked Luo Yang with a smile while smoking a cigar.

Both sides were in good spirits during the negotiations, resulting in a very harmonious atmosphere in the office.

"Mr. Cohen, the global market is not limited to China, the United States, and Europe; it also includes South Korea and Japan in East Asia. Southeast Asia's economy has also been growing rapidly in recent years. If we consider the 10 ASEAN countries as a whole market, it will not be smaller than the East Asian market."

Luo Yang relaxed slightly at this point, leaned back in his chair, and slowly asked, "How will the markets in these places be divided in the future?"

Vic Cohen's eyes were practically overflowing with satisfaction.

"Two ways."

The old fox's eyes gleamed; "The first option is to follow the cooperation model between American and European companies, where we share the pie. The second option is for the two companies to split the market, each choosing one."

Did they deliberately dig a hole?

Luo Yang's muscles, which had relaxed, tensed up again.

His mind raced instantly.

At least for now, the Southeast Asian market is definitely not as good as the East Asian market in the eyes of most people. After all, these two countries are considered developed countries with a unified market, and the US capital has an exceptionally strong control over them.

As for Southeast Asia, although ASEAN has 10 countries, it cannot compare with the two East Asian countries in terms of overall economic size or the issue of a unified market.

Moreover, there is a crucial factor: East Asian countries have relatively stable social order and higher national quality, making them more suitable for the development of bike-sharing projects.

"Mr. Cohen, please don't test me."

Having figured this out, Luo Yang gave a wry smile: "We can't handle the domestic conglomerates in these two East Asian countries. Once the bike-sharing project starts operating in these two markets, it will be copied by them in no time and squeezed out of the market, unless we cooperate with your large American investment institutions to enter their markets together."

Vic Cohen smiled and remained silent, waiting for Luo Yang to continue.

After Sun Wei finished translating the first paragraph, Luo Yang continued, "As for Southeast Asia, although the market is a bit chaotic, cities like Singapore, Jakarta, and Kuala Lumpur are still good places to promote shared bikes. So, I know my limitations and will choose the Southeast Asian market!"

It's only 2012 now, and nobody knows that 11 years later, in 2023, the trade volume between China and Southeast Asia will surpass that of the European Union and the United States, reaching a scale of 9117 billion US dollars.

Moreover, the country will focus on promoting the Belt and Road Initiative in the future, with one of the Belts being the route that runs from Southeast Asia to the Indian Ocean and extends to Europe.

From the coastal ports of China, across the South China Sea to the South Pacific Ocean.

Therefore, the Southeast Asian market has great potential for the future.

"Mr. Luo, you are not only quick-witted in business, but also quite proficient in factors outside of business. You are truly a remarkable genius!"

Right after Luo Yang made his choice, Vic Cohen laughed.

He first praised Luo Yang, and then said, "Once the companies in the United States and Europe develop, you will no longer be an unknown in the global Internet industry, especially in the sharing economy and mobile Internet industry. Your reputation will be even higher, so investment institutions will value you more!"

Luo Yang was stunned for a moment.

"Mr. Cohen means..."

"We still need to leverage your reputation in the sharing economy circle."

Vic Cohen smiled and said, “Therefore, when starting a company in East Asia, you will need to take on the role of the company founder until the project has completed two or three rounds of financing, after which you will step back. Of course, we will also let you benefit; you can keep 10% of the shares in the startup.”

According to the old fox, the goal was to leverage Luo Yang's fame.

Although he was given the title of founder, Luo Yang was certain that the company was actually operated by someone else. He was merely a figurehead, only needed to read from a prepared script and keep smiling when attending certain events.

As for retaining 10% of the equity, after three or four rounds of dilution, it would be considered good if around 3% of the equity could be retained.

Of course, all of this is free money. If you can think of it that way, it's not bad. After all, it's tens of millions of US dollars in income.

Southeast Asian market

Vic Cohen concluded, "We won't get involved. I'm confident that Mr. Law is capable enough to handle this."

He ate the biggest piece of cake and left a scrap for Luo Yang.

This is what makes IDG so domineering.

Moreover, in their minds, this is not considered domineering, but rather a manifestation of strength.

Luo Yang is still weak, so even if he feels aggrieved, he can only endure it.

Fortunately, most of it was within his plan; his resentment and restrained expression were just an act.

It must have been tough on him, an amateur actor.
(End of this chapter)