Twenty years of cold chain

The concepts of Series A, Series B, and Series C financing are not complicated. The first round of financing after the angel round is called Series A, the second round is called Series B, and so on.

The funding rounds can indirectly reflect a company's life cycle stage. In short, Series A funding focuses on the product, such as "I have a cutting-edge technology with great potential, and I'm eager to invest to scale it up together"; Series B funding focuses on the business model, such as "We have a complete technology chain for promotion, sales, and after-sales service; let's expand rapidly together and create a network"; and Series C funding focuses on expansion prospects, such as "We urgently need new product lines to expand new businesses and obtain greater profits."

Generally, after these three substantial rounds of financing, profitable companies will go public, and subsequent financing will fall within the scope of the stock market. For some companies that are still unable to go public, it is common to continue raising funds through the definitive round.

Of course, this is just a general statement, and there is no strict definition of financing rounds. Companies have different development models and capabilities, and not all companies strictly adhere to this order. Understanding a company's development stage through its financing rounds is often more practically meaningful.

In the venture capital world, newly established Series A funding companies attract a lot of attention. Investors are astute, so the potential benefits of a successful Series A funding round are very strong, especially the recognition from well-known investors in the industry, which greatly helps in advancing future funding rounds.

In the industry, Guan Wentao is undoubtedly a well-known figure. For many people, his status as a major shareholder is secondary; what is more eye-catching is his reputation as an "investor who never makes a mistake."

Guan Wentao had already planned this carefully. He started with Mammoth Angel Investment to pave the way. The amount of capital injected was not important. Instead, it was to demonstrate his trust in Tongxing. In the eyes of the industry, his trust was confidence, which laid the foundation for the subsequent Series A financing.

Hu Shutong began separating the business plan from the proposal, a crucial step in the Series A funding round, a process that wasn't complicated. Liu Zhiying and Yang Chenghai had anticipated the size of this funding round, and they also had a rough idea of ​​what Hu Shutong was really going to do; however, no one dared to speculate on how smoothly things would go. Although the broader scope wasn't mentioned, the proposal already contained elements relevant to the Series A funding round.

Beyond the business plan, another matter deeply tugged at Hu Shutong's mind. Even though he was a seasoned veteran, there was one thing he had absolutely no experience with, which even left him somewhat bewildered.

That is, company valuation.

However, Hu Shutong faces a significant problem: it's not Tongxing Financing, but Tongxing Distribution Financing, and Tongxing Distribution hasn't even started yet. If it were Tongxing Financing, financial statements would be a powerful tool for valuation.

During the financing meeting, the other party will definitely make some calculations on the valuation, but Tongxing Delivery must also give its own valuation. As for the difference between the two, that is another issue.

Therefore, the most important thing is how this value is derived.

At noon that day, Guan Wentao brought two cups of coffee to Hu Shutong. Seeing Hu Shutong's somber expression, he smiled slightly and sat down, pushing the coffee aside as he said leisurely, "Shutong, you bought a house in Qingyan, didn't you?"

Hu Shutong nodded. "I bought a three-bedroom apartment."

"How's the location?"

"It's a bit out of the way, but considering Pingxin's and my jobs, it's a good choice."

"If I also want to buy a house in that area, can you give me an estimate?"

Upon hearing this, Hu Shutong no longer considered it a casual chat. Following Guan Wentao's words, his mind immediately began to race.

"I'll buy a three-bedroom apartment too. If you buy a tenement building, I'll buy a tenement building too. If you buy a villa, I'll buy a villa too. Although I didn't calculate it before, with you as a reference, I know how much it will cost."

"And another thing, for someone like you from an academic background, the most impressive thing your family has to offer is actually something you can't see. I buy houses just to make a living, but you could probably turn one into an academic base. If that's the case, ten of my houses wouldn't be as good as one of yours."

"Furthermore, you also have an old house. Over the years, you've built up a large neighborhood around you. You can get things done with just a word. That's a huge resource. Everyone also knows that you have a group of powerful drinking buddies. When you two host a party, most people wouldn't dare to come. You'd need to have some financial means to even dare to visit your house."

Hu Shutong glanced deeply at Guan Wentao, filled with admiration. His words were truly insightful. He had offered Hu Shutong four points of advice regarding a single house!

"How's it going? Are you able to handle things with my house?"

Hu Shutong nodded deeply. These words were full of sincerity, as if he were being taught step by step, and every word behind them was a great guide. Every dimension was opening up Hu Shutong's mind, allowing the inexperienced Hu Shutong to draw a line from his scattered thoughts.

The person before me can explain "startup valuation" so clearly and simply; he is truly a master in this field. Guan Wentao discussed the market approach, the property value approach, the customer value approach, and the professional value approach, all of which fall within the scope of "startup valuation" and are what investors value most in startups.

For startups, investment can only look at the prospects. If it's all pots and pans and bustling with activity, then it's not a Series A round.

There are plenty of similar companies in the market, which serve as a benchmark for valuation. However, Guan Wentao's interpretation goes far beyond that. Tongxing headquarters may not participate, but that doesn't mean Tongxing Delivery can't utilize its resources. Whether it's technology or manpower, the transition from Tongxing to Tongxing Delivery is seamless, even eliminating the need for a transitional phase. This is the key point Guan Wentao is firmly grasping.

Guan Wentao couldn't be too specific in his words because Mammoth Fund would inevitably be one of the Series A investors, and an excessively high valuation for a company is something investors naturally don't want to see.

But Guan Wentao had prepared a different explanation for others: the A round of funding is necessary for the growth of the B round; to prevent equity dilution by other investors, a solid foundation must be laid in the first round. In this industry, building a large base through strength is itself a form of exclusion.

Hu Shutong couldn't fully understand what this person was thinking, but one thing he was clear about was that everything that could be brought to the forefront was because Guan Wentao was supporting him from behind.

Startup valuations only apply to the current stage and phase of development; with the funding Tongxing desires, they don't meet its true needs. But Guan Wentao, like a guarantor, has managed to bring something normally unattainable into a simple logical framework. For him, as long as this startup valuation method isn't entirely new, he has countless ways to elevate it to a higher level.

Once this person gets going, his energy is absolutely astonishing.

……

I've loved cold chain logistics for twenty years.