Rebirth 08: Can a mobile game company also build a tech empire?

Chapter 123 Financing Choices

It went on until late at night.

Lu Chen drank a few glasses of wine, but he wasn't drunk.

He sat by the window, looking at the night view outside.

The city of Hangzhou is brightly lit at night.

The lights of the tall buildings in the distance twinkled like stars.

He wasn't in the mood to appreciate the night view.

He was thinking about what lay ahead.

In the first month, sales reached 450,000 units, generating 900 million yuan in revenue and 50 million yuan in net profit.

This amount of money is enough to keep the company very comfortable for the next six months.

That's enough to give the team a generous year-end bonus.

That's enough to ensure everyone can have a comfortable and happy New Year.

But this is just the beginning.

Lu Chen knew all too well the cruelty of this industry.

Today your product is highly sought after by users.

It might be forgotten in a corner of the shelf tomorrow.

ZhengTu Technology wants to truly become a great company.

There is still a long way to go.

For example, hardware needs to be continuously iterated.

Journey 1 is just the first product.

Its success proves the product capabilities of the Journey team.

But the next generation of products must surpass it in all aspects, including performance, design, and user experience.

The supply chain needs to be optimized, the yield rate needs to be improved, and costs need to be controlled.

The development cycle for new products needs to be shortened.

In the mobile phone industry, without excellent products, nothing else matters.

The system needs continuous optimization.

ZUI, a deeply customized version of Android, is smooth and stable.

However, it is still far from being a true operating system.

Every detail of the corpse experience needs to be polished.

Games need to innovate and introduce new content.

The previous games did indeed help Conquer Online establish itself.

But users' novelty will wear off, and competitors will imitate them.

Voyager's AAA game projects.

It is a long-term battle that requires time, technology, and funding.

The platform needs to expand its influence.

App stores are still in their infancy.

The number of developers, applications, and user activity are all far from sufficient.

There aren't enough applications.

Users would have no reason to stay on the platform.

There is not a large enough user base.

Developers have no incentive to join.

This is a chicken-and-egg dilemma.

Every step requires money, resources, and talent!

While the existing cash flow is healthy.

However, this is not enough to support a more ambitious plan.

Even future chip development and artificial intelligence deployment.

These are all truly bottomless pits.

Investments often amount to hundreds of millions.

The research and development cycle is three to five years.

It's even possible that we won't see any results in the end.

But if you don't do these things, you'll always be following in others' footsteps.

You can never be a true industry leader.

Lu Chen withdrew his gaze.

He looked at Lin Bing, who was clinking glasses with her colleagues.

Lin Bing seemed to notice his gaze.

He walked over with a wine glass in his hand.

"Mr. Lu, is something on your mind?"

Lin Bing sat down next to him.

Lu Chen didn't hide anything and nodded slightly.

"I'm thinking about what to do next. 450,000 units is a good result, but it's far from enough."

Lin Bing smiled slightly.

"Looking for funding?"

Lu Chen looked at him.

A hint of surprise flashed in his eyes.

Lin Bing was indeed perceptive.

"Um."

Lu Chen frankly admitted it.

"The success of Journey 1 proves our product capabilities. Now is the best time. We have achievements, popularity, users, and brand recognition. If we seek investment now, we can negotiate the highest valuation."

Lin Bing nodded.

"Indeed, and financing is not just about money, but also about resources. A good investor can bring supply chain support, channel resources, and even help in overseas markets. Sometimes, choosing the right investor is more important than how much money you raise."

"What suggestions do you have?"

Lu Chen asked.

He needs someone knowledgeable to help him.

Lin Bing is clearly the best candidate.

Lin Bing adjusted her glasses and began to analyze the situation seriously.

"There are two types of financing. One is financial investment, which involves finding venture capital firms. They only invest money and do not participate in operations. They pursue high returns and then exit. Generally, you need to see results in five to seven years. The advantage is that there is a high degree of freedom and the management has the final say. The disadvantage is that they will force you to grow rapidly and put a lot of pressure on you to perform."

He paused, took a sip of his drink, and continued.

"Another option is strategic investment, which involves seeking industrial capital, such as internet giants. In addition to money, they can also bring resources and channels. For example, if Tencent invests in us, app stores can use QQ to drive traffic. If Lenovo invests in us, we can share the supply chain and overseas channels. But the cost is that whoever's money we take means we will be tied to them in the future, and we may lose some independence."

Lin Bing looked at Lu Chen.

Which one do you prefer?

He paused, then added.

"However, I advise you to choose carefully. Capital is a double-edged sword. Once an agreement is signed, it is difficult to go back on your word. Choose partners who truly understand us and are willing to support us in the long term, rather than speculators who only look at short-term returns."

Lu Chen nodded thoughtfully.

Lin Bing is right.

His judgment was based solely on the existing market structure.

But Lu Chen knew the truth in his heart.

What will the future internet landscape look like?

Baidu, Alibaba, and Tencent will grow into three giants.

It penetrates into every track.

Almost all startups eventually have to choose sides.

In addition, companies like ByteDance, Meituan, and Pinduoduo have emerged and surpassed them.

This will stir up the entire market.

If strategic investment is introduced too early.

They may very well be tied to one side's war machine.

They lost the space for independent development.

They might even be used as cannon fodder in a war between giants.

The future of the internet industry.

There are just too many stories like this.

A startup that was originally very promising.

After taking money from the giants.

They will either be marginalized, incorporated into other organizations, or disappear completely after choosing the wrong side.

However, financial investment is not perfect either.

Venture capital firms are looking for short-term returns.

This will put enormous pressure on the company to grow.

They need to see a beautiful growth curve.

It might even be necessary to cut losses at a critical moment.

Making decisions that are detrimental to the company's long-term development.

Some decisions take time to show their value.

For example, developing operating systems, AAA games, or chip manufacturing.

These are all long-term investments.

There will be no return in the short term.

In the eyes of venture capitalists.

Such investment carries risk.

These are the projects that should be cut.

"Let's get in touch with some top-tier venture capitalists first."

Lu Chen finally said.

"We can talk to Sequoia Capital, IDG, SoftBank, and others to see their terms and attitudes. We're not considering strategic investment for now; we're not at that stage yet, and I don't want to be tied down too early. Let's maintain our independence, expand our business, and talk about it later."

Lin Bing nodded.

"I know a few people in the industry who can help make connections. I've met Mr. Shen from Sequoia China a few times, and I also have a few old acquaintances at IDG."

In addition, if we are to initiate financing, we will need a complete business plan and future plans, clearly outlining our business model, growth potential, and financial projections. I will prepare these.