Seventeen billion US dollars was nothing to talk about.
Li Mu's expression was indifferent. He was so shocked that he couldn't speak for a long time.
Before he came, the CEO had told him that the base price of Sequoia was 16.5 billion USD.
The so-called floor price was the highest limit for Sequoia to participate in the bidding.
Although the CEO didn't explicitly state what to do if the price requested by Animal Husbandry Technology was higher than Sequoia's base price, according to the normal procedure, once Sequoia set the base price, there would only be two results. If the price was within the range, Sequoia would enter. If the price was higher than the base price, Sequoia would retreat. For so many years, the third possibility had never happened.
Sequoia was the same as other venture capital investments. Every investment had to be calculated with the potential profit margin and capital risk. Makino Technology's Series C was a large investment, and more than a billion US dollars of cash was invested in one go. Therefore, the risk had to be evaluated repeatedly. After all, Sequoia's money did not come from nowhere. It was the common asset of all the board members and the investors of the various funds.
In this case, even if Sequoia believed that Makino Technology could reach US $170 billion in assets in the next few years, it had to reasonably weigh the risks behind it. It was impossible to make a hasty decision just because the company was developing smoothly and leave hidden risks.
For venture capitalists, when they lead or invest in a company, they will definitely try to lower the actual valuation. On one hand, it is to reduce the capital investment, and on the other hand, it is to sell the company better in the future.
Come in when the valuation is 100 million, withdraw when the valuation is 500 million, and let the next company take over at the price of 500 million. This was the common way for venture capitalists to make money. However, if they did not grasp the premium when they took over, it would make other investment banks think that the price they took over was too high. Then it would be difficult to sell the company at a high premium in the future.
S suddenly thought of a lot. Li Mu saw his strange expression and guessed that the price he offered might have scared him. Before him, he had already scared the representatives of two venture capital companies. Therefore, Li Mu didn't care at all. He smiled and said, "Mr. Hanks, you don't need to worry too much. Hua Xia has an old saying, 'Even if we can't reach an agreement because of the price, we are still friends."
S nodded slightly and said to Li Mu with a serious face, "Li Zong, to be honest, we have made a very in-depth and objective assessment of the situation of Makino Technology. The valuation of 17 billion is indeed too high. If we finance according to this valuation, I am afraid that the amount of capital we can accept is very little."
Li Mu looked indifferent and said with extraordinary confidence, "Mr. Hanks, I want to correct the mistake in your words first."
S raised his eyebrows and looked at Li Mu, waiting for him to continue.
Li Mu smiled and said, "I don't want a valuation of 17 billion. I want to start from 17 billion. You can think of it as a starting price."
At this moment, S felt the strong confidence in Li Mu. In his opinion, when Li Mu said this, his tone was not as simple as confidence. It was even a little arrogant.
Sequoia had been in the Internet field for so many years, and it was no exaggeration to say that Sequoia was the godfather of the Internet industry. With this experience, Sequoia could basically make an accurate evaluation of an Internet company. That was to say, if Sequoia used 16.5 billion US dollars as the base price of Muye Technology, then most companies in the industry would not offer a higher price. Li Mu's opening bid of 17 billion US dollars was indeed a little arrogant in his opinion.
Li Mu could see that S was a little angry and dissatisfied. It seemed that his words had made him feel a little dissatisfied, but Li Mu did not care. He continued to say with a smile, "Mr. Hanks, people in Hua Xia like a kind of jade called Jadeite. The price of good Jadeite is astonishingly high. Even a ring made of Jadeite may be worth more than 10 million yuan. If the quality is not good, you can buy it for a few hundred yuan. Because the price range of Jadeite is very large, the industry has given birth to a model of stone gambling. Stone gambling is very interesting. I think it has a lot in common with the investment industry. If you are interested, I can tell you."
S held out a hand. "Please go ahead."
Li Mu said, "Jadeite is a special kind of ore. What's interesting is that when it is mined, it is basically wrapped in a layer of weathered skin. No one can see the value of the jade inside without cutting it open. Sometimes, a stone the size of a basketball can be worth more than 100 million yuan. Sometimes, it is worthless. So in order to pass on the risk, the seller of the ore does not completely cut the ore himself. Instead, he lets the buyer cut it himself."
S was a little fascinated. He waited curiously for Li Mu to continue.
Li Mu continued, "Some sellers trade pure raw stones. Whether there is jade in the stone, and if there is, how good the quality is, basically depends on the buyer's own judgment and luck. Generally speaking, the average price of this kind of stone is relatively low, because the buyer has to bear all the risk.
"There are also sellers who, when trading raw stones, will first cut a little shallowly on the surface of the raw stone to let the jade inside show a little color. In jargon, it is called opening a skylight. After the skylight is opened, if the quality of the exposed part is very high, the price of the stone will also soar. Because with the little color exposed by the skylight, the buyer will be more confident when judging, and reduce some risk.
"Some raw gemstones have only one skylight, and some even have three to five skylights or even more. However, relatively speaking, the more skylights there are, the better the quality of the exposed parts, and the higher the price of the raw gemstone.
"However, no matter how many skylights there are, there are still great risks. Because the skylights are only on the surface, no one knows what the quality of the jade inside is. There are many skylights that look very good, but after cutting them into the jade, you will find that it is worthless except for the part that is very good. Moreover, many jade merchants deliberately falsify the parts of the skylights and make them look like they are of very high quality. In this case, when the buyer buys it and cuts it open, he will immediately lose everything. He might even lose all his money."
"The opposite is also the same. Sometimes the cut part doesn't look good, but after buying it and cutting it completely, you will find that the quality inside is excellent. In this case, the return on investment will naturally be high."
Speaking of this, Li Mu continued with a smile, "You see, how similar stone gambling is to investment. Those who dare to buy a complete raw stone are angel investors. For a company that has developed for a certain period of time and has a certain understanding of the outside world, this kind of company is equivalent to opening a skylight. The longer it develops, the more projects it handles, and the more skylights it opens. Once the company is listed and everything is completely open to the stock market, it is equivalent to a processed jade that is put on the market for sale. All the prices are clearly marked, and the old and young are not cheated."
S smacked her lips with a smile and said, "Although I didn't understand it very clearly, it sounds really interesting."
Li Mu nodded and changed the topic. "In the stone gambling industry, no matter how many skylights there are, there are still mysteries inside that experts can't see through. Buyers can't see through everything, so they can't think that their judgment is exactly equal to the actual value of the whole piece of jade."
S could tell that Li Mu was saying that Sequoia couldn't see through the inside of the jade of Makino Technology. He couldn't help but laugh. "Mr. Lee, according to what you said, the actual value of a piece of jade is unknown to both the buyer and the seller."
Li Mu smiled and said, "Of course, neither the seller nor the buyer knows. They can only rely on their own judgment."
S shrugged and spread out his hands. "Since it's all based on judgment, there must be some bias on both sides. The most important thing is that both sides can reach a consensus before. If they can't reach a consensus, then no matter how good the jade is, they can't reach a deal."
Li Mu laughed and clapped his hands. "This is also what I want to say. If the buyer and the seller can't reach a consensus on the value of the jade, then naturally there is no way to reach a deal. But it doesn't matter if we can't reach a consensus. You can go back first. After I open another skylight, you can come back and take a look. At that time, use your expert's eyes to re-evaluate the price of the newly opened skylight of Makino Technology. If we still can't reach a consensus, it doesn't matter. I can open another skylight, or two skylights, until you or other venture capitalists are willing to reach a consensus with me!"
S was a little confused. He thought that Li Mu wanted to ridicule Sequoia for not knowing the value of the jade, but he did not expect Li Mu to say that he would take the initiative to open another skylight. What did that mean? S understood what he meant when he said he would open a skylight for the jade, but he really did not know how to operate a skylight for a company.
Although he did not understand the specific metaphor, S heard the domineering and unyielding tone in Li Mu's words. The meaning of Li Mu's words was very clear. He must make venture capitalists willing to reach a consensus with him. The subtext was: only venture capitalists would bow to him, and he would never bow to venture capitalists.
S was a little disgusted with Li Mu's youthful arrogance. At the same time, he knew very well that he would definitely return in defeat today. Li Mu insisted on the 17 billion dollar offer, and he could not make him lower the offer. He could only go back and report.
If the CEO and the board were willing to change their minds and accept the offer, then the two sides would continue to negotiate. If not, then Sequoia would get up from the negotiating table, and the project would be suspended indefinitely for Sequoia.
In that case, unless Li Mu changed his mind after running into a wall, he would lower the valuation in exchange for Sequoia to return to the negotiating table and continue to discuss.
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