Due to Li Mu's toughness and the rising status of Makino Technology in the Internet industry, Sequoia finally gave up the routine due diligence work before the financing and directly signed the contract with Li Mu at Makino Technology!
Thirty-three billion USD, the dust had settled!
Li Mu's strength made Sequoia and the entire venture capital circle feel great pressure. However, in the capital field, whoever could make money was the boss. Li Mu happened to be the one who could make the most money.
When Mark Zuckerberg founded Facebook, it was quite difficult to get hundreds of thousands of USD in financing. However, when he pushed Facebook into the mainstream, overseas tycoons flew to the United States and begged him to invest in Facebook at a high premium and voluntarily give up all their voting rights. This was the change of status in the capital industry.
A paper contract finalized the valuation of Makino Technology at 33 billion USD. It also confirmed the largest financing in the world's Internet industry at the end of 2002.
However, the valuation at this time was much higher than before. After all, no matter how high the previous valuation was, no shares had been successfully transferred at that valuation. However, it was different now. Sequoia had used 3.3 billion USD in this contract to confirm the valuation of Makino Technology at 33 billion USD.
After the contract was signed, the entire Makino Technology was in an uproar.
Whether it was the colleagues in the United States or in Beijing, they were all excited about the company's skyrocketing valuation and the huge amount of financing. The atmosphere was more excited than Chinese New Year.
Although Makino Technology did not receive the money immediately after signing the contract, the entire Internet industry and the venture capital circle were in an uproar.
They knew that Makino Technology was now very powerful, that YY users had exceeded 200 million, and that YY had begun to develop towards "centralization". However, they did not expect YY's valuation to reach such a high level.
Thirty-three billion USD! This was already a record high valuation for an Internet company in Hua Xia, and it was among the best in the entire Internet industry in the United States.
However, capital statistics were relatively rigorous. Although Sequoia gave Makino Technology a valuation of 33 billion USD, no media had included Makino Technology in the list of Silicon Valley and the world's Internet company market capitalization. This was because the companies on the list were basically all listed companies. For the media, the concept of "market capitalization" was only known after a company was listed.
Overall, the value of market capitalization was the highest, followed by the valuation after the actual financing. Makino Technology's valuation of more than 30 billion USD had completely placed it at the top of the world's Internet industry pyramid.
The media all over the world were paying attention to the financing of Makino Technology. It was just like Alibaba's previous life when it went public in the United States.
Overnight, countless media published extensive special reports on the C Series financing of Makino Technology and Sequoia, pushing Makino Technology into a global hot topic.
Major media around the world had different views on the valuation of Makino Technology of 33 billion USD. Most of the views were shocked, a small number of views were taken for granted, and a very small number of views thought that the bubble of Makino Technology was too big, frighteningly big. If the bubble burst one day, it would become the biggest news in the Internet industry, and even trigger a chain reaction, leading to a new round of Internet bubble bursting.
However, no matter what kind of voices, it could not cover the brilliance of Makino Technology at this moment. The eyes of the world had shifted to Makino Technology. In Asia alone, more than a billion people were paying attention to every step of Makino Technology's financing.
The people of Hua Xia were the most excited about Makino Technology. In Hua Xia, the attitude of more than a billion people was highly unified. There was nothing but pride.
At the same time, the admiration of the people of Hua Xia for Li Mu once again reached a new high.
Li Mu hoped to be the business card of the Internet industry in Hua Xia, and even the national business card of Hua Xia. Now it seemed that he had achieved his goal.
Li Mu had not yet returned to China, but the domestic coverage of him was already overwhelming.
Since the speech at Harvard University, every move of Li Mu in the United States had been closely followed by the media in Hua Xia, and they followed up on everything. So much so that Li Mu's current exposure in China was even more than the exposure of the entire entertainment industry.
Just when everyone hoped that Li Mu could stand up and speak at this time, Li Mu, who was still in Silicon Valley, found Lin Ching-ah and Kong Lingyu, who was in Yan Jing, to discuss the relevant matters after the new round of financing.
However, as soon as Li Mu came up, he threw out the core idea to the two of them. "This time, we will not discuss the development and strategic planning of the enterprise. We will only discuss two issues. First, employee cash rewards; second, the preparation of the employee option pool."
After the successful financing, the valuation of Makino Technology would soon continue to rise. If there was a major strategic development in the next one to two years, then they could basically consider launching an IPO. Once the company's IPO was successful, it would be time for the company's shareholders and employees to reap the fruits. Now the core employees had a certain amount of shares. Although the financing was slightly diluted, the overall market value was still very gratifying. However, this was only for the core management personnel. Although the ordinary employees currently had various perfect benefits, the issue of options had not been prepared. Now it seemed that it was the time.
Li Mu's idea was that before the company went public, a certain proportion of shares should be prepared as an option pool, and the distribution should be completed before the company went public. In this way, once the company went public, the employees' options would be converted into the company's shares, and they could exercise their rights to cash out in the stock market.
Kong Lingyu and Lin Ching-ah had no objection to Li Mu's option pool plan. They had been working with Li Mu for more than a year, and now they were billionaires with a theoretical net worth of more than 100 million. Their blind worship of Li Mu had almost reached a peak.
Therefore, Li Mu made a rough plan. At present, he held about 70% of the shares of Makino Technology. After diluting the shares by 10%, there would be about 65% left. Therefore, he was willing to take out 5% of the shares to rush into the option pool. According to the current valuation, this 5% was more than 1.5 billion US dollars.
Whether it was Song Liang, Chen Ze, or Hui Ka Ming, they were all investors of Makino Technology. With capital coming in, it was not a problem for them to wait for the dilution. However, Li Mu knew that he could not use them for the option pool. Besides, Lin Ching-ah and Kong Lingyu had very few shares. If they were asked to donate part of it, it would be unfair for them.
Therefore, Li Mu decided to take out 5% of the shares to set up an option pool, and then split the 5% shares. In the way of 10 million original shares for each percentage point, the 5% share debt would be divided into 50 million original shares. The 50 million original shares would be the employee option pool of Makino Technology for a period of time in the future.
After setting the total amount of the option pool, Li Mu asked Lin Ching-ah to take the lead in formulating a rule for the allocation of options. It should be formulated according to the time of entry of each employee, their rank in the company, their contribution to the company, KPI assessment, special contribution, and other dimensions. It should be made clear how many corresponding options could be obtained according to different conditions, as well as the time needed to exercise the options.
50 million original shares were not a small number. Therefore, Li Mu made a request to Lin Ching-ah. "At present, we only have more than 1,000 employees, so you have to make a reasonable allocation of the options in the option pool. You can't spend all of them at one go. Just like saving money, you have to control it."
Lin Ching-ah nodded. "Don't worry, Li Zong. I understand."
Li Mu said, "My idea is to take out 10% of the option pool at this stage, that is, 5 million shares, and distribute them to more than 1,000 employees. When our employees exceed 3,000, we will take out another 10%. When the number exceeds 5,000, we will take out another 10%. Before we go public, we will take out another 20% to distribute half of the option pool. The remaining 50% will be slowly distributed to the new colleagues who join later after the company goes public."
In the video conversation, Kong Lingyu said, "Boss, it's already very high for 1,000 employees to receive 5 million shares. Now the value of each share is 33 US dollars, which should be about 270 yuan. Even if each employee receives 1,000 shares, it will be more than 200,000 yuan."
Li Mu smiled and said, "Lingyu, the value of options is not calculated in this way."
In the video, Kong Lingyu and Lin Ching-ah both looked at Li Mu.
Li Mu smiled and said, "You see, although our current valuation is 33 billion US dollars, and we split 5% of the shares into 50 million shares, each share is indeed 33 US dollars. However, before we go public, the options are not allowed to be exercised. If all the employees want to cash out, they will have to wait for us to go public. After we go public, the value of each share will be far more than 33 US dollars."
As he spoke, Li Mu explained, "Although each original share in the option pool is worth 33 US dollars at this stage, its actual value cannot be measured by money. You have to remember, according to our valuation, the actual value of each original share is one billionth of the company's actual value."
"If our valuation continues to increase in the future, our market value may reach 80 billion US dollars before we go public. After we go public, the company's market value may exceed 100 billion US dollars. At that time, it will be the window for employees to cash out their options. Each original share of options is equivalent to 1,000 US dollars worth of company shares. For example, if our share price after we go public is 20 US dollars, then the actual value of each original share of options will be 1,000 US dollars. After we go public, each original share in the hands of employees will be directly exchanged for 50 shares of the company."
Kong Lingyu nodded and laughed at himself. He said, "Boss, I came from an unorthodox background. To be honest, I don't really know how to use the options, especially after we go public."
Li Mu smiled and said, "It doesn't matter if you don't know. Just do your job well. We don't have to follow the rules of the industry. We can set it ourselves."
Lin Ching-ah asked, "Li Zong, if we give 50% of the option pool to employees, then after we go public, what should we do with the remaining 50% of the option pool? Directly convert it into shares of the company? "
Li Mu nodded and said, "That's right. Before we go public, we will give our employees options. After we go public, we will directly give our employees shares. According to my assumption, after we go public, we will have a total of 5 billion shares. Then the remaining 2.5% of the option pool will directly become 125 million shares of the company. "
As he spoke, Li Mu said, "After we go public, in order to attract talents, we will set a stock quota for mid-to-high-end talents who enter the company. For example, when P7 technical talents come in, we will give them 5,000 shares of the company in addition to their salary. 5,000 shares may be worth tens of millions, but there will be a time limit for these 5,000 shares. The rights to exercise these 5,000 shares will be divided into a few years. This will tie the talents to the company for a longer time."
Lin Ching-ah nodded and said, "I understand, Li Zong. At that time, we will set the total time limit for the rights to three years. Employees can have one opportunity to exercise the rights one year after they officially enter the company. The total number of shares can't exceed one-third of the total number of shares. After two years, another one-third will be exercised. After three years, the remaining one-third will be exercised."
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