My Age of Investment

In the evening, Xia Jingxing received a call from Jonas in the hotel.

Jonas: "Daren, our team thought about it, and still think we should have a candid chat with you."

Xia Jingxing: "Oh, then tell me!"

Jonas: "Then I'll say it straight, you invest $900,000 in us, and we will dilute 15% of our shares to you."

Xia Jingxing: "Where is De Fengjie?"

Jonas: "You don't need to think about them, you're definitely better off investing in us than investing with DFJ."

Xia Jingxing: "This... this is not good, it has a bad reputation."

...

Xia Jingxing hung up the phone and looked at Andrew and Howard who were drinking beside him.

Howard shrugged, "Daren, I think you should shut down your social networking site and focus on VCs.

With your wisdom, you will definitely be able to achieve brilliant achievements in this field.

On behalf of DFJ, I invite you to become the youngest investment manager in our company. "

Xia Jingxing smiled, "Thank you for your offer, I prefer to do things for myself."

"Okay! When you figure it out one day, you can come to Defengjie to try it."

Howard is really convinced.

After leaving the apartment where Skype's team was, he was dragged by Xia Jingxing to drink.

Drinking and drinking, Jonas called him first.

As agreed with Xia Jingxing, he turned on the speakerphone and turned on the power amplifier.

Jonas also offered "$900,000, 15% equity".

To be honest, he was a little moved.

Contribute an extra $300,000, take 3 more points, and invest directly without Darren.

But this scene was watched by Xia Jingxing, and he could not act alone if he wanted to hide it.

And if Jonas can talk to him alone, it is not necessarily that he will not talk to Daeron alone.

Sure enough, after he refused, he called Darren again.

If Xia Jingxing hadn't kept his hand, their "fragile alliance" would likely be disintegrated tonight.

This man is a complex animal.

Xia Jingxing naturally had to be more careful.

Howard admired Xia Jingxing's insight into human nature.

If you are not careful today, you are likely to be defeated by Jonas.

By tomorrow, it is not impossible for the valuation to exceed 10 million.

And it was the two investors who bleed after all.

Because he and Xia Jingxing had just met each other, naturally there was no trust. Once doubts and suspicions arose, let alone continue to maintain the alliance, it would be good to not fight.

With this interesting experience tonight, the foundation of trust between the two sides has been strengthened a lot, and the alliance relationship will no longer be as fragile as before.

…………

…………

the next day.

Xia Jingxing and Howard came to Skype's apartment and had a showdown.

Two options, A and B, must be chosen.

Looking at the two people hooking their shoulders, Jonas knew that his plan had failed again, and in despair, he handed over the decision to Nicholas.

Nicholas chose plan B without hesitation. The two investors invested $1 million in Skype, and the post-investment valuation was $5 million. The founding team diluted 20% of the shares.

He is not afraid of too much equity dilution, so he can get the money to keep the company alive before he can talk about other things.

People are more down-to-earth, in stark contrast to Jonas.

Howard is very satisfied. If there is any more trouble with Nicholas, he needs to re-evaluate the team.

Product development capabilities are good, but if the founder is too short-sighted, the company is destined to not go far.

Fortunately, the gang didn't break through his tolerance.

After signing the investment letter of intent, also known as the TS (term sheet) investment term sheet, a due diligence is also required.

Scape is not a big company, and the investment amount is only one million dollars, not a particularly large amount, so they did not invite a professional company to conduct in-depth due diligence, and Howard, Xia Jingxing, and Andrew did it.

Among them, the most important is the intellectual property rights of the company.

"Nicholas, Jonas, the P2P technology intellectual property that Sky needs is in the hands of the company you both own, what's the situation?"

Howard was very professional, and when he came up, he checked out the core assets of Scape.

Jonas said with a smile: "Those intellectual property rights were filed when we started Kazaa, they don't belong to Skype, but we can license them to Skype for free."

"Authorization?"

Howard frowned. "If these intellectual property rights are not in Skype's hands, we must reassess the value of Skype."

Xia Jingxing had never done professional venture capital investment, and without interjecting, he was earnestly stealing from the teacher.

After arguing for a while, Howard forced the two to sign a 20-year free license agreement, and the matter was over.

As for twenty years later, Defengjie should have withdrawn from the investment long ago.

For a small company, there's not much to be done.

It took a few days to investigate everything from the product to the relevant legal agreement. After confirming that there was no problem, the three parties began to sign a formal investment agreement.

Xia Jingxing invested 400,000 US dollars to obtain 8% of the shares of Skype; Defengjie invested 600,000 US dollars to obtain 12% of the shares of Skype.

As for the founding team of Skype, all the shares held are discounted by 20%, multiplied by 0.8 for dilution.

Before this equity division, Howard also asked the founding team of Scape to take part of the equity and set up an option pool to motivate key employees.

If you don’t set up the option pool in advance, and wait until the A round of financing to set it up, you will trap angel investors in it: help the founding team to dilute the equity and set up the option pool together.

Howard, an investment veteran, naturally would not make such a low-level mistake. Before signing a formal investment agreement, he asked the six-member founding team of Scap to set up an option pool.

These six people are also quite generous, and each made up an option pool that accounted for 20% of the total share capital according to the proportion.

In fact, it is not too high. Except for a few domestic companies such as Huawei, most of the companies' option pools are only a few percent of their total share capital after listing.

When Google and Facebook went public, employees owned nearly 30 percent of their shares.

In this regard, it is not that some domestic capitalists lack the generosity of foreign countries, but the competition for domestic talents is too fierce and spoiled.

The formal investment agreement is a bit complicated. In addition to the target company's valuation, investment amount, and investment method, it also includes the use of funds, transfer restrictions, corporate governance, right to sell, right of first refusal, right of first refusal, anti-dilution clauses, Non-compete, right-to-know, confidentiality clauses... a bunch of subsidiary agreements.

When Xia Jingxing signed the angel investment agreement with Andrew and John, these terms were also signed, which was not unfamiliar.

In addition to being a director of Skype, Xia Jingxing also has the right to co-invest a part when Skype makes a Series A investment, keeping the 8% shareholding ratio unchanged.

In addition, when a company wants to acquire Skype, the investor has the right to sell, and according to the same acquisition conditions, the founder will sell the equity together with the founder.

In other words, the founder cannot run away, and the investor can take over the deal alone, which is to protect the interests of the investor.

There are also founders selling equity, and investors are eligible to subscribe first.

Share repurchase and betting are not signed.

On the one hand, angel investment is inherently risky, and its valuation is not high. It is too bullying to ask for repurchase.

It's not called venture capital anymore, it's called borrowing.

Gambling is also generally used to motivate founders to work hard when there is a big difference in valuation and the product is in the explosive stage.