readsfreenovel Chapter 265 Capital Games
Chapter 265 Capital Games
It was 3:10 PM.
"Regarding the IPO underwriting," Winston returned to the initial question, "if Morgan Stanley invests in this round of financing and provides IPO guidance services, will we be able to obtain a priority commitment from the lead underwriter?"
Ling Yun pondered: Goldman Sachs wanted priority, while Morgan Stanley wanted commitment. Both were top investment banks, each with its own strengths. Goldman Sachs had more experience in underwriting technology stocks, but Morgan Stanley might be more comprehensive in its services.
"We can promise," Ling Yun said slowly, "that under the same conditions, Morgan Stanley has priority. Moreover, if we are satisfied with the listing guidance services you provide, we will give you our top consideration when we go public in the future."
"The standard of 'equal conditions' is too vague," Winston shook his head. "We need a more definite commitment."
"Then you need to provide a more definite service commitment," Ling Yun said. "IPO guidance is not a simple consultation; it requires the investment of real resources. If Morgan Stanley can prove your sincerity, we are certainly willing to establish a long-term partnership."
Winston was silent for a moment. He picked up his teacup and took a sip of the now-cold black tea.
"How about this," he said, "Morgan Stanley invests $4000 million, a 4.71% stake. We sign a listing advisory service agreement, with a $100 million upfront service fee deducted from the investment. The service period is eighteen months. During these eighteen months, we dedicate a team to help Xingyu prepare for its IPO. After eighteen months, if Xingyu decides to go public and meets the listing standards with our assistance, Morgan Stanley automatically becomes a joint lead underwriter. If Xingyu chooses another investment bank, it will have to pay a penalty of three times the service agreement amount."
This plan binds the listing commitment and services together, but does not completely lock them in.
"Being a joint lead underwriter is possible," Ling Yun said. "But it won't be automatic; we'll have to decide based on the underwriting plan. However, we can promise that if Morgan Stanley's services satisfy us and their underwriting quotes are competitive, we will give you priority in being selected as one of the joint lead underwriters."
"We need to define the criteria for 'competitive'," said Winston's assistant.
"Underwriting fees are 10% lower than the market average, research coverage is committed for at least three years, and there is liquidity support after listing," Fiona listed the specific conditions.
"These can all be written into the agreement," Winston nodded. "So, shall we reach an agreement?"
"We still need to go through the legal details," Ling Yun said. "But in principle, we welcome Morgan Stanley to become a shareholder and partner of Xingyu."
"Our legal team will send you the Term Sheet tomorrow morning." Winston stood up. "Looking forward to working with you."
"Looking forward to cooperation."
After seeing off the Morgan Stanley team, it was already 3:40 PM.
Back inside the club, the three sat down on the sofa by the fireplace, and a waiter brought them fresh coffee and tea.
"What do you think?" Ling Yun asked Fiona.
"Morgan Stanley's terms are more complex than Goldman Sachs' overall, but not too harsh." Fiona opened her notebook. "We limited the scope of the Most Favored Nation (MFN) clause, but the other terms are within the normal market range. The IPO coaching arrangement carries some risk, but if we don't plan to go public within 18 months, this agreement actually gives us flexibility."
"Goldman Sachs or Morgan Stanley, which do you prefer?" Carly asked.
"We want both," Ling Yun said. "Use Goldman Sachs to pressure Morgan Stanley on terms, and Morgan Stanley to pressure Goldman Sachs on prices. Let them compete, and we'll get the best terms."
"What about Abu Dhabi?"
"Abu Dhabi is a strategic investment and must be retained." Ling Yun picked up his coffee cup, then put it down again. "We need a diversified shareholder structure: American capital, European capital, Middle Eastern capital, and Chinese founders. This structure is the safest."
The firewood in the fireplace crackled slightly, sparks flew up, and then went out.
"What should we do with Sequoia's coffee tonight?" Carly asked.
"Moritz wants to find out the truth," Ling Yun said. "Sequoia is a top-tier venture capital firm, but they usually invest in earlier-stage projects. Xingyu is now in its growth stage, and Sequoia may just want to maintain contact to prepare for the next round. I'll go alone tonight; you rest."
Are you sure?
"OK." Ling Yun glanced at his watch. "Go back to the company now for a debriefing meeting. Then I'll go back to my apartment to change and head to the coffee shop at seven."
On the way back to the company, Ling Yun leaned back in her seat and closed her eyes. Two consecutive high-intensity negotiations had left her mentally stretched thin. Her temples throbbed with pain.
At the 4 PM debriefing meeting, the team summarized the day's negotiation results. Goldman Sachs led the round with an $840 million valuation, followed by Morgan Stanley, and Abu Dhabi made a strategic investment. The total funding round is expected to reach $150 million, exceeding expectations.
The legal team began reviewing the terms, while the finance team updated the model. Carly arranged the meeting for the following day—she still needed to contact several European funds; although they already had the French National Investment Bank, it was always good to have more options.
At 7:00 AM sharp, Lingyun arrived at a café in Palo Alto. The café was small, decorated with wood, and the walls were adorned with paintings by local artists. There weren't many people there at this time; a few young people were sitting in a corner writing code.
Michael Moritz was already there, seated by the window. He was wearing a polo shirt and khaki pants, looking more like a university professor than a Wall Street elite. In fact, he was a journalist before transitioning to venture capital, investing in companies like Yahoo and Google.
"Mr. Ling." Moritz stood up and shook hands. "Thank you for taking the time."
"Mr. Moritz, it's an honor to meet you." Ling Yun sat down.
The waiter came over, and Lingyun ordered an Americano.
"I'll be frank," Moritz said without mincing words. "Sequoia is very interested in Starry Sky, but the valuation in this round of financing is beyond our comfort zone. We usually invest in Series A and Series B rounds, with valuations between tens of millions and one or two hundred million. 8.5 million is too expensive for us."
"I understand," Ling Yun said. "Different funds have different investment stages."
"But I still want to talk to you," Moritz said, "because I believe the future of StarTalk is more than just instant messaging. What you're doing is building a social graph. Whoever owns the social graph owns the next decade of the internet."
That was a very insightful statement. Ling Yun couldn't help but re-examine the person in front of him.
"Social graph..." he repeated the word.
“Yes.” Moritz leaned forward. “ICQ, StarTalk, AIM—these instant messaging tools, on the surface, are for people to chat, but in reality, they are recording the relationships between people. Who is talking to whom, what they are saying, and how often they are talking—this data is more valuable than search history. Because search history is about the relationship between people and information, while chat history is about the relationship between people.”
"How valuable do you think this data is?"
"Big enough to disrupt the existing internet landscape," Moritz said. "Google organizes the world's information, but who organizes the world's people? That's your opportunity."
The coffee arrived, and Lingyun picked up the cup, the steam blurring her vision.
"So Sequoia wants to invest in the next round?" he asked.
"If you need it," Moritz said, "but more importantly, I want to build a connection with you. Sequoia is more than just money; our post-investment resources—talent acquisition, strategic guidance, and follow-on funding—may be more valuable than the money itself."
"I understand." Ling Yun put down his cup. "If Xingyu has any earlier subsidiaries or new business lines in the future, we will give priority to Sequoia."
“I’m looking forward to it,” Moritz smiled. “Also, I’m personally curious—what do you think of the internet bubble? Everyone’s so enthusiastic right now, valuations are ridiculously high. How long do you think it will last?”
This is a very personal and sensitive issue.
Ling Yun pondered for a few seconds. "The frenzy will continue, but it won't last forever. Every technological revolution has a hype cycle, and eventually it will return to its intrinsic value. The key is whether you've built real barriers to entry and revenue when the bubble bursts."
"Well said," Moritz nodded. "So, what is the barrier to Star Language?"
"User habits, social relationships, and an open ecosystem," Lingyun said. "Even if competitors develop better technology, users won't easily migrate because their friends are all here."
"This is a network effect," Moritz said. "The most powerful moat."
The conversation lasted forty minutes; no specific deal was made, but a connection was established. Moritz concluded by saying, "Keep in touch, and feel free to contact me if you need anything."
As Lingyun stepped out of the coffee shop, the cool night breeze helped him regain his senses.
He walked back to his apartment. The night in Palo Alto was quiet; he could only hear his own footsteps.
Back in his apartment, he turned on his computer; his inbox already contained over a dozen new emails. Draft term sheets from Goldman Sachs and Morgan Stanley had arrived. The legal team had highlighted the terms that needed to be negotiated. Carly organized her schedule for tomorrow.
There was also a letter from Ni Guangnan, titled "Urgent Matter".
Lingyun clicked on it.
"President Ling,
This afternoon I received news that a team at the Institute of Computing Technology, Chinese Academy of Sciences, is facing funding difficulties while developing an operating system. Their leader contacted me through connections, hoping to collaborate with us. The team is very strong; several members have participated in early-stage projects related to domestically developed operating systems.
I know we're already working on the Starry Sky system, but this team has unique experience in underlying optimization and hardware adaptation. Bringing them in could be helpful for our expansion in China.
They're arriving in Jinan tomorrow and hope to meet you. If you don't have time, I can contact them first.
Ni
Lingyun, from the operating system team, stared at the screen.
The Starry Sky system is currently primarily developed in Silicon Valley. Although it's open source, the core team is entirely American. If it's to be promoted in China, it will definitely require local technical support and adaptation.
He replied, "We can meet. It's scheduled for next week. I'll fly back. Keep a low profile and don't make a fuss."
send.