Chapter 329 - 167: 1 Million for a 50% Stake

Chapter 329: Chapter 167: 1 Million for a 50% Stake

For a project that’s a guaranteed win, you have to maximize the profit.

More equity means more money later on.

Xu Xiyue felt her phone vibrate. After reading a WeChat message from Chen Mo, she nodded at him.

What Chen Mo meant by "conventional" was that the equity stake for an angel investment round is typically between 8% and 25%, with a maximum of 30%.

If more than 25% is given up in the first round, subsequent funding rounds would dilute the founders’ equity too quickly, potentially causing them to lose control of their company.

If the founding team holds too little equity, it could lead to a decline in their motivation.

But Chen Mo’s message was clear: 30% equity wasn’t enough. He wanted her to acquire more than 50%.

It was fine even if it meant spending more money and relinquishing operational control.

’Looks like there’s some inside information about this project that I don’t know,’ she thought, a strange light flickering in her beautiful eyes.

’But 50% must be the maximum. Any more would dilute the founding team’s stake so much there’d be nothing left for them.’

’They’d never agree to that.’

Before long, the receptionist led four young people—three men and one woman—into the conference room.

After Jiang Huiyang made simple introductions, they got down to business.

"Based on your described development progress, the time and costs your team has invested, and the project’s current state of completion..."

"My preliminary valuation for your company is 1.6 million yuan. We are willing to invest 800,000 yuan for a 50% stake."

Xu Xiyue thought for a moment, then looked at Jiang Huiyang’s team and stated her offer. ℯℯ𝘭.𝘤ℴ𝘮

’To be honest, a valuation of 1.6 million was already a bit high for their project.’

’She had only deliberately inflated the valuation to get more equity, just as Chen Mo wanted.’

"Eight hundred thousand for a 50% stake?"

Hearing Xu Xiyue’s offer, Jiang Huiyang and his team were taken aback, their faces etched with surprise.

They never expected Xu Xiyue to demand a 50% stake right off the bat.

They had to admit, the 1.6 million valuation Xu Xiyue offered was very generous.

But the percentage of equity was too high; they found it hard to accept.

Panshi Venture Capital alone would hold as much equity as all four of them combined.

If the project successfully launched and became operational, a second round of funding would dilute their shares even further.

At that point, they would have no say, because the four of them combined would hold less than 50%.

Besides, the company’s valuation was at its lowest point right now. For the other party to take 50% of the equity at this valuation...

If the company’s valuation increased in the future, they would be at a huge disadvantage.

"President Xu, I’m afraid we can’t accept that equity percentage. We’d even be willing to take a lower valuation."

Jiang Huiyang stated their position frankly.

"President Chen is very bullish on your project, which is why we’re offering such a high valuation."

"The 50% stake is our bottom line. However, the valuation can go a bit higher, and we can delegate operational control to your founding team."

Xu Xiyue began to negotiate with them, following Chen Mo’s instructions.

Upon hearing this, a flicker of interest crossed the faces of Jiang Huiyang and his team.

If Panshi Venture Capital was willing to offer a higher valuation and delegate operational control to them, then perhaps the deal was acceptable after all.

"You all must have come to our firm because you were out of options, right?"

"You all recognize me, so you must know my reputation. The fact that you’re still willing to take my investment means other VCs aren’t interested in your project."

"Only Panshi Venture Capital is willing to fund you. This is your only chance."

"You might lose 50% of your equity, but the company will get a capital injection. Your project can continue development and have a smooth launch."

"Think about your dream. Think about all the hard work, the countless sleepless nights you’ve poured into this. Would you be able to live with it if the project just died here?"

"It’s 50% of your equity versus the chance for all your blood, sweat, and tears to finally see a successful launch. I’m sure you’ll make the right choice."

Xu Xiyue had been through countless scenarios like this. She knew exactly what to say to get what she wanted.

"President Xu, how high can our valuation go?"

After hearing Xu Xiyue out, Jiang Huiyang and his team understood the situation and came to a decision.

Just as Xu Xiyue had said, they really had no other choice.

Either all the money, time, and effort they had poured into this would be wasted.

Or they could give up 50% of their equity and take a gamble.

No other venture capital firms were interested in their project.

Only Panshi Venture Capital was willing to invest in them. Xu Xiyue was right; this was their only opportunity.

Besides, if they didn’t secure this investment, the team would have to disband today.

And in that case, their remaining 50% equity would be worthless anyway.

"We’ll invest 1 million for a 50% stake."

Xu Xiyue stated the new investment amount.

One million for a 50% stake naturally raised their company’s valuation to 2 million.

’The valuation was a little high, but according to Chen Mo, it was fine as long as they secured the 50% stake.’

Upon hearing this, Jiang Huiyang and his team members quickly exchanged glances.

One million yuan would be enough to support them through the entire development and launch of the project.

They might even have some left over for pre- and post-launch marketing.

"We agree to this proposal."

Jiang Huiyang, acting as their representative, nodded in agreement.

"Then let’s sign a letter of intent."

Xu Xiyue had someone prepare the letter of intent.

Only after signing the letter of intent could they proceed to the next stages of the process.

This included in-depth due diligence, which involved on-site visits to the company, competitor analysis, auditing financial statements, and screening for legal risks.

There were also interviews with the founding team, product demonstrations and testing, intellectual property reviews, and so on.

They were putting up cold, hard cash; they weren’t going to just wire the money based on a simple project proposal and a few words from Jiang Huiyang’s team.

The formal investment would only happen after completing this deep dive and after the firm’s investment team had conferred and determined there were no issues.

And even after the investment, they would periodically review financial and operational data.

This was to prevent the founders from squandering the money once they received it.

In short, venture capital demanded caution above all else.

Otherwise, entrepreneurs could burn through all your money and leave you with nothing but a mess.

However, Jiang Huiyang’s company was small and straightforward, so the due diligence process would be quick.

As long as no problems arose, the investment would be formally finalized very soon.

"Okay."

Jiang Huiyang and his team had no objections.

While a letter of intent isn’t legally binding, it does come with an implicit exclusivity.

It also stipulated an exclusive negotiation period, during which they could only discuss financing with Panshi Venture Capital.

Basically, as long as the subsequent due diligence didn’t turn up any red flags, the letter of intent would become the basis for the final investment agreement.

Everything would proceed according to the terms laid out in the letter of intent.

For example, the 1 million for a 50% stake.

Soon, someone from the firm’s legal department delivered the letter of intent.

Xu Xiyue and Jiang Huiyang signed it and stamped it with their company seals.

"Thank you, President Chen, for believing in our company!"

Jiang Huiyang bowed slightly to Chen Mo again in gratitude.

If it hadn’t been for Chen Mo’s insistence, even Xu Xiyue wouldn’t have wanted to invest in them.

"The best way to thank me is to develop a great game,"

Chen Mo said with an encouraging smile.

In his experience, it didn’t matter what kind of game Jiang Huiyang’s team came up with in the end. His unique constitution would ensure its success.

So he wasn’t too worried; he could just let them do their own thing.

"We’ll definitely give it our all!"

After Jiang Huiyang’s solemn promise, he and his team left Panshi Venture Capital.

After they departed, only Chen Mo and Xu Xiyue remained in the conference room.

"Are you really that confident in this project?"

Xu Xiyue couldn’t help but ask, her curiosity piqued. Her beautiful eyes were fixed on Chen Mo, as if trying to read his mind.

"The day this project goes live will be the day you’re reborn."

Chen Mo wrapped an arm around her slender waist, pulling her so she crashed chest-first into his embrace.

He tilted up her fair, soft chin and smiled gently.

’It wouldn’t just be the day she was reborn and broke her curse.’

’It would also be the day she offered herself to him and officially became his woman.’

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