lerbook Chapter 159 Goldman Sachs' Advice
Chapter 159 Goldman Sachs' Advice
Four o'clock in the afternoon, in the conference room of the alien company.
Richardson, Managing Director of Goldman Sachs' investment banking division, sat across the conference table with a thirty-page financing proposal spread out in front of him. His assistant, a young man wearing glasses, was operating a laptop.
"Mr. Ling, we've analyzed Xingchen Technology's valuation," Richardson said. "Currently, you only have two shareholders: you personally own 70%, Dell owns 10%, and the employee stock option pool owns 20%. This equity structure is too simple and not conducive to going public."
Lingyun leaned back in his chair.
"so?"
"Before the IPO, we need to do two or three more rounds of financing." Richardson turned to the third page, "to bring in more institutional investors, dilute equity, but increase market capitalization. Goldman Sachs can lead the first round."
"What's the valuation?"
"Based on our existing business: Starry Sky operating system, Starry Sky browser, Starry Stream front-end framework, and Starry Package toolchain," Richardson stated, "we believe a reasonable valuation is between $300 million and $500 million."
Ling Yun smiled.
"Richardson, the StarCraft operating system currently has less than 1% market share, and its browser has less than 3%. Will the market accept this valuation?"
"This valuation isn't high," Richardson said earnestly. "We're looking at the future. The UHSB standard is progressing, the gaming ecosystem is being built, and the AMD platform optimization is complete. More importantly, you're Microsoft's only publicly acknowledged challenger. This story is valuable."
"How much do you want to invest?"
"In the first round, Goldman Sachs led a $50 million investment, and we can arrange follow-on investments. This will dilute our equity stake by 10% to 15%."
Ling Yun thought for a while.
"Once the news gets out, a lot of people will come knocking on our door."
“Of course,” Richardson said. “The hardware manufacturers in the UHSB alliance will definitely want to take a stake. Dell will follow suit and maintain its equity stake.”
"What about Microsoft?"
"They won't vote, but they might get involved through an agency," Richardson frankly stated, "to gather intelligence or exert influence."
"I do not accept funding from Microsoft."
"Understood. We will conduct a background check."
Ling Yun stood up and walked to the window.
Outside the window is a typical Silicon Valley scene: parking lots, office buildings, and sparse palm trees.
"We'll be holding a fundraising roadshow in a week." He turned around and said, "We'll invite members of the UHSB alliance, as well as partners in our ecosystem, to submit their bids, and the highest bidder will win."
"Scale of the roadshow?"
"A small scope, no more than twenty organizations. Each organization can send a maximum of two people."
"Okay." Richardson noted it down. "We'll prepare the materials, but we need you to provide the latest financial data and product roadmap."
"I'll arrange for someone to cooperate."
After seeing the Goldman Sachs representatives off, Ling Yun immediately convened a meeting.
The team includes Eric, the Operations Systems Manager; David, the Browser Manager; Carly, the Ecosystem Tools Manager; Emily, the Finance Manager; and Mark, the Administrative Manager.
"Goldman Sachs wants to take us public," Ling Yun said bluntly. "First, we'll raise funds, then scale up, and then go public. What do you all think?"
Emily spoke first, "The timing is right. After the Southeast Asian crisis, global capital is looking for new hot spots, and tech stocks are the next big thing. If we raise funds now, our valuation can go up."
Mark worried, "The funding will dilute equity, especially the stock options for us early employees..."
"The employee stock option pool will be retained," Ling Yun said. "10% to 15% of the new financing will come from my equity. If Dell wants to follow suit, it will also have to contribute proportionally."
Eric asked, "What will the money be used for?"
"Three things," Ling Yun wrote on the whiteboard. "First, the development of the operating system, especially the mobile device version. I am optimistic about the future of handheld computers and smartphones."
"Second, acquisitions. We can consider acquiring companies like Blizzard and Epic, which we have already invested in, if they are willing to be acquired. We can also consider small and medium-sized software companies to fill the gaps in our application offerings."
"Third, marketing. Especially in the Chinese and European markets, Microsoft's dominance is relatively weak, so we have an opportunity."
Fiona noted, "What materials should be prepared for the roadshow?"
"Three documents," Ling Yun said. "A technical report outlining our technological advantages. A business plan detailing market opportunities and revenue projections. A financial model outlining cash flow and profits for the next three years."
Who will speak?
"I'll talk about strategy, Eric will talk about technology, and Emily will talk about finance."
"time?"
"One week later. Location: San Jose Convention Center."
"Guest list?"
"The UHSB consortium has seven founding members and more than a dozen investment institutions. A total of twenty."
Arrangements were made, and everyone prepared.
The news spread that very night.
The first person to call was Michael Dell from Dell.
"Ling, do you need funding?"
"right."
Dell will participate in the investment, maintaining a 10% stake.
"Welcome. See you at the roadshow."
The second is Jerry Sanders from AMD.
"I heard you're looking to raise funds?"
"right."
"Great!" Sanders exclaimed excitedly. "Count us in on the funding. AMD wants to invest and strengthen our strategic partnership."
See you at the roadshow.
Next, HP, Compaq, Sun, IBM... members of the UHSB alliance all called.
Everyone wants to vote.
Because everyone has seen that Star Technology is not just a software company.
It is the creator of the UHSB standard, the leader in AMD platform optimization, the builder of the gaming ecosystem, and Microsoft's only challenger.
This story, in Silicon Valley in 1997, was sexy enough.
At 10 p.m., Lingyun returned to the hotel.
Zhao Hu was watching the news in the living room.
"Mr. Ling, Microsoft's stock price rose by 2% this afternoon. Some analysts say it's because investors believe Microsoft's monopoly position is unshakeable."
"Let them talk," Ling Yun said, taking off his coat. "Once our roadshow is over, they'll know who they should be worried about."
Lingyun walked onto the balcony.
The lights are sparse in Silicon Valley at night.
But tomorrow, this place will become lively because of a fundraising roadshow.
He knew that this financing was not just about money.
It's also about taking sides, forming alliances, and telling the world: Star Technology has arrived.