Li Xinkui felt that nothing was going his way recently; even burning incense and praying to Buddha didn't help.
First, his little brat got into a fight at school and was forced to suspend classes.
Not long after, his projects also started having problems one after another.
First, the Renren.com data center project in Wujiang District, which had already been negotiated and was preparing materials, was unexpectedly halted at a crucial moment.
Then, there were also some issues with the final payment settlement for the previously completed Yuanfang Plaza project.
One incident could be called an accident, but when several things happened together, Li Xinkui, if not foolish, knew he had provoked someone he shouldn't have.
Recalling the mysterious words a vice president from the general contractor of the data center project had said while having dinner with him, Li Xinkui finally understood the whole story.
After hastily calling his son over, Li Xinkui shed his previous loving father image, craning his neck and staring as he asked,
"Who exactly was that person in the baseball cap who got into a conflict with you guys last time?"
Li Xiao'en didn't have to go to class these days, so he was having a blast, though honestly, it didn't matter to him whether he attended class or not.
Seeing his old man look like he was going to devour someone, he was still a bit confused:
"They were definitely students. The ones who hit us with steel pipes later were all students, not bodyguards."
"No, that's wrong. The client for my data center project is Renren.com. I specifically checked, and Renren.com's boss is from the University of Finance and Economics. Think carefully again, is it the same person? You little brat, you've ruined me!"
"I really don't know. I have heard the name Chen Pingjiang, he seems pretty cool at the University of Finance and Economics, but are you scared?"
Li Xinkui didn't expect to be talked back to by his good son, and immediately felt blood rush to his head, wishing he had shot the kid onto the wall back then.
If it were just one project with a small problem, it wouldn't be a big deal, but now several projects were having issues, and the news had even spread throughout the industry.
This led some people who didn't know the truth to consider whether to cut ties with Li Xinkui, as rumors from unknown sources suggested Chen Pingjiang also had significant backing.
"Get out, get out, get out! All you do all day is eat, drink, and be merry. If it weren't for me, you'd be starving to death!"
Li Xinkui cursed.
Long Yanfen, who had just come out of the shower, frowned unhappily:
"I heard you yelling and shouting while I was bathing. Can't you speak properly? What if you scare my child?"
Li Xinkui was absolutely furious, so angry he laughed:
"An indulgent mother spoils her child. Just keep spoiling him, and sooner or later he'll be sent in to 'eat peanuts'."
Long Yanfen's face changed.
She didn't expect her husband to curse their son like that:
"Li Xinkui, explain yourself! You're getting bold, aren't you? What kind of man takes out his frustration at home after being angered outside?"
Meanwhile, Li Xiao'en was still fanning the flames:
"His project was messed up by someone, and he's blaming me."
Hearing this, Li Xinkui could no longer hold back.
He went up and slapped Li Xiao'en directly, leaving him dazed and disoriented.
In an instant, the Li family was in chaos.
Less than two days later, the University of Finance and Economics also issued a disciplinary decision regarding the stadium stand brawl.
Li Xiao'en and the others were directly expelled!
Faced with such a punishment, Li Xiao'en and his mother were greatly alarmed and wanted to go cause a scene at the school, but Li Xinkui didn't show up at all.
In the end, Li Xiao'en couldn't even get past the school gates.
......
By early December, news about Renren.com's upcoming Series B financing was spreading everywhere, and Renren.com made no secret of it.
Just a week later, the situation dramatically changed.
"With Renren.com doing this, who would dare to play along with them?"
"They're completely bullying us investors, actually coming up with this bidding investment scheme."
"I don't really want to join in on this. It's just one project; if the east doesn't light up, the west will."
Many VC/PE institutions expressed pessimism about Renren.com's Series B financing.
The reason for this was simply that after so many years in the industry, no one had ever seen such an aggressive fundraiser as Chen Pingjiang from Renren.com.
Others rely on FAs for fundraising, but Renren.com wanted to hold a bidding process.
According to the rules set by Renren.com, this round of financing adopted a new form combining "Class D + Class B" shares, meaning investment institutions needed to invest a certain proportion in non-income Class D common shares to qualify for Class B common share financing.
The investment cap for Class B shares for a single institution was $200 million, with a minimum investment of $10 million.
There was no minimum investment requirement for Class D shares.
However, Renren.com explicitly stated that, under similar conditions, investors subscribing to larger amounts of Class D shares would be prioritized.
What did this mean?
The Class D shares released by Renren.com had a three-year lock-up period.
After the lock-up period expired, investors could request the company to repurchase the Class D shares at the investor's original cost price.
From this, it was clear that Class D shares were, in a sense, interest-free bonds.
Even more outrageous, while investors could request the company to repurchase Class D shares, the company also reserved the right to repurchase part or all of the Class B shares held by investors at the official valuation.
To put it plainly.
To invest in Renren.com, one had to purchase a certain portion of Class D shares, which was equivalent to lending a large sum of money to Renren.com for free.
If you wanted to redeem it after maturity, sorry, there wouldn't be a single cent of interest.
Moreover, if you wanted to redeem Class D shares, Chen Pingjiang could also request to repurchase the Class B shares held by investors, even though these Class B shares would be calculated at their market value at that time.
But the risk was much greater.
Because Class B shares could depreciate due to Renren.com's poor management.
No one in the world had played it this way before; Chen Pingjiang was the first!
The worst outcome of this investment was lending an interest-free loan to Renren.com for free, with the purchased Class B shares ultimately plummeting, leading to huge losses for investors.
Even the best outcome would mean earning significantly less and having a large sum of money tied up.
These VCs and PEs, truly had seen it all, could it even be played this way?
Is Chen Pingjiang just not being a human?
However, Chen Pingjiang was completely unfazed by the outside noise.
Based on the newly announced average subscription ratio of 1.61:1 for Class D/Class B shares, subscribing to 100 million yuan in Class B common shares would also require subscribing to 161 million yuan in non-income Class D common shares.
Assuming an annual return rate of 30% for Class B shares, due to the Class D share subscription, the overall investment's return rate would drop to an annual [ (1.3^3 + 1.61) / 2.61 ]^1/3 - 1 = 13.41%.
Therefore, the investment returns for investors in this round would always be significantly discounted.
For a time, the market was filled with voices predicting Renren.com's decline.
"Chen Pingjiang is too arrogant; he'll have to face the bitter consequences."
"How can we, as capital providers, be controlled by a single company? I suggest everyone stop investing and let Renren.com cry it out."
However...
They said one thing, but their bodies were very honest.
As of December 15th, after the first round of bidding, nearly 100 investment institutions had submitted deposits and bidding applications, exceeding the planned financing amount by 30 times.
Now all the VC/PE firms were stunned.
The eliminated investment institutions grumbled privately:
"It's absolutely despicable, insane! On the surface, they rallied you to stand together and not invest, but secretly submitted their deposits behind your back."
Some other investment institutions quickly sought out Chen Pingjiang through various channels, expressing that they had come to their senses and wanted to get on board!
Those investment institutions that failed in the "washout" began to use various means to inquire about prices from each other.
In this capital feast, the smaller institutions were the most hurt.
Renren.com's Series B financing plan was finally released to the public, causing an uproar among some media and financial experts.
1. Renren.com's pre-investment valuation for this round is $2.5 billion.
2. Investment structure: Class B common shares (held through an SPV company, carrying voting rights.) Class D non-income common shares (held through an SPV company, carrying no voting rights.)
3. Subscription amount: Class B: Submitted by investors, subject to final company confirmation. Minimum subscription amount is $10 million.
Class D: Submitted by investors, subject to final company confirmation. No minimum subscription amount. (Although there is no minimum subscription amount, for the same amount of Class B investment, priority will be given to those who subscribe to more Class D shares.)
For a time, there were all sorts of voices criticizing Chen Pingjiang and Renren.com.
But some entrepreneurs applauded, feeling that Chen Pingjiang's strong stance could reverse the situation where entrepreneurs were at the mercy of capital.
In the cigar lounge.
Shen Nanpeng looked at Chen Pingjiang with a bitter smile:
"I really didn't expect you to pull off such a move. Not only did I not expect it, but probably no one in China or even the whole world did. I've never seen such an aggressive fundraiser as you. However, while you can maximize profits this time, you've probably offended many investment institutions, and there are others waiting to see you fail."
Chen Pingjiang shrugged helplessly:
"They said no, no, but their bodies were very honest, and in the end, didn't they still cry and clamor to get on board? Besides, apart from getting an interest-free loan, I didn't actually do much; I just wanted to filter out some smaller investors this way. The figure of $2.5 billion itself is quite suitable. Aren't you, Sequoia Capital, considering taking it all?"
Shen Nanpeng rolled his eyes at him:
"I'd like to, but I'm unable. 20% of the shares is $500 million, plus another $800 million in Class D shares to lend to you for free. I'll still be the lead investor this time."
Chen Pingjiang nodded noncommittally.
He was just asking casually.
The reason he adopted this approach was probably clear to Shen Nanpeng himself: he didn't want to give up too many shares to Sequoia and wanted to attract other large institutions.
Chen Pingjiang was not the first to raise funds with such an aggressive method; DJI also did it later.
"This incident has caused a huge stir, and every move Renren.com makes from now on will definitely be scrutinized under a microscope. You'd best ensure that Renren.com can maintain explosive growth and successfully go public, otherwise, your reputation in China's capital circles will truly be ruined."
After extinguishing his cigar, Shen Nanpeng earnestly advised,
"However, I have great confidence in both you and Renren.com. In fact, the industry feels the same, even if they're making a fuss now. As long as Renren.com keeps rising, these people will actually thank you for giving them a ticket on the ship; that's how realistic capital is."
Although he had some complaints about Chen Pingjiang's unconventional moves, Renren.com was indeed a good project, and Shen Nanpeng had no choice but to accept it.
(End of Chapter)