My Age of Investment

Milner has been in the investment industry for so many years. Although he has never invested in any particularly awesome projects, he has never extinguished the fire of ambition.

He invested in the only fairly successful project, and his influence has always been limited to Russia.

For this, he is far from satisfied, and has been trying to find a way to break through the status quo and bring DST to a higher stage.

To this end, he dealt with several oligarchs, raising funds for the company, and at the same time pulling in powerful people;

The heads of Goldman Sachs, hedge fund New Century Holdings and other institutions in Russia were all drawn by him to join DST, in order to open up the network and expand their business to the United States.

Milner himself understands that the ceiling of Russia's Internet economy is obvious, and it is great to dominate the country.

If you want to cast world-class Internet companies like Yahoo and Google, you have to turn your attention to the United States.

Just when he worked hard to manage his contacts and was about to enter Silicon Valley.

A friend brought a message, saying that the CEO of Facebook was looking for him and wanted to chat with him.

After briefly confirming Xia Jingxing's identity on the phone, he rushed from Moscow to London in a hurry.

For him, this is undoubtedly a pie in the sky, a perfect opportunity to break into Silicon Valley.

After chatting a few words with Xia Jingxing and getting to know him a little more, Milner began to enter the theme.

"I heard that Facebook just signed a $300 million advertising bill from Microsoft? And also reached a strategic partnership with Microsoft?"

Xia Jingxing nodded, "Yes, Facebook has developed for more than two years, and it's time to start advertising and monetize it."

Milner said with a smile: "Facebook and YouTube each have tens of millions of users. By convention, the annual advertising revenue will not be less than 200 million US dollars."

I have to say that Mi Baltou is quite accurate, and there have been predictions within Facebook. It is almost as much as the other party said, and the fluctuations are not big.

Xia Jingxing nodded secretly, Mi Baltou was indeed a CEO of one of the three major Internet companies in Russia, and was very familiar with the Internet.

The outside world only sees the ability of money, but ignores the learning ability and judgment of the other party.

Milner continued: "But I reckon,

These revenues alone are not enough to support Facebook's continued development at the previous fast pace.

It may take two or three years to reach a revenue balance, or even turn a profit.

Moreover, this is the conclusion that the oil pipe needs to continuously increase the bandwidth.

Including YouTube, Facebook may be completely profitable, and it will be two or three years later.

Adding up is four or five years, five or six years, during this period, it is necessary to continuously transfuse blood to Facebook. "

Milner stopped and said nothing.

Xia Jingxing smiled, and had to admit that this bald head had two brushes, and he could see the dread of the oil pipe at a glance.

In fact, excluding YouTube, Xia Jingxing has a way to make Facebook profitable in the next two to three years, and at the same time ensure that the expansion will not slow down.

But video websites burn more money than social networks. To create a creator ecosystem, it is even more necessary to carry out profit sharing activities.

All of these will put heavy financial pressure on the oil pipeline.

"Yeah, so we're going to do an equity round this year."

Hearing Xia Jingxing's own words, Milner's eyes lit up and said, "If Facebook wants to raise money, can DST join it?"

"Can!"

A smile appeared on Milner's face, but Xia Jingxing's next sentence made his face gloomy.

"The valuation of 10 billion US dollars, do not accept capital injection, only accept the transfer of old shares."

Milner didn't burst into rage, and quickly forced himself to calm down.

Before he came, he thought about why Facebook, the most promising emerging company in Silicon Valley, would look to one of their little-known Russian investment companies.

What did you see in them?

It turned out to be waiting here.

Generally, few investment institutions are willing to take over the old shares transferred by unlisted companies, especially when the valuation has not been discounted.

Of course, there are exceptions to everything.

A great company can do that.

Unknown venture capital institutions cannot invest in top projects, so they can only go to the secondary market, which is a place that specializes in selling old stocks.

There is not much difference in essence between issuing new shares and taking over the transfer of old shares. They are both shares, and the rights and interests they should enjoy are not less.

There is only one exception. After this old stock takes over, it is no longer a preferred stock.

Preferred stock is when a buyer wants to buy it. When the IPO is listed, the shareholders holding the preferred stock sell first, and then it is the founder's turn.

Milner is very optimistic about Facebook, even if it is not preferred stock, as long as he can get Facebook shares, he is satisfied.

It's just a valuation of 10 billion US dollars. It's too tricky to bully Russians who don't understand venture capital?

"Daren, we have no problem buying old stocks, but is Facebook's valuation of 10 billion US dollars too high?

Assuming that Facebook can really make $200 million in revenue this year, this price-to-sales ratio is 50 times.

You know, when Google went public, the price-to-sales ratio was less than 10 times. "

"How can we compare with them? Facebook has just started commercialization, and the growth rate of users is also increasing, and many potential values ​​have not yet emerged.

If you look at it three years later, Facebook’s revenue volume will definitely catch up with, or even surpass, Google’s IPO. "

Milner chuckled, "Then can I invest in three years later?"

"Okay. After three years, the investment will not be at the current price."

Xia Jingshu spread his hands and said, "Investment is originally an investment in the future, the expected return of an investment."

Milner smiled, he understood the truth, but why did you sell Facebook to me at the valuation three years later, what am I earning in these three years? Get some air?

Before doing Internet investing, Milner was in the investment banking business.

What does the investment bank do? It is to decorate a piece of garbage, change the concept, turn it into something like environmental protection technology, recyclable resources, etc., and then sell it at a high price.

Playing with concepts and selling air, he is very familiar with it.

It is because of this experience that Milner pays more attention to mature companies, in his own words, called "late stage investment."

The most critical point of late-stage investment is to see the value depression of the asset and where the future growth potential lies.

Xia Jingxing's valuation of 10 billion US dollars really made him back off a bit.

When valuing Facebook, professionals will use well-known Internet companies and listed companies in the industry as a reference.

As a rising star, Google's rise in the past has a lot of similarity with the current Facebook, so it has naturally become the first choice for reference.

Google's current share price has doubled from last year's IPO price, and its total market value is approaching $50 billion.

If Facebook can grow to this level in the next few years, it can make some money on the investment.

But it is very difficult. It needs to continue to maintain a proud position in the social network, and the level of revenue and profit must also be improved.

These are all things that Milner needs to analyze and study repeatedly.

Xia Jingxing watched Milner thinking seriously, did not disturb the other party, and waited quietly beside him.

What the media said "Milner decided to invest in Xiaopazi in three minutes".

That is purely to fool people, deliberately arranging some jokes to attract attention, so as to cause topicality and achieve the effect of brand communication.

Xia Jingxing knew that Milner was an investor who "seeks money but not voting rights", but valuation is related to the final return.

The other party needs to weigh carefully, which is also what it should be.

Ten billion dollars, not 100 yuan, it is very normal to think about it for a few months.

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