Chapter 195: 50 Million Financing, The Food Delivery War Is About to Begin!

The succession of the CEO of Kuai Pao proceeded silently.

Before the Spring Festival, Pei Yi led his team to continue conquering the food delivery market in Luzhou.

The number of full-time riders in the delivery department rapidly expanded from over 90 to more than 500, and there was also a part-time food delivery team of over 600 people to alleviate delivery pressure during peak periods.

Normally, with Kuai Pao's daily order volume, at least 1,500 food delivery riders would be needed to handle the delivery task of 100,000 orders.

However, currently 70% of orders come from within the first ring; Kuai Pao's operational scope is relatively concentrated, and with the intelligent delivery system, it barely maintains delivery timeliness.

Once business expands to farther areas, the existing system and delivery capacity will face a huge test, and the delivery delay rate is likely to rise sharply.

If capacity cannot be expanded and algorithms optimized in time, even with more subsidies to attract new users, it would be difficult to support the rapidly growing order volume; instead, declining delivery experience would lead to user churn.

Therefore, despite the year-end approaching, Kuai Pao's HR department is still recruiting intensively, with over 50 new employees joining daily.

Among these people are both ground promotion and merchant acquisition staff from 24 Coupon, as well as R&D engineers from Manzuo and Gao Peng.

In the Great Thousand Group Wars, many group-buying websites go bankrupt every month.

They continuously supply excellent talent to society.

Kuai Pao seized this opportunity, welcoming a good time for development and growth; for grassroots merchant acquisition, there are no industry barriers between food delivery and group-buying businesses.

The working models of the two are almost identical; after joining Kuai Pao, one can immediately copy previous group-buying merchant resources into Kuai Pao on a one-to-one basis.

It can even be said that the speed at which group-buying websites go bankrupt is inversely proportional to Kuai Pao's merchant growth trend.

On the other side.

Kuai Pao's recent development naturally attracted the attention of Ma Wenteng and Liu Zhiping.

"This kid is very cunning; he dragged the Penguin around for a spin and wouldn't even budge on 5% equity."

Ma Wenteng sat in his office, smiling as he cursed.

"Not quite; since he opened his mouth, he definitely wants financing; it's just a matter of price."

"I valued Kuai Pao at 300 million, but he immediately opened an entry on Pinba, boosting Kuai Pao's daily orders to the 100,000 level."

Liu Zhiping shook his head, equally helpless.

He had figured it out: whenever a project involves Chen Yansen, unless a premium of three or five times is offered, the other party simply won't accept financing.

"Have Lin Chenfeng re-evaluate Kuai Pao based on the current order scale and complete the financing as soon as possible."

Ma Wenteng instructed; he did not want to miss the best timing to invest in Kuai Pao.

After all, DST and Jin Sha Capital had both shown strong investment interest in Kuai Pao.

If the Penguin hesitates any longer, Chen Yansen might choose other venture capital firms.

"I understand," Liu Zhiping nodded in agreement.

Meanwhile.

Zhu Xiaohu of Jin Sha Capital, Zhou Shouzhi of DST, and Shen Nanpeng of Sequoia Capital all received the latest updates on Kuai Pao.

They also did not expect that the originally overlooked food delivery model, upon colliding with traffic and capital, could unleash such astonishing development potential.

After some thought, Zhou Shouzhi called Chen Yansen, proposing an equity stake with a valuation of 1 billion.

Chen Yansen smiled and politely declined.

DST did invest in quite a few internet companies in China, but besides capital, it could not provide additional growth nutrients for Kuai Pao.

And Chen Yansen was not short of money.

Zhou Shouzhi could only regretfully withdraw from Kuai Pao's Series A financing race; as for Ele. me, he had considered it privately, but after a field visit, he gave up directly.

Compared with Kuai Pao, Ele. me fell far short in delivery timeliness, order processing systems, and rider team construction.

After Zhang Xuhao received 1 million US dollars from Jin Sha Capital, he only upgraded the website and invested too much money in technical engineers, product managers, and market operations personnel.

But the ground promotion BD that Zhou Shouzhi valued more, Ele. me did terribly.

As a food delivery platform connecting users on one end and merchants on the other, Ele. me had no outstanding achievements in either aspect, so Zhou Shouzhi naturally looked down on it.

This was also the reason Zhu Xiaohu refused to invest in Zhang Xuhao again.

At this moment, Zhang Xuhao sat in the reception room of Mama Ali's Strategic Investment Cooperation Department, waiting anxiously.

Under the pressure of Kuai Pao, he had almost exhausted his network within the Jiaotong University alumni circle but failed to secure a single cent of financing.

So he turned his gaze to the financiers in Hangcheng.

Creak!

The door was pushed open.

Zhang Xuhao hurriedly stood up and went forward to greet them.

Standing at the door was a bald middle-aged man wearing a blue suit, followed by two assistants.

"President Ji, long heard of your name!" Zhang Xuhao bowed slightly and greeted with a flattering tone.

At this time, the true boss of Mama Ali's Strategic Investment Department was still Cai Xin; Ji Gang was only the general manager and had not yet taken the position of head.

However, for an investment case of Ele. me's scale, Ji Gang could decide fully on his own.

"President Zhang, please sit."

Ji Gang smiled slightly and replied.

Before deciding to meet Zhang Xuhao, he had studied Ele. me and also Kuai Pao; for this O2O ecosystem different from the group-buying model, he indeed had investment interest, and his direct boss Cai Xin also believed that food delivery possessed certain growth potential in the local life track.

Since Chen Yansen had joined forces with JD. com to fight Taobao for e-commerce market share, Ma Liyun and Cai Xin did not want to invest in Kuai Pao.

So they shifted their attention to Ele. me.

"President Ji, this is Ele. me's business plan; as of December 31, Ele. me's registered members totaled 67,000, with daily order volume maintained at around 10,000."

Zhang Xuhao cautiously handed over a document and introduced it slowly.

"Do you have confidence to defeat Kuai Pao?" Ji Gang took the document, looked down for over ten minutes, and suddenly asked.

Zhang Xuhao was stunned for a moment, but immediately reacted, speaking with certainty: "The difference between Ele. me and Kuai Pao is merely a lack of expansion capital; as long as Mama Ali is willing to invest in Ele. me, I guarantee I can surpass Kuai Pao within three months."

Entrepreneurs most fear showing cowardice before battle; Zhang Xuhao's words made Ji Gang nod inwardly.

In terms of product accumulation, Ele. me has already been operating for three years, so its technology in orders and delivery systems should be stronger than Kuaipao's.

"Mama Ali gives you 50 million in funding — how much equity are you offering in exchange?" Ji Gang set down the document and looked at Did Zhang Xuhao as he asked.

In his view, given Ele. me's current scale, plus a premium factor, the valuation was at most 200 million.

Therefore, if Did Zhang Xuhao offered less than 10%, Ji Gang would absolutely turn around and walk away.

His bottom line in his heart was 30%.

After all, from Ji Gang's perspective, Ele. me was nothing more than a small platform whose daily orders had just broken ten thousand.

If Chen Yansen hadn't hyped up the concept of food delivery, he would have driven the price down even harder.

After hearing this, Did Zhang Xuhao immediately fell silent.

He still didn't know that Chen Yansen was about to inject 200 million into Kuaipao, so he felt that 50 million in funding was enough for Ele. me's next stage of development.

But he only wanted to sell 15% of the equity.

"President Ji, I only need 30 million in funding, in exchange for 15% of Ele. me's equity."

After a quick think, Did Zhang Xuhao replied directly.

"Kuaipao's customer acquisition cost is estimated at around 15 yuan. 30 million can only buy 2 million new customers — you can't even swallow up the food delivery market in Hucheng, so what will you use to compete with Kuaipao?"

Ji Gang shook his head and rejected Did Zhang Xuhao's proposal.

"Then how about 20%?" Did Zhang Xuhao asked tentatively.

"30%! I don't think Ele. me's valuation can reach 250 million." Ji Gang said lightly.

30%?

Did Zhang Xuhao shook his head repeatedly. Jin Sha Ventures had taken 20% in the seed round — if he gave Mama Ali another 30%, the founding team's shareholding ratio would be close to dropping below the 50% warning line.

There were still Series A, Series B, and Series C rounds of financing ahead — what would they do then?

After more than two years of operational research, he had long known that user acceptance of food delivery was not high, and that enormous funds would be needed to cultivate the market and educate users.

Once he agreed to Mama Ali, he could very well lose controlling interest.

But if he didn't agree to Mama Ali, Ele. me would most likely not survive the first half of 2012.

"25% — that's all I can offer. If President Ji doesn't agree, I'd rather give up Mama Ali's financing."

Did Zhang Xuhao thought for a moment, sighed, and said firmly.

"OK, I can roughly accept this number, but whether it can pass the group's resolution still requires President Zhang to go back and organize the financial and business reports and submit them to Mama Ali's venture capital department for review."

Ji Gang hummed in acknowledgment, then explained with a smile.

"I understand." Hearing this, Did Zhang Xuhao couldn't help but let out a sigh of relief.

In any case, with this money Ele. me could at least survive this winter, and in the coming spring hold onto the food delivery market in Hucheng and accelerate its expansion.

……

……

Luzhou, Central Authority Office.

After Meng Yuanzhi explained the reason, he handed the choice over to the heads of Luzhou Construction Investment and Xincheng International.

These two local investment companies held nearly 20% of Jingdong's equity.

Chen Yansen's request could only become a reality if these two were persuaded.

"I disagree! Sister Chengzi Technology is, plainly speaking, just a phone assembly factory — its value is far below Jingdong's. There's no need for us to abandon the essential for the trivial."

Wang Qingsheng of Luzhou Construction Investment refused outright.

Meng Yuanzhi frowned, displeased in his heart.

Seeing this, Xu Minggang of Xincheng International immediately understood Meng Yuanzhi's idea and said with a smile:

"President Wang, actually Sister Chengzi Technology has its own patented technologies — for example, the Aurora OS operating system, battery management, global gesture operation, and fast charging. But I also disagree with transferring equity directly to Senlian Capital. Let's have the other party use Sister Chengzi Technology's equity for an exchange."

Meng Yuanzhi's eyes lit up upon hearing this; he felt Xu Minggang's idea was a good one.

This way, Jingdong and Sister Chengzi Technology could be deeply tied together, which better served Luzhou's overall interests.

"If it's an equity swap, then I have no objections either." Wang Qingsheng glanced at Meng Yuanzhi's expression, then looked at Xu Minggang, and finally agreed.

Jingdong's total market value was around 60 billion, and Senlian Capital had purchased 4.9% from the open market.

Since the 5% mandatory-disclosure red line had not been triggered, the outside world did not know that Sister Chengzi Technology had already begun laying out its supply chain in order to reduce material costs.

"Since neither of you has objections, let's settle it like this for now. We'll discuss the rest when we meet."

Meng Yuanzhi made the final call and locked the matter down.

That afternoon, Chen Yansen received a callback from Tao Jingwen, who proposed a cooperation plan of equity swap.

Chen Yansen thought briefly and agreed readily.

After setting a time for the talks, Chen Yansen hung up the phone.

He planned to wait for Gao Weilin to return from his inspection trip in Hangcheng, then begin working on the matter of taking a stake in Jingdong.

Although on the circulating market value he could also buy a certain proportion of equity, first, it would easily drive up the purchase cost, and second, Jingdong had the backing of Yanjing and Luzhou's local capital.

If they slapped him with the label of a hostile takeover, he might very well have to spit back out the equity he had swallowed.

Now that he had Meng Yuanzhi's approval, there were no worries left.

Otherwise, even if the investment institutions behind Jingdong ignored him, every additional 5% of equity would require a mandatory disclosure, and the retail investors in the secondary market weren't fools — they would absolutely clutch their chips tight.

By then, it wasn't impossible for the price of 1.6 yuan per share to climb to 16 or 26 yuan.

Chen Yansen had no intention of being a sucker!

At this moment, Gao Linwei had just boarded a plane back to Xucheng. His negotiations with Cheng Weixing had gone exceptionally smoothly, and he had successfully secured the lead role in the new project.

(End of this chapter)