Chapter 378

Five days later, Penguin, Mama Ali, Huake, and KuaiPao signed a letter of investment intent in Shanghai.

The content covered core commercial terms such as investment amount, valuation, equity ratio, closing conditions, as well as an exclusivity clause requiring KuaiPao not to negotiate financing with any other investment institution within three months.

Before completing due diligence and signing the formal agreement, the only investors in KuaiPao's Series B financing were Penguin, Mama Ali, and Huake.

KuaiPao's total transaction volume for 2012 was 31.7 billion, primarily from food delivery; based on industry average price-to-sales ratios and a 90% market share, with efforts from Gao Weilin and Pei Yi, they ultimately secured a 1.2 multiplier—31.7 multiplied by 1.2—setting the valuation at 5.8 billion U. S. dollars.

Compared to the 1.2 billion valuation in its Series A financing a year earlier, the increase reached 483.3%.

In other words, investment institutions that participated in KuaiPao's Series A, if they had invested 10 million at the time, now saw their valuation rise to 48.33 million—nearly a fivefold growth.

Mama Ali led the round, with Penguin and Huake following, investing 870 million U. S. dollars to acquire 15% equity in KuaiPao.

After the financing concludes, Senlian Capital's equity stake will become 67.9%, Penguin 10.1%, Mama Ali 9.4%, Huake 4%, and Chen Yansen will still firmly retain controlling ownership.

Although KuaiPao did not publicly announce it immediately, due to the large scale of the financing, competitors quickly received the news.

"870 million U. S. dollars? Are Penguin, Mama Ali, and Huake insane? What justifies KuaiPao's 5.8 billion U. S. dollar valuation?"

Zhang Tao of Dazhong Dianping was extremely resentful.

"Although KuaiPao's annual sales are only slightly over 30 billion, its growth rate is extremely fast—its food delivery and group-buying output in January alone reached 4.3 billion, and its 2013 performance is projected to exceed 50 billion Chinese yuan."

Li Jing, the co-founder sitting beside him, explained.

Zhang Tao sighed heavily and waved his hand: "I understand what you're saying, but I just can't accept it—Dazhong Dianping fought for two years to rise from the Thousand Group-Buying War, and we hadn't even enjoyed our victory before Senlian Capital stole the fruit—how is that fair?"

"Brother Tao, the business arena is a battlefield—where is fairness?" Li Jing said with a bitter smile.

In the beginning, Dazhong Dianping also climbed to the top three of the industry by stepping on competitors' heads.

Now that KuaiPao has stepped on it, it has no right to cry out for fairness.

"How many daily food delivery orders are there now?" Zhang Tao asked casually.

"Yesterday it exceeded 30,000 for the first time, but 85.7% of orders were from new customers, and the next-day retention rate for first-time users was only 7.4%, with a second-order rate of just 2.1%," Li Jing said, reluctant to speak.

In plain terms, Dazhong Dianping's food delivery users all came for the "first order minus 15 yuan" discount—out of 100 customers who exploited the deal, only 7.4 were still willing to return the next day, and only 2.1 made a second purchase.

These numbers are fucking terrible!

Zhang Tao's lips twitched, he sucked in a sharp breath, his vision darkened, and it took him a long while to recover.

Compared to the conversion and retention data from just two days ago, it had dropped by another half.

Food delivery had only been online for a week; although Dazhong Dianping had no prior experience, it had poached key staff from Baidu and Meituan Delivery—how could it be this bad?

He looked at Li Jing and asked: "Where is the problem?"

"The riders' fulfillment capacity is insufficient, the order allocation algorithm keeps failing, and the route planning has serious bugs."

Li Jing spoke honestly.

In fact, Baidu and Meituan Delivery also performed terribly in these three areas.

Dazhong Dianping directly copied their technical solutions—of course problems arose.

The food delivery industry has a low entry barrier but a high technical barrier.

To improve accuracy in order allocation, capacity scheduling, and route planning, Chen Yansen spent nearly five billion Chinese yuan to acquire Gao De Maps and recruited over a hundred algorithm engineers from Microsoft, Google, and Mama Ali.

Total investment in human, material, and financial resources exceeded ten billion!

Did Zhang Tao really think poaching a dozen programmers from Baidu and Meituan Delivery would replicate KuaiPao's success model?

He was dreaming!

"Fix this quickly—food delivery, as an extension of group-buying, has far higher repurchase frequency than group-buying; whether Dazhong Dianping secures its next round of financing depends entirely on the performance of its food delivery business."

Zhang Tao's expression turned solemn as he instructed Li Jing.

"Understood," Li Jing nodded.

But in users' eyes, Dazhong Dianping's food delivery system was even worse than Meituan's and Baidu's, with rider delay rates reaching 30%.

Users cursed the riders; riders cursed the company.

For example, the delivery address was clearly Longhua, but the system planned the destination as Longhua Zhonglu—isn't that a scam?

If not for the free first order, who would bother using Dazhong Dianping to order food?

The detour Zhang Tao was taking now, Li Yanhong and Wang Xin had both walked months earlier.

On the other side.

After learning that KuaiPao had raised another 870 million U. S. dollars, Wang Xin felt immense pressure.

Facing a competitor that lacked neither money nor traffic, he truly felt at a loss.

Fighting a price war against KuaiPao meant lacking its financial strength.

Competing on technology was even worse—he was left miles behind; Meituan had been in food delivery for over five months, yet its location accuracy and order allocation remained unbearable.

Gao De refused cooperation and denied access to its data interface; Baidu's map data contained errors.

One was a true villain; the other, a hypocrite.

Meituan didn't even have basic map data—how could it do food delivery?

In frustration, Wang Xin considered building his own data—but after inquiring, he learned he needed to obtain a Class-A surveying and mapping qualification for navigation electronic maps and another Class-A qualification for internet map services to be compliant.

By the time he secured the qualifications, Meituan would be dead!

This was another key reason he scaled back his food delivery operations.

First, pull back his fist and hold onto his group-buying territory.

"Knock knock knock!" A rapid knock on the door interrupted Wang Xin's thoughts.

Before he could react, Wang Huiwen rushed in, looking helpless: "Boss Wang, Juhuasuan wants to terminate the partnership."

"Mama Ali invested in KuaiPao, but isn't it also an investor in Meituan?" Wang Xin leapt to his feet, furious.

But KuaiPao's valuation is 5.8 billion U. S. dollars, while Meituan is only worth 4 or 5 billion—less than one-tenth as much, so its value is naturally different.

Wang Huiwen silently thought to herself.

Wang Xin himself knew well that Meituan held too few chips—it was normal to be looked down upon.

Ma Liyun's actions are too extreme!

KuaiPao isn't Mama Ali's subsidiary—why remove Meituan from JuHuaSuan altogether?

"What about Dazhong Dianping and Lashou?" Wang Xin asked next.

"Same treatment as us," Wang Huiwen replied flatly. Fuck!

Wang Xin cursed under his breath—he understood. This was almost certainly a hidden clause between KuaiPao and Mama Ali.

In this round of financing, KuaiPao gave Mama Ali substantial benefits to successfully persuade Ma Liyun.

For a moment, Wang Xin paced frantically in circles.

Meituan's transaction volume in January was 470 million, with 60 million coming from JuHuaSuan.

After losing this portion of revenue, Meituan likely won't even reach 300 million in transaction volume in February.

After all, February has only 28 days, with seven days off in between.

Wang Xin took several deep breaths and, with no other options, dialed Lin Chenfeng at Tencent's Investment Department.

"President Wang wants to sell the company again?" Lin Chenfeng teased with a smile.

Last time, he had firmly rejected Wang Xin.

Otherwise, he'd have been played by Wang Xin like Ma Liyun was.

"No—I want to negotiate a partnership with President Ma to merge Meituan with QQ Group Buying," Wang Xin said, startling him.

He knew conventional cooperation wouldn't move Ma Wenteng—only a desperate, all-in move offered a sliver of hope.

In his view, Tencent had participated in KuaiPao's Series A and B rounds but still maintained QQ Group Buying, proving Ma Wenteng still coveted offline consumption scenarios.

Lin Chenfeng paused, barely holding back a laugh. Internally, Tencent had long criticized QQ Group Buying, Pupai Wang, and Yixun—everyone wanted to offload them as fast as possible; why would they acquire Meituan?

Even via equity payment, Ma Wenteng and Tencent might not be interested.

But then he reconsidered—perhaps merging Meituan into QQ Group Buying could boost product valuation.

After a moment's thought, Lin Chenfeng didn't immediately refuse, but said slowly: "President Wang, I'll relay your proposal to Martin and Pony."

"Director Lin, thank you," Wang Xin replied.

Meanwhile.

After hanging up, Lin Chenfeng went straight to Liu Zhiping's office and knocked.

"Come in," Liu Zhiping called.

Lin Chenfeng entered, waited for him to sit, then calmly said: "Martin, just now Wang Xin from Meituan called…"

"He wants to sell the company again? This guy is fickle—not trustworthy," Liu Zhiping interrupted.

"He wants to merge Meituan into QQ Group Buying via equity payment—mostly to get access to WeChat and QQ traffic."

Lin Chenfeng continued.

"No money? That's worth trying," Liu Zhiping replied after thinking.

Though Tencent and Senlian Capital had good relations, when it came to personal interests, whether it was him or Ma Wenteng, they'd instantly stab Chen Yansen in the back.

That's the nature of merchants!

There's no such thing as loyalty in this world!

Anyone who builds a company to a hundred-billion scale can't possibly be good-hearted.

If they seem good, it's just an act.

"Come with me—let's hear what Pony thinks first," Liu Zhiping said, walking out.

Lin Chenfeng followed behind.

Five minutes later, the two entered Ma Wenteng's office.

"Merge with Meituan? It could raise QQ Group Buying's valuation—but who runs the business? Wang Xin?" Ma Wenteng frowned, looking at Liu Zhiping.

The current head of QQ Group Buying is Luo Xi, with over a thousand staff, including remnants from Gao Peng Wang and F-Tuan.

Because last year, QQ Group Buying merged with Gao Peng Wang and F-Tuan.

Put bluntly, it's an alliance of losers from the Thousand Group Buying War.

Backed by Tencent, it won't die—but it can't thrive either, just barely hanging on.

Ma Wenteng originally planned to hand QQ Group Buying to Liu Qiangdong, but after Qiangdong secured funding from OTPP and Saudi Capital, he immediately reneged and tore up the letter of intent.

"Wang Xin isn't one of us," Liu Zhiping replied indifferently.

Implied: they could take Meituan—but kick Wang Xin out.

"Will Wang Xin agree?" Ma Wenteng smiled.

He knew well—Wang Xin only wanted Tencent's mobile traffic resources.

His words sounded noble, but couldn't hide his desire to "climb onto a big man's back."

"Let Chenfeng try," Liu Zhiping said dismissively. "It doesn't hurt the group either way."

If Wang Xin refuses, then Tencent has no need to merge with Meituan.

Meituan's valuation is around $500 million, while KuaiPao's is $5.8 billion; Tencent holds a 10.1% stake worth nearly $600 million.

For Ma Wenteng and Liu Zhiping, the greatest strategic value of merging Meituan into QQ Group Buying is the boosted valuation—giving them more leverage in future sales.

That afternoon, Wang Xin received Lin Chenfeng's reply and felt his heart turn to ash.

Ma Wenteng wouldn't give him any chance!

From Lin Chenfeng's tone, it was clear Tencent had no intention of deeply investing in the group-buying industry.

He wanted to use Tencent as a stepping stone; Tencent wanted to use him as a footstool—and wouldn't spend a single cent.

Wang Xin dreaming of taking over QQ Group Buying? Forget it!

Facing reality, Wang Xin gave a bitter smile and had no choice but to fight on against KuaiPao, Lashou, and Dazhong Dianping.

At the same time.

Delivery riders of Kuai Pao from all over the country slowly heard news that the company had completed its Series B financing.

The first batch of over five thousand delivery riders who joined Kuai Pao basically hold between two thousand and three thousand stock options each.

Riders who became regular employees in Q3 and Q4 of last year have only around five hundred shares.

Calculated at the current price of 5.8 US dollars per share, the top performers among the first batch of Kuai Pao riders hold as many as six thousand options, with option gains alone exceeding two hundred thousand Chinese yuan.

In just one year, the value increased by over one hundred thousand!

The turnover rate of riders at Meituan and Qiandu Waimai began to skyrocket!

(End of this chapter)