Chapter 330: 18% of JD

It was cold, so the two found a hotpot restaurant, had it to themselves, and opened two bottles of baijiu to eat hotpot and drink.

They didn’t rush into talking about financing; instead, they spent most of their time complaining about the financial crisis.

When the financial crisis hit, the internet bubble burst, many companies were stripped bare, and life became hard.

Take Weibo: before the crisis, its valuation and financing once reached $500 million, and many even said that was conservative.

Now, Weibo’s valuation—Yan Li had never bothered to look closely, to avoid feeling sick.

Weibo was like that; JD was even worse.

Weibo at least counted as a small trend and was the industry leader; JD’s e-commerce hadn’t yet built a strong reputation, and its scale and tolerance for error were far behind Taobao.

When Yan Li first invested in JD, its valuation was about $150 million.

Now, after some time of development, JD had shown outstanding performance in reputation, scale, and profitability—but after the financial crisis, its valuation was under $100 million.

According to Boss Liu, someone had offered to invest at a $30 million valuation; the shrinkage was extreme.

But more often, many didn’t even want to invest that much. Before coming to Hengdian, Boss Liu had met plenty of investors; the more he talked, the colder his heart grew.

“If it weren’t for General Xu helping me out, JD’s cash flow would’ve already snapped.”

Boss Liu took a heavy gulp of liquor, his face reddening; Yan Li picked up a slice of beef tripe for him.

“Old Liu, be honest—how long can JD last?”

“Two months, maybe even less.”

Boss Liu gave a bitter laugh: “We’re already stealing from Peter to pay Paul. If no more money comes in, the best outcome is finding a buyer to take us off the hook; the worst is shutting down the company.”

JD had considered selling, but there were no buyers. The only major electronics giant that showed interest offered an absurdly low price.

Selling at that price would mean Boss Liu and the founding team had worked for nothing these past years; Yan Li and Jinri Capital would also take a loss.

General Xu of Jinri Capital strongly supported Boss Liu and JD’s model, and didn’t want all the previous investment and effort to go to waste.

But one tree can’t make a forest; Jinri Capital wasn’t just her decision alone. In this situation, someone else had to join in to guarantee JD’s survival before Jinri would commit more money.

“Old Liu, you should’ve come to me sooner.”

Yan Li scolded Boss Liu—he’d been guarding against him until the company nearly collapsed; the guy was incredibly patient.

Boss Liu couldn’t say he feared Yan Li would swallow him whole, so he put on a look of concern for his brother.

“I know you’re in a tough spot too; I didn’t want to make things harder for you.”

The theory that Yan Li was bankrupt was never believed by anyone with eyes, but many did believe his life was hard—because everyone’s life was hard.

Yan Li’s rise from the stock market wasn’t a secret, and he held a pile of money-guzzling beasts, so outsiders assumed he’d been hit hard by the financial crisis; otherwise, given his nature, he wouldn’t have tolerated negative rumors for so long.

“What kind of talk is that?!”

Boss Liu was loyal; Yan Li played the emotional card: “Publicly, if JD collapses, my earlier investment vanishes; privately, we’ve always gotten along—I treat you like a good friend, a brother—could I just watch you suffer without lifting a hand?”

“I truly didn’t realize you were this desperate; otherwise I’d have come to you long ago. Even if I was tight on cash, I’d have squeezed out money to save JD.”

Boss Liu was deeply moved; he stood up and raised his cup: “General Yan… no, brother… no more words—I’ll drink it all.”

Yan Li stood up too, drained his cup, and they played at being close brothers for a while.

Honestly, Boss Liu wasn’t bad at acting; maybe one day I’ll get him a role.

After playing the loyal brothers, it was time to talk business: how much money Yan Li would pay, how many shares Boss Liu would give.

JD was short on cash—and desperately so; it could swallow $100 million easily.

But it could swallow the money, it couldn’t give the shares.

So Boss Liu could only estimate a figure sufficient to plug the funding gap and ensure short-term survival.

The financial crisis was still raging; this wasn’t a good time for fundraising. Boss Liu’s main goal was simply to survive and avoid collapse in the short term, waiting until after the crisis to consider large-scale financing.

Before this, JD had already discussed needing $15–20 million, offering about 20% in shares.

Notably, the 20% JD was offering also diluted Yan Li’s existing stake.

That meant: if Yan Li didn’t invest, his 8% became 6.4%; if he invested, the total shares became new shares plus 6.4%, not 8%.

Yan Li tapped his fingers lightly on the table; the money he pulled out of the stock market had been partly used to profit from the crisis, partly held in reserve.

He’d used some reserve funds to acquire shares in Yi’an Cinema, but not much; he now had enough cash to buy all the shares JD was offering.

But Boss Liu probably wouldn’t agree—and Jinri Capital, which had done so much, certainly wouldn’t agree either.

Forget about disagreement; just threaten to let JD go bankrupt and force them to agree.

From future knowledge, Boss Liu still had a way out; if they split up, Yan Li would lose. Besides, you don’t do business this way.

Moderate pressure and negotiation are business tactics; extreme pressure isn’t cooperation—it’s making an enemy, and it would damage Yan Li’s business reputation.

Yan Li had no intention of swallowing JD; this time, he meant to step in at a critical moment to help Boss Liu, to earn his gratitude.

To fight over shares using extreme pressure and threats would stray from his original intent—and easily backfire.

So, buying all the shares was out of the question—but at this price, it was truly rare; the more he could get, the better.

Later, when JD raised massive funding, Yan Li might not follow with heavy investment; the more shares he held now, the more he’d keep after dilution.

“How much can General Xu contribute?”

“If the financing goes smoothly, Jinri can put in $8 million.”

Yan Li nodded; he didn’t ask how many shares Jinri got—each investor had different terms and contracts.

Jinri Capital was holding on desperately to JD, even taking on debt; its control threat was limited, and it likely had no special favors.

But then again, Jinri feared JD’s collapse and losing its earlier investment; it might have offered favorable financing terms.

So Yan Li didn’t need to obsess over Jinri’s deal with JD—only use it as a reference.

JD needed $15–20 million; even if Jinri put in $8 million, the gap was still large—JD’s bottom line would likely be lower.

“Old Liu, I’m willing to offer $10 million for 12% of JD.”

Boss Liu’s eyes lit up instantly—he never expected Yan Li to offer $10 million.

The market was uncertain; Yan Li couldn’t possibly hold no cash. Under these conditions, he’d scraped together $10 million—tens of millions in RMB—to help him. Yan Li’s wealth was thicker than Boss Liu imagined.

But 12% was still too much; together, Yan Li’s stake would nearly hit 20%, and Jinri’s stake was also large—if they teamed up…

Yan Li saw Boss Liu’s expression and knew what he was thinking; he took a sip of liquor.

“Old Liu, at this price, I barely negotiated at all. If I really pushed down, you’d probably agree—but that would hurt our brotherhood.”

“I genuinely want to help you. I won’t claim to be noble, but I’ve done my best—I’ve lived up to being your brother.”

“Of course, I admit I also believe in JD’s model, so the share percentage can’t drop. If you insist, I can add more cash, pour some resources into Weibo, or even sign a concerted action agreement.”

In business, talking only about feelings is fake; feelings plus a bit of self-interest make it more real.

Then, offering what the other side wants while reducing your own threat—how could he not be swayed?

Sure enough, Boss Liu hesitated a moment: “I still need to consult the company and General Xu—but it should be fine.”

“Good. Deal.”

Yan Li clinked his cup with Boss Liu’s and emphasized again his lack of intent toward JD.

“If anything comes up, let’s talk more—I’m counting on you to take me to Nasdaq to ring the bell for JD.”

“….”

JD’s situation was indeed dire. After finishing the liquor, Boss Liu didn’t wait for the next day—he left Hengdian and returned to Beijing.

Later, after two multi-party conference calls, they finally reached an agreement.

Yan Li—or his company, Yan Ye Capital—invested $11 million plus related resources, acquiring 12% of JD.

After Yan Ye joined, Jinri Capital immediately followed; their moves prompted two previously hesitant investors to prepare to join.

JD’s Series B financing was expected to raise $23–25 million.

With more funds and Yan Li insisting on prioritizing shares, JD ended up offering more than the originally planned 20%.

Thus, Yan Li’s original shares were diluted further; adding the new 12%, his total stake exceeded 18%.

Yan Li was satisfied: nearly one-fifth of the shares, plus some favorable terms, meant that even if he ended up with less than 10% by the time JD went public, it would still be worth a fortune.

So if you want to make money, investing is the way—back the right horse, and you’ll make a killing.

…

Although JD’s financing contract still needed time to finalize, to calm internal staff and restore its public image, news was quickly leaked.

Yan Li’s exact investment and share percentage weren’t disclosed, but “insiders” claimed it was no less than $10 million.

Before the outside world reacted, Pang Yidian, who had been promoting Yan Li’s bankruptcy, exploded.

Fake! Absolutely fake! If Yan Li could come up with tens of millions, I’ll eat shit.

Less than ten minutes after that Weibo post, Yan Ye Capital and JD’s official accounts released the financing facts.

Yan Li personally retweeted @Pang Yidian—[Helping you promote this. Don’t forget your promise.]

His move triggered Weibo’s algorithm; the Weibo pet, Pang Yidian, was officially born.