Internet moguls are being held hostage by the entertainment system!

Chapter 428 TikTok's Valuation and Funding Targets
Natural light seeped in through the gaps in the roller blinds, entering the brightly lit conference room, where it was then easily absorbed.

Chen Xiu, who had just finished confirming the premiere of "Sheep Without a Shepherd" at Datang Pictures in the morning, rushed to Douyin's headquarters at noon to attend a meeting, which lasted for two hours.

However, he didn't find it unbearable, because Zhou Shouzi had already been explaining the PPT for two hours and was obviously more tired.

"...As of November, TikTok's revenue this year has reached 6 billion RMB."

"In November, advertising revenue reached 700 million yuan, a 125% increase compared to the previous month, while live streaming rewards reached 300 million yuan, an 80% increase compared to the previous month."

"Although TikTok's net profit is still negative so far, this table shows..."

Zhou Shouzi slid the remote control down, and the projector switched to the next image.

The presentation of new content boosted the spirits of Chen Xiu and Zhang Yiming and Su Xiao, who were also in the meeting.

The wall displays three very different tree diagrams. The net profit figure is upside down, the expenditure figure is much higher than the revenue figure, and the operating cost figure only accounts for a small part of the total.

“We can see that TikTok’s biggest expenditure this year is actually buying users and advertising with established internet companies like Facebook and Google.”

"However, since Facebook launched Lasso and Google launched Tangi last month, two competitors that are full clones of TikTok's 15-second short video templates, we have reduced our spending on user acquisition and promotion."

"The increase in organic traffic in November was very impressive. TikTok ranked first in downloads on both the App Store and Google Play, and its global monthly active users (excluding Douyin's domestic share) officially exceeded 700 million."

"So our advertising revenue increased significantly last month, while our expenses decreased sharply. Although our net profit is still negative, it has increased by 87% compared to last month. We expect to officially turn a profit in the first quarter of next year."

Zhou Shouzi gave the first flag of today's meeting.

Chen Xiu, Zhang Yiming, and Su Xiao also applauded generously.

"Clap clap clap!"

The atmosphere in the office gradually warmed up, and Zhou Shouzi, who had been speaking for more than two hours, regained his energy.

When he raised his hand to press down, Chen Xiu and the other two tacitly stopped clapping.

"OK! What I just mentioned is TikTok's performance in various overseas markets and its overall financial situation. This shows that the company itself is effective enough, and I haven't played a role yet."

A person with high emotional intelligence is someone who can speak in a way that is comprehensive and considerate.

Zhou Shouzi took over as CEO of TikTok in just two weeks.

He is already very competent because he can manage all the company's affairs, big and small, while also taking care of the upcoming pre-IPO financing.

If you insist on giving some performance targets, then the board of directors must be out of their minds, since achievements take time to develop.

So none of the three people present paid any attention to this self-deprecating remark. Zhou Shou, the capitalist, finished speaking and moved on to explaining the key content of the PPT.

"Based on TikTok's current monthly active users, our next profit-generating focus should be on advertising revenue."

"Facebook, which is also in the content interaction and social networking field, already has advertising revenue accounting for 85% of its total content revenue."

"In comparison, Facebook's annual revenue before its IPO in 2010 was $7 million, and at that time, investment institutions valued it at $250 billion."

"Although TikTok's net profit is negative, compared with Douyin's situation in China, PE (private equity funds) and HF (hedge funds) investment institutions are more optimistic about TikTok's future profitability."

After laying so much groundwork, Zhou Shouzi suddenly stopped, took a breath, and looked at Chen Xiu and the other two with a solemn expression.

"TikTok's pre-IPO funding round raised $300 billion, with 10% of its shares offered, valuing the company at $30 billion after the round!"

Hearing this expected number, Chen Xiu was not too surprised. Instead, she quickly calculated the share distribution after the financing ended.

After being spun off, TikTok has conducted two rounds of external financing. Including this pre-IPO, the shares sold are 10%, 9%, and 8.1%, totaling 27.1%.

During the initial acquisition of Musical, a share swap was conducted, and Zhu Jun and the founding team of Musical still hold approximately 5% of the shares without voting rights.

Including the 10% employee option pool established earlier, it has now been diluted to 6.48%, is in the unexercised stage, and does not have voting rights.

Adding the three figures together, the total is 38.58%, meaning Douyin's parent company still holds 61.42% of the shares and 72.9% of the voting rights.

In this way, even if Douyin goes public next year, it will still have a relative controlling stake in TikTok.

Chen Xiu tapped the table with her finger, then turned to look at Zhang Yiming and Su Xiao, both of whom showed satisfied expressions.

Then, with Zhang Yiming's encouraging gaze, he began to chair the remainder of the meeting.

"Shouzi, are you done?"

"Yes, the report is over."

"Then sit down and have some water."

"..."

Chen Xiu's gentle and welcoming attitude caused a flicker of surprise in Zhou Shouzi's eyes.

However, he adjusted very quickly, making it almost impossible to detect any surprise.

After pulling out a chair and sitting down, Zhou Shouzi slowly took a sip of water, then slowly raised his head, placed his hands on the table with clenched fists, and waited for Chen Xiu's question with a sincere look and a smile on his lips.

Seeing that he had composed himself, Chen Xiufang continued the conversation, "What impact do you think the valuation after the pre-IPO will have on TikTok's IPO pricing next year?"

"Okay, if I were to analyze it, I personally believe that TikTok's valuation will perform more positively after the pre-IPO is completed."

"Please explain the reasons." "TikTok chose the Hong Kong Stock Exchange for its IPO. According to the Hong Kong Stock Exchange's regulations, an IPO cannot be applied for within 120 days after the pre-IPO period ends. This means that after completing this round of financing, we have a full quarter plus a calendar month to improve the company's revenue situation."

Chen Xiu raised her hand, indicating that she needed to interrupt the question.

Zhou Shouzi suppressed his urge to speak and nodded in quiet waiting.

Chen Xiu glanced at the last revenue slide on the wall and said, "You mean the financial report for the first four months of next year, or the first quarter, will determine TikTok's final pricing?"

"Yes! And I'm confident that the result will be much higher than the valuation of this round of financing."

"The specific plan was not included in this report?"

"The current task is to complete this round of financing first."

"OK, you've done very well in such a short time."

"Thank you."

Zhou Shouzi's earnest thanks seemed rather strange to Chen Xiu, while Zhang Yiming and Su Xiao, who were sitting on either side, also had smiles on their faces.

In the past, the atmosphere at these small-scale high-level meetings was quite lively.

After finishing the report and questioning, Chen Xiu cleared his throat twice and continued, "Shouzi, has the target for this round of financing been decided?"

"According to the company's intentions, there are a total of five pre-IPO slots. Among them, the overseas financing targets have been confirmed as SoftBank Vision Fund, KKR, Yunfeng Capital, and General Atlantic. The remaining one, the domestic strategic investment target, has not yet been determined, but many companies have already expressed their intention to invest."

After Zhou Shouzi took office, he was put in full charge of TikTok's investment coordination work.

He comes from an investment banking background, so it's a good fit for his profession and there's nothing to worry about.

However, Chen Xiu became interested in many of the companies he mentioned: "Which companies are they?"

"The calls I received included those from QQ, Ali, and Baidu..."

With all the BAT (Baidu, Alibaba, Tencent) members present, it seems that Baidu can no longer be considered part of the top tier.

"Jingdong, Meituan, Pinduoduo, Didi..."

Why are there still beeps?

Chen Xiu interrupted Zhou Shouzi as he recited the menu, her expression both curious and strange.

Zhang Yiming's eyes widened, his gaze darting left and right, filled with the gossipy desire to see the drama unfold.

Su Xiao frowned slightly, a hint of disgust at seeing something dirty appearing on her otherwise aloof and beautiful face.

Zhou Shouzi was also quite embarrassed. When he worked at DST Venture Capital, he was the one who worked with Chen Xiu to invest in Didi. He was naturally aware of the disagreements and differences between them.

"They called me, and out of politeness, I didn't refuse."

"Fine!"

Chen Xiu was just a little surprised, but didn't really feel much about it.

Besides attracting funds for development, ensuring the smooth progress of the IPO, introducing strategic investment, and determining issuance criteria, pre-IPO also aims to address the exit issues of existing shareholders.

TikTok had a wide range of investors in its first two rounds of external financing.

If some early investors want to exit, they can do so with other private equity firms or institutions during this funding round, instead of waiting until after the IPO to cash out.

This round of financing reserved one spot for domestic participants, so that those who invested early on would have a chance to participate in the transaction.

Chen Xiu asked curiously, "Shouzi, so many companies have applied, but we can only have one spot. How do you plan to choose?"

"Leaving aside second-tier internet companies, the real choice is between Tencent and Ali. It's understandable that Ali wants to expand into overseas e-commerce markets and establish a strategic partnership with TikTok, but we already have SHEIN. Tencent…"

"Don't hold back because I'm a Tencent shareholder. Speak your mind."

"OK! Tencent has always had high hopes for overseas markets, but previous attempts have all ended in failure. They may be pinning their hopes on partnering with TikTok to successfully expand overseas."

Chen Xiu nodded and pondered, also considering the choice in his mind.

"Ahem, let me say a few words."

Zhang Yiming's speech seemed particularly abrupt in the meeting room.

When Chen Xiu turned her head to look over, she met his smiling eyes, and her scalp tightened instantly.

“I think choosing Penguin is better than Ali, because e-commerce is the inevitable path for TikTok in the future, and Ali obviously has no advantage compared to SHEIN, which has already reached a strategic partnership with us.”

"However, we should avoid establishing strategic partnerships and competing with each other in the same field. The WeChat Video Channel that Tencent is currently developing is actually just another Weishi, so there is really no need for it."

“I suggest that Mr. Chen communicate with these investors. He is familiar with them and I believe he can handle it well. Shouzi can be responsible for liaising with overseas investors. This will also improve work efficiency.”

Upon hearing this, Zhou Shouzi and Su Xiao turned to look at Chen Xiu.

Chen Xiu thought to herself: Tsk tsk, I didn't expect there to be such a funny person in the conference room... no, three.

(End of this chapter)