Reborn in 1999: Starting as a black marketeer

After listening to Wang Feiyang's suggestion, President Ma was very interested, but also a little worried.

He hesitated for a moment, then tentatively asked, "Feiyang, are you really that confident in QQ? You know, I'm not even confident I can meet those two conditions you proposed for the bet."

"Haha, Mr. Ma, if it were so easy, why would IDG and PCCW agree? It's because everyone thinks it's impossible, or that if we actually succeeded, they would gain far more than they would lose. Only then would they possibly agree to our betting agreement," Wang Feiyang laughed heartily.

Mr. Ma laughed when he heard this. Indeed, if it were an easy task, would IDG and PCCW be fools? They certainly wouldn't agree!

However, the performance-based agreement proposed by Wang Feiyang was very attractive, and he believed that IDG and PCCW would definitely be moved.

…………

After hanging up the phone, Mr. Ma first communicated with the other shareholders. In fact, he had put the call on speakerphone, and the other four shareholders had already heard the betting conditions proposed by Wang Feiyang.

Like Mr. Ma, they initially thought it was an absolutely impossible task. However, after hearing Wang Feiyang's explanation, they all understood that it was precisely because it was an impossible task that IDG and PCCW might have agreed...

There's no better option now. IDG and PCCW are the best VC firms they can contact that are offering the best terms. And the company really can't survive without funding. So even without Wang Feiyang's betting agreement, they have no choice but to agree to his demands.

With this performance-based agreement in place, a sliver of hope remains: what if it actually works out?

After the shareholders reached a consensus, Mr. Ma quickly returned to the conference room, where representatives from IDG and PCCW were waiting for his reply.

"We, the shareholders, have discussed it and, in principle, have no objection to your offer of 40% equity for 300 million US dollars." As he spoke, Mr. Ma glanced at the representatives of the two VC firms.

Representatives from IDG and PCCW exchanged a glance, smiles appeared on their faces, and they nodded simultaneously. It seemed that the investment should be fine.

"However, we hope to add two performance-based clauses to the investment agreement!" Mr. Ma immediately added.

"Oh? A performance-based agreement? Tell me about it," the IDG representative asked with great interest.

When investing in internet companies, venture capitalists often like to use performance-based agreements because they have many advantages. If the performance-based agreement is set up well, it can significantly reduce investment risk or generate higher returns.

"The performance-based agreement is for a two-year term. Your company will jointly invest three million US dollars in Tencent, and each of you will temporarily receive 10% of the shares." At this point, Mr. Ma paused and looked at the expressions of the representatives from IDG and PCCW.

However, both of them remained expressionless, gesturing for him to continue. Being able to serve as a senior representative in large companies like IDG and PCCW meant they were definitely among the elite, and naturally they could control their emotions, waiting for Mr. Ma to finish explaining the betting terms before reacting.

"Our promise is that Tencent will officially achieve profitability within one year and have over 100 million registered users within two years! If either of these two conditions is not met, we will each increase your company's shares by 5%. If both conditions are met, then we win, and you will only receive your 10% shares." Mr. Ma quickly stated the terms of the betting agreement.

Upon hearing the two betting clauses, the representatives from IDG and PCCW widened their eyes instantly.

Profits exceeding 100 million in one year and over 100 million in two?!

If this can really be achieved, it means that Tencent's valuation will reach hundreds of millions of US dollars or even higher!

Even if they only get 10% of the shares, compared to their mere $150 million investment, that's still a return of dozens of times!

Now they're not so much concerned about the small number of shares offered, but rather they're wondering if Tencent can really deliver on such stringent performance-based conditions...

"Are you... sure it's these two betting clauses?" the IDG representative asked hesitantly. He felt that perhaps Mr. Ma had made a mistake. If these two conditions were proposed by their side, they would be considered very harsh. But Mr. Ma himself brought them up on his own initiative.

Mr. Ma readily nodded and said, "Yes, I believe these two clauses demonstrate the founders' optimism and confidence in the company's future prospects! I believe this will also give you greater confidence in investing."

The IDG representative thought to himself, "That's incredibly confident!"

This time, he didn't even look at PCCW's representative, and said directly, "We have no objection to this performance-based clause; we can sign it accordingly!"

He didn't care, of course. Even if Tencent failed to meet the two conditions of the bet, IDG could still achieve its established goal of acquiring 20% ​​of the shares.

If Tencent can complete this, that would be fantastic! Even if it's just a 10% stake, this investment would be incredibly profitable!

PCCW is naturally not as professional as IDG when it comes to investment. This joint investment was originally led by IDG, and now that IDG has agreed, PCCW's representative quickly echoed, "We have no objections either, let's sign it."

Since all three parties had no objections, the investment agreement was successfully reached, and Mr. Ma, representing Tencent, officially signed the documents...

According to the agreement, IDG and PCCW each invested US$1.5 million to acquire 10% of Tencent's shares. Tencent promised to achieve financial profitability within one year and reach 100 million users within two years. If either of these conditions is met, IDG and PCCW will each acquire another 5% of the company's shares. If neither condition is met, they will each acquire 10% of the shares.

After the agreement was signed, three million US dollars were deposited into the company, and Tencent's shareholder structure also changed.

Originally, the company had only six shareholders. Among them, Mr. Ma held the most shares, with 30%. The second largest shareholder was Zhidong with 20%, the third largest shareholder was Aqing with 17%, the fourth largest shareholder was Chen Dan with 14%, the fifth largest shareholder was Wang Feiyang with 10%, and the sixth largest shareholder was Xu Chen with 9%.

The shares held by the original six shareholders have now been diluted proportionally: Mr. Ma 24%, Zhidong 16%, Aqing 13.6%, Chen Dan 11.2%, Wang Feiyang 8%, and Xu Chen 7.2%.

Two new shareholders, IDG and PCCW, each holding 10% of the shares.

Wang Feiyang, who was originally the fifth largest shareholder of the company, dropped two places to become the seventh largest shareholder...

Fortunately, his shares were not diluted too much, because after Tencent received this investment, it did not accept any new investments until its official listing. Later, the South African MIH Group simply took over the shares of IDG and PCCW, replacing their shareholder status.

After receiving a call from CEO Ma informing him of the successful financing, Wang Feiyang was also a little excited. Only he knew that from this day forward, Tencent would officially embark on its path to becoming a giant, and he could simply sit back and enjoy the enormous wealth brought by Tencent's rapid growth...