HLnovel Chapter 202 Progress of Leap Financing
Chapter 202 Progress of Leap Financing
Chapter 202 Progress of Leap Financing
The news that Google AdWords (GG) business has generated over $600 million in revenue in 21 days, while not officially announced, is not exactly confidential information either. At least the employees in charge of Google Search (GG) business and senior executives of the group are generally aware of it.
Then, well-informed Wall Street institutions and the investment community quickly learned of this situation, which accelerated the financing negotiations of YueDong Games.
"The core issue remains the same: the main point of contention between the two sides is the valuation of the company."
In Google's chairman's office, Ernst looked at Leam Lyman and thought to himself that Wenger had actually succeeded in keeping this Harvard graduate.
While it's unclear what specific conditions Wenger offered, it's understandable that for such top talent, high-quality collaborative resources and support for core projects are crucial bargaining chips.
Wenger entrusted the entire financing process for Leap Games to Leam, a Harvard PhD student whom Wenger praised as having the potential to become a top lawyer.
Negotiations reached a stalemate. Ernst knew very well that investors would never accept the $40 billion valuation offered by Leap Games, and he himself had never harbored such unrealistic fantasies.
The reason for insisting on this valuation throughout the negotiations is actually a negotiation strategy.
If we easily loosen our grip on prices, those investment institutions that are quick to exploit loopholes will think there is still room for further downward pressure, and will try their best to secure every penny.
The result is that the financing process will be slower, and Wall Street will think that they have the upper hand, thus prolonging the negotiation time.
"Which institution made the highest bid?" Ernst asked Leam.
"Sequoia Capital." Leam's answer was both unexpected and reasonable to Ernst.
For a long time, Silicon Valley investment institutions have adhered to a strategy of casting a wide net, often investing in hundreds or even thousands of companies within a year.
However, these invested companies generally share a common characteristic: they are mostly startups with limited funds and low market value.
A small investment can be a few hundred thousand dollars, while a large investment can be several million dollars.
Large-scale financing rounds like those for companies like YueDong Games rarely involve Silicon Valley capital.
What truly propelled their rise was the internet. The enormous revenue that the internet industry brought to these Silicon Valley investment firms made fundraising much easier for them.
Today's Silicon Valley investment institutions have not yet developed into the kind of capital giants that seek projects globally in later generations. The fact that they were able to give YueDong Games the highest valuation this time is indeed beyond conventional expectations.
However, Ernst's own continued strength and the enormous potential of its subsidiaries are undoubtedly key factors.
It's like looking at antiques; they're all so genuine, you'd make a profit if you bought them, so it's not surprising that Silicon Valley capital is pouring in huge sums of money.
Especially since his company was previously closed to Silicon Valley capital, the fact that this capital has now been able to enter means they certainly don't want that door to close again.
How do you open this door? By proving your worth, which means having more money.
"The valuations given by Wall Street are generally between $22 billion and $26 billion, with Sequoia Capital giving the highest valuation at $28.5 billion."
$28.5 billion, Ernst fell silent.
Although he knew that raising funds at a valuation of $40 billion was unrealistic, the offer of $28.5 billion was still somewhat different from his expected price.
His original idea was to stick to the $4 billion valuation, hold onto these financial institutions first, and then loosen his stance when negotiations completely broke down, completing Leap Games' first round of financing with a valuation of $33 billion to $35 billion.
"What's your opinion on this?" Ernst looked up, casting the light on Leam Lyman.
Leam didn't answer immediately, but instead stared intently at Ernst for a moment before speaking, "Didn't you already prepare a backup plan?"
Ernst laughed upon hearing this, his face showing great interest. He even took out a cigar and began to adjust it, while asking, "Oh? Then tell me, what's my backup plan?"
Leam remained calm and composed, displaying a commanding presence. "Although I don't know much about the gaming industry and can't accurately judge the merits of a game like so-called professionals, I'm not blind."
"From the first contact after the financing negotiations began, the development of Call of Duty, which was still in development at YueDong Games, accelerated significantly."
"I have confirmed with Ryan Ruiz that the game was originally scheduled to complete testing in mid-August and officially launch at the end of August, but it now appears that the launch date may be brought forward by a month, and it is expected to be available on the YueDong Games platform at the end of July."
"Although I don't play games myself, seeing how much fun YueDong's employees had during the testing phase, I can tell that the game must be of very high quality."
"That's quite a keen observation." Ernst's interest grew, and he pressed on, testing Leam's abilities: "Besides these, what else did you observe?"
At this moment, Leam naturally wanted to demonstrate his strength to the fullest. Now that he had joined Ernst's camp, he certainly hoped to consolidate this hard-won position and seize the advantage of arriving first.
He looked at Ernst and said firmly, word by word, "I also discovered that Leap Games is actually very short of money."
Ernst was slightly taken aback at first, then burst into laughter.
It's worth noting that even on Wall Street, most institutions are still puzzled by this. YueDong Games has hundreds of millions of dollars in cash on hand, but its fundraising process reveals a hint of anxiety.
Apart from the headquarters building that has already started construction and several game development projects that are underway, it seems that the company has no other areas that require large-scale capital investment.
Ernst hadn't expected that this kid would actually figure it out.
"Tell me, how did you find out about this?" Ernst was full of curiosity.
Leam crossed his right leg over his left, adjusted his posture, and slowly explained, "During the time I was in charge of financing for Leap Games, I noticed that Ryan Ruiz and the company's CFO, Josh Green, were meeting with each other at an unusually high frequency."
Ernst picked up the lighter and slowly toasted the cigar he had prepared, asking unhurriedly, "What's so strange about that? YueDong is pushing for financing; isn't it normal to communicate with the finance head?"
"That's not the case." Leam shook his head, refuting firmly, "This phenomenon might be normal in other companies, but it's extremely unusual at Leap Games."
"How long has Yuedong Games been established? The number of projects and the scale of its assets are very clear, so there is no need for such frequent discussions. This shows that Yuedong must be preparing for a major move, which must require huge financial support."
A glint of light flashed in Ernst's eyes. No wonder Wenger spoke so highly of Leam; he was indeed a highly capable person.
In fact, YueDong Games is indeed facing financial pressure, and the root cause of this situation lies in its initial plan to emulate the EA model. To put it bluntly, it took too big a step and eventually backfired.
Supporting talented game developers is a strategic move that must be promoted, and it is also a key step for Leap Games to become a dominant force in the game market.
To Ernst and Rein Ruiz's surprise, there were simply too many talented game developers on the market, like a swarm of locusts crossing a river.
To date, Yuedong has confirmed investments in more than 13 game projects. These projects all have clear market prospects and strong creativity, and are high-quality targets with obvious potential.
From a rational perspective, Yuedong could choose to invest in only some of these projects to reduce investment risk.
However, considering that EA might react quickly and accelerate its competitive strategy after the official launch of the Jump Game Platform, Ernst and Ryan Ruiz discussed it and ultimately decided to accept it.
These 13 projects are not all; there are still several projects that are under consideration but have not yet been finalized. If all of them are finalized, there will definitely be twenty game projects.
Although the initial investment for each project is not high, mainly determined by the shareholding and profit sharing, the total investment still adds up to a huge amount.
These studios are all desperately needing funding right now, so how could Yuedong not be short of money?
The key issue is that Yuedong doesn't dare to disclose this information yet, because it would affect its valuation.
Having projects is a good thing, but investing in so many projects at once can give investors the feeling of being overconfident.
Another point is that there are precedents for this.
EA almost went bankrupt back then because of this model; the company's funding nearly dried up, and it proved that many of its investment projects were money-losing ventures.
Ernst knew that back then, EA hadn't done a good job with quality control and was willing to invest in any project.
But the market doesn't see it that way. Investors only see EA's failures, and they don't understand the quality of games.
"Tell me, what other ideas do you have that could help YueDong Games increase its valuation?" Ernst changed the subject, without explaining the details to the other party.
"There is one, but I don't know what you're thinking."
Ernst raised his hand, indicating that he wanted to hear it.
"By tying MGM's funding together with YueDong's funding, if YueDong's new game becomes a huge hit, and with MGM being such a lucrative asset, I'm confident I can get these people to accept a price of over $35 billion."
$35 billion?
enough.