Chapter 664 The Real Purpose of Investment

"Invest in me?" Don Valentine smiled and said, "Eric, I am an investment company. I have already raised a lot of funds, but I don't have any investment targets yet. In this case, do you still want to invest?"

Sequoia Capital had just been established not long ago, and a wealthy overseas investor who had invested in Intel suddenly came to visit and wanted to invest in his company, which indeed made him feel a little strange;
Yang Wendong shook his head and said, "I know, but I am optimistic about you, not the current business of the company; just like when I invested in Intel, at that time, Moore and his team didn't even have a product, but I invested anyway."

In fact, it is not just him. Later venture capitalists also mainly look at people when investing in some companies, rather than just looking at the existing business;
No matter what, human ability is the most important. As long as you have the ability, even if you fail now, you may be able to turn things around in the future.
For example, Wang Xing of Meituan founded Xiaonei.com during his early college years. It was once very popular but failed. He then created Fanfou.com (similar to early Weibo), which failed again. He started Meituan for the third time and finally succeeded. Zhang Yimin of ByteDance had a similar experience and started many businesses.

Today, the butterfly effect is uncertain, so Yang Wendong’s investment principle is to invest in people who have been successful in history. If you invest in multiple people, even if some fail, the others will most likely succeed.

"Invest in me? But I don't make products?" Valentine added, "If you want to invest in someone from Fairchild Semiconductor, I actually have a few friends who can introduce you to them."

Yang Wendong shook his head and said, "Actually, apart from Moore and others, I am not very familiar with other people in Fairchild, so I will not invest. On the contrary, people like you who have experience, technology, and investment knowledge are more suitable for finding targets, so it is easier for me to invest in your company."

In fact, according to his knowledge from his previous life, many people who came out of Fairchild Semiconductor founded hardware companies, and many of them achieved good results, but he didn't know which companies these were. After all, only companies like Intel and Sequoia were relatively well-known. Pure hardware companies that do not directly face customers and are not world-class have little popularity.

Valentine thought for a moment and said, “Eric, if you want to invest in my Sequoia Capital, that’s fine, but the model of our investment fund is different from that of companies like Intel. There are no shares, but only capital coming in;

I will use the funds from all parties to invest. When the investment funds make money, I will take a portion of the profits, and the rest will belong to you. You can choose to withdraw it after a period of time or continue to invest. Similarly, I also have the right to reject your capital at any time. "

"I understand. Many investment funds in the United States follow this model," Yang Wendong nodded.

In fact, it was a pity that he could not get the shares of Sequoia Capital, but this kind of investment fund generally adopts this model, and Buffett did the same in the early days. It was not until later that he needed to use Berkshire Hathaway to go public for financing that Yang Wendong had the opportunity to invest in him indirectly.

Other funds, including Soros' Quantum Fund, which will become more famous in the future, all operate in the same way. They have partners and investors, but there is no concept of shares. Even if there are shares, they are jointly invested by multiple early investors. Later, they will only introduce funds instead of selling shares for financing, because only ordinary companies need financing. As long as this kind of fund has achievements, it can directly raise funds, and the risks are also borne by the customers, so why sell shares?
Historically, Sequoia Capital has never been listed. Its funds came from early fundraisers and the huge returns from subsequent investments, forming a virtuous circle.

However, this matter also depends on the founder. For example, SoftBank has gone public, and once it goes public, the shares will naturally flow out. But obviously, Sequoia Capital will not go public, and it can only be an early investor.

Valentine nodded and said, "Okay, Sequoia Capital's initial investment is $10. Eric, how much do you want to invest?"

"How much can I invest at most?" Yang Wendong asked.

Although you cannot get shares, the more money you invest, the higher the returns will naturally be. Especially some of the early investments made by Sequoia Capital may become giant companies in the future.

Valentine smiled and said, "What Gordon said is indeed true. You are indeed a big capital tycoon. How about this? I will accept your maximum of $120 million. How about that?"

"Okay, then how do I distribute the dividends of my investment?" Yang Wendong naturally didn't care about how many millions of dollars it was. The more the better, but it couldn't be too much. These companies also needed to maintain a balance.

Valentine said: "According to the quarterly dividends, I will inform the main investors of the investment income every quarter, and then you can decide whether to take the dividends or continue to convert the dividends into investments, or withdraw the investment;
Of course, as a matter of reciprocity, I also have the right to refuse any investor to continue investing, and all the rules will be written in the contract. "

Yang Wendong asked: "If you invested in a company like Intel, which has unlimited potential in the future, and my funds are also involved in it, but you suddenly don't want me to invest, can I take the shares of these companies?"

"That won't work unless I agree." Valentine shook his head and said, "Actually, this kind of thing you're talking about is very common in the United States. Generally speaking, we pay in cash."

Yang Wendong said: "This doesn't seem fair, does it?"

"No, this is fair." Valentine explained, "Because as an investor, you can withdraw your investment at any time, and you need cash when you withdraw your investment, right? I can't just randomly assign some shares to you, right? Will you force me to accept the shares I give you?

So, you invest money, so I will naturally give you money in the end, but the previous gains are all accounted for, and I will also give you money legally according to the proportion, not just for you, but for anyone." "That makes sense." Yang Wendong nodded and said.

After all, not everyone is a time traveler, and we don’t know the future of a company. The probability of encountering a company like Intel is also extremely low. If stocks can be given, then when the fund is forced to return the money, it will give junk stocks, and investors will be cheated to death.
Although under normal circumstances, funds would not do anything that would damage their reputation, they still have to be on guard in many cases.

Valentine continued, "I will draft the contract. Eric, you can go to Los Angeles to find a professional law firm. The rules of the financial industry are basically the same. I don't actually have any special rules."

"Okay, then I'll wait for your contract. As for the funds, as long as you sign the contract, I can give it to you on the same day." Yang Wendong thought for a while and said.

Everything still depends on the contract. Since we cannot obtain shares, we can only follow the rules of the US financial industry.

Valentine smiled and said, "Okay, I'll give you the contract in two days."

Yang Wendong added: "Tang, before you invest in some companies, will you tell us investors this information?"

"Normally not. Since you have given me the funds, you have to trust me. This is not a board meeting, so there is no need for voting." Valentine said, "But every quarter, there will be a profit summary. I will send out information or call a meeting to describe the general investment situation."

Yang Wendong nodded and said, "Okay, but I have another idea. If you want to invest in a company, you can tell me. If I am optimistic about it, I would also like to invest in this company. What do you think?"

If you cannot obtain Sequoia shares, investing with Sequoia is also an indirect model that can obtain high returns;
Although not every investment of Sequoia Capital is successful, overall its investment accuracy rate is still very high.

"You also want to invest together?" Valentine frowned slightly, then asked, "Do you want to acquire shares of the American company?"

Yang Wendong said: "Yes, I am very optimistic about the electronics industry. I also have related companies in Hong Kong, so I also want to invest in the United States. However, I am definitely not as good as you in this area, so I also want to invest with you;
As far as I know, investment companies like you don’t invest alone when investing in a company, right?”

"It's true that not all of them will invest individually, but some will seek cooperation with other funds." Valentine thought for a moment and said, "If you really want to invest, I will notify you when there is a suitable opportunity, but I won't make any promises on this point."

"Okay." Yang Wendong also understood what he meant;
I am not sure enough and will contact you only when I need funds. This means I want to share the risk with them.
But this is normal. If they have a good project that they are 100% sure of and have enough funds, how can they let others come in to share? Just like Yang Wendong in the early days, it was impossible for him to let other investors invest in Intel together.

Seeing that Yang Wendong didn't have any special requests, Valentine smiled and said, "Okay, I wish us a happy cooperation."

"It's a pleasure to work with you." Yang Wendong also shook hands and said.

After leaving Sequoia Capital and returning to the InterContinental Hotel, Yang Wendong sat across from Lin Youcheng and said, "Youcheng, arrange for professionals to keep an eye on Sequoia Capital. I want to know the investment status of this company clearly."

"Okay, no problem." Lin Youcheng agreed and asked, "Mr. Yang, are you so optimistic about Sequoia Capital?"

"Let's follow the investigation first." Yang Wendong did not explain, and said, "When we have the information, we will decide whether to invest or not.

However, it is not convenient for us to step in for the time being, so we will first set up a fund company in the United States, and then let this company take charge.”

Since it is impossible to invest directly in Sequoia Capital and get similar returns as company stocks, you can just keep an eye on its investments. Whatever it invests in, you can select and screen it appropriately before investing. Generally, this investment will not be too bad.
In fact, you can do the same thing with Buffett, but if you own shares in Buffett's company, there is no need to go through so much trouble. At most, you can invest in a few high-quality companies such as Coca-Cola and General Electric.

This is the real purpose of Yang Wendong's investment in Sequoia Capital. Through Sequoia Capital's investment direction, if history changes in the future, he will also be able to obtain his own benefits from the actions of this top venture capital firm.

PS: Please give me a monthly ticket
(End of this chapter)

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