Blockchain Creates Digital Stocks and Opens a New Era of Capital
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Since the birth of the joint-stock company, capital games have been transforming the world. Whether it is the industrial revolution or the information revolution, they are “capital games”, and even the operation of the United States is built on the capital of Wall Street.
For enterprises, equity is the carrier of capital. With the development of technology and the times, understanding capital and capital market changes is a required course for the top-level design of equity in science and technology enterprises.
Has VC Become Greedy
What is the secret of Venture Capital (VC) operation? Find a good story, and then sell it to the next investor. VC does not create value, it is just a transit station, and as it raises funds, it becomes more and more “greedy”. VC not only cultivates “unicorns” in its investment projects, but also likes to cultivate “super unicorns”.
In 1980, Apple’s predecessor, Apple Computer, issued 4.6 million shares at an issue price of $14, an increase of nearly 32% from the issue price that day, to $29, and a market value of about $1.78 billion. In 1997, Amazon, an online bookstore at that time, went public with an IPO price of $18 and a valuation of $438 million. In 2012, Facebook sold 420 million shares at an issue price of $38, with an opening price of $42.05 and a market value of $104 billion.
In 2014, Alibaba issued 320 million American Depositary Shares (ADS) at an issue price of $68 per share, of which 123 million were new shares. It closed at $93.89 on the day, with a market value of $231.4 billion (the current stock price is $152.48 and its market value worth $395.256 billion). In 2018, Xiaomi publicly issued 108.98 million shares in Hong Kong, priced at HK $17 per share, and the company’s total market value was HK $426.5 billion (the current share price was HK $9.8 million, with a total market value of 243.9910 billion). In 2019, Uber plans to issue 180 million ordinary shares and 27 million over-allotment options at an issue price of $45. On the first day of listing, Uber’s stock price broke, closing at $41.57, and Uber’s market value was about $69.7 billion.
Leaving little space for following investors, Venture Capitals are creating huge capital bubbles as well.
Why We Need VC
Silicon Valley’s VC philosophy believes that VC investment in different stages is a process of “derisk”. Each stage of VC bears the corresponding risk, and the return of risk is the capital market (receivers) obtained from VC Several times the leverage of a company’s equity premium. In this way, naturally, VC gets its share of the capital market cake.
For example, as of July 18, 2018, Softbank holds 28.8% of Alibaba’s shares, Yahoo holds 18.8% of Alibaba’s shares, and Alibaba, which has a market value of more than $ 400 billion, are the biggest beneficiaries. Prior to Alibaba’s IPO, Softbank and Yahoo’s holdings in Alibaba were 34.1% and 22.4%, respectively. Luckin Coffee, a rising star of can continue the VC-led game, financing, and pump its valuation, but instead, it chose a direct way by IPO at Nasdaq. Like Amazon, the IPO was not profitable, and then the stock price plummeted. As Bezos wrote in his letter to the shareholders:
“This is Day 1 for the Internet and, if we execute well, for Amazon.com. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets. “Today, Amazon’s total market value is 895.645 billion US dollars, for Amazon, to give every ordinary investor a chance to do a VC. But such IPOs are rare now.
The Secret of Huawei
Ren Zhengfei, CEO of Huawei, said once in an interview: “Except for receiving other capitals, everything is negotiable.”
Does Huawei really need capital? The answer is no, of course. Huawei has its own capital model, which is to vigorously introduce human capital. That is mainly reflected in its employee stock ownership system. Huawei employees increased their capital through Huawei’s labor union by more than 26 billion yuan through the purchase of virtual shares. Huawei’s 2018 annual report shows that as of December 31, 2018, the number of employees participating in Huawei’s employee shareholding plan reached 96,768, and Huawei founder Ren Zhengfei’s shareholding fell to 1.14%.
Huawei allows talents to become shareholders. Compared with listed companies, Huawei makes its individual investors become shareholders. The value of this innovation lies not only in capital, but also in the wisdom of employees. This is the secret of Huawei’s equity incentive model.
Digital Stock
What is digital stock? Let’s take a look at two well-known digital assets: BNB and ETH.
Binance, which issued the “digital stock”-Binance coin (“BNB”) on June 24, 2017, with an issue price equivalent to 1 yuan, raised more than 100 million people, the current price is about 240 yuan, and the market value is 50 One hundred million U.S. dollars.
The following figure is a software platform that can deploy digital contracts-Ethereum. When the platform was established, it also issued a “digital stock”-ETH. Since July 24, 2014, Ethereum has conducted a 42-day EHT pre-sale, raising a total of more than 18 million U.S. dollars, the issue price is RMB 2.8, the current price is over 1900 RMB, and the market value is 30 billion USD.
These are two extreme examples of“digital stocks”. The project has not experienced VC layer-by-layer price increases and IPO. The only protection for investors holding these “digital stocks” is that they can be completely free to “vote by their feet”.
In the IT company’s own business and products are on the Internet, they may use technical means to issue digital stocks directly online without intermediaries, and directly trade or transfer stocks between investors and invest. Consumers can use digital stocks to buy company products or services. ETH and BNB are perfect examples.
Whether for entrepreneurs or ordinary investors, for VCs, they can no longer stay in the role of “porters of value.”
Open a New Era of Capital
Ren Zhengfei mentioned in an interview with reporters, “One proved-efficient way of building bridges, roads, and houses is simply throwing money in it, but this is not how the chip industry works. You have to throw your money on mathematicians, physicists, and chemists. We have to work hard to change in every aspect of mathematics, physics, chemistry, neurology, and brain science, and we may stand up in this world. “
“We don’t need capital to come in. The nature of capital greed will undermine our ideal realization.”
As mentioned earlier, Huawei does not need the “magic” of capital. It introduces human capital, which excludes financial capital, and they welcome those human capital with wisdom. Of course, Huawei also lost the liquidity of its capital. According to reports, due to the bank’s suspension of providing loans to Huawei employees, some Huawei employees “retired” by leaving the company, and Huawei almost encountered a liquidity crisis.
Science and technology board + digital stocks may create a new era, in which science and technology entrepreneurs can learn from Huawei, introduce human capital, introduce VC according to actual conditions, and even issue digital stocks, or register for an IPO at the science and technology board at an appropriate time.
