[Chapter 283: Investing in Netscape]
Back in Los Angeles, surrounded by his circle of lovely companions, Linton finally let himself relax completely. Thanks to Madonna's organization, the lively party went on all night long...
By morning, except for Naomi and Sophie Marceau who had to leave in a hurry due to ongoing film shoots, everyone else stayed at the estate to continue enjoying the festivities. Madonna naturally took the lead, organizing more parties by the pool, in the bedrooms, the dance hall, and the garden terrace.
There were also various themed performances around the gym, cinema, study, and bathroom, continuing until the third day, when the ladies began to leave one by one to return to their busy schedules. After all, they were big stars with plenty to do.
...
Winnie stayed behind to accompany Linton to his study and gave him a report on recent work developments. First, she updated him on the $118 million profit share he had received from Universal Music just before Christmas. Linton kept $18 million himself and donated $100 million to the charity foundation.
Due to the implementation of the Information Superhighway plan, both of them had long-term optimism about the computer and communication industries. They decided to invest all related funds into stocks in these sectors.
After more than a month of continuous purchases, half of the $100 million had been converted into stocks of companies like Microsoft, Cisco, Oracle, Intel, Compaq, and Dell. They also paid a 15% premium using $50 million to buy a 4.7% stake in America Online from an institutional investor.
Seeing America Online, Linton paused, a vague impression surfacing in his mind. He didn't recall much about this company, only that by the year 2000, America Online had grown into the world's largest internet service provider.
In early 2000, it made a stunning $165 billion acquisition of Time Warner, the parent company of Warner Brothers -- one of the major Hollywood studios -- marking the largest merger in history at the time. However, this merger turned out to be a spectacular failure. The newly merged company faced a host of problems and, combined with the bursting of the internet bubble, it fell into a deep crisis.
Ten years later, the companies split again, with America Online's market value plummeting by 98%, leaving just 2%. It became one of history's most infamous failed mergers.
When Linton traveled back in time, America Online had already faded into obscurity, so he hadn't thought much of it. Now, seeing Winnie's investment details, the company's story came back to him.
Though he didn't remember the exact market value in early 2000, it was probably over $200 billion -- otherwise, why pay $165 billion for Time Warner? It was surprising that the current value was under $1 billion. Even with future financing and expansion, if they exited before 2000, the investment could yield over 50 times the returns.
Winnie had a keen eye -- it seemed she was a lucky charm for him.
Next, she informed him about the newly formed Internet Venture Capital Fund named Mangrove Capital. After more than three months of preparation, the team was complete, with regulations and risk control models gradually in place.
Operations officially began on February 1st, with Winnie placing advertisements for Mangrove Capital on seven properties owned by Linton's real estate company. That month alone, they received 13 angel investment applications. After thorough investigations, Winnie and the investment team shortlisted five companies for potential investment.
"One of the investment proposals is for Mosaic Communications Corporation, founded by two men. One is Jim Clark, a well-known entrepreneur in Silicon Valley who previously co-founded the 'Calculus' company, where he served as COO. He has since left and is ready to start anew.
The other is Marc Andreessen, who's even more impressive. Last year, while interning at the National Supercomputing Application Center at the University of Illinois, he developed a Unix-based browser called 'Mosaic,' which was enthusiastically received by major research institutions and universities across America.
Their plan focuses on the browser market, aiming to develop a Windows-based commercial browser.
Their investment pitch asked for $2 million, valuing the company post-investment at $10 million, for 20% equity.
Since it fits perfectly into the first of our three agreed-upon focus areas -- developing easy-to-use interfaces for Internet applications -- I believe this is a highly feasible project and should be prioritized first.
We've completed background checks and are preparing for formal business negotiations."
Linton initially had no impression of Mosaic Communications Corporation from his previous life. But Jim Clark and Marc Andreessen were legendary -- they were the founders of Netscape! Why weren't they starting Netscape this time? Why the different company name?
Curious, Linton interrupted Winnie, "Hold on, give me the company's file."
After reviewing the information, he relaxed. This was clearly the browser development plan -- surely the same as Netscape. Just the company name was different; no matter though, the name wasn't important. What really mattered was the core team and their business direction.
Unexpectedly, the first deal for the venture capital fund brought such a thrilling surprise -- a historic first big winner in the Internet industry.
Founded in early 1994, within just a year and a half, by the end of 1995, it went public with a market value approaching $3 billion. At its peak in 1996, the market value exceeded $8 billion.
But good times didn't last. As Microsoft entered the browser market, the two companies clashed in a fierce browser battle. In the second half of 1997, Microsoft bundled its browser with Windows, a killer strategy that soon pushed Netscape out of the market. Its value dropped sharply, and in 1998, it was sold for $4.2 billion to America Online.
It was fast and effective, with hundreds-fold returns in just two to three years.
'No doubt, we must secure this investment. The stake must be as high as possible, no matter the cost,' Linton thought.
"Winnie, I think the company has strong prospects. We must close the deal and during negotiations, try to increase our stake," he told her.
"Isn't 20% enough? How can we raise the offer?" Winnie asked.
"20% is not enough. I'm confident about this company. I want to acquire 30%, even if we need to invest $4 million or more," Linton insisted.
"Darling, it's a great company, but is it necessary to value them so highly? This goes beyond their own ask," Winnie replied, though she trusted Linton; as a skilled investor, she had her own views.
"Trust me. This company deserves the extra investment. First, they're addressing the biggest pain point on the Internet -- currently, the Internet is still an academic product, hard to use and requiring professional skills, which hinders mass adoption. The market demand is huge. This field has enormous potential.
Second, the core developer Marc Andreessen is a real tech genius; he developed 'Mosaic' while still interning at college. With him on board, we know the project won't fail.
Third, Jim Clark, the other co-founder, previously co-founded Calculus and was COO, managing operations.
The two founders complement each other -- one focusing on tech development, the other on business -- and they picked the right field at the cusp of the Information Superhighway. It's hard to imagine this company won't succeed."
"You make a strong case, but maybe we don't need to raise so much. How about proposing a $3 million investment for 30% equity in negotiations?" Winnie suggested.
"You can try that, but with Jim Clark involved, it's unlikely the angel round investors will part with much equity so easily. $2 million for 20% is standard, but to get more shares, we need to pay more.
I even think they might resist $4 million. I suggest we can go higher if needed, up to $5 million," Linton advised.
"Alright, I'll follow your lead. I'll handle this project personally and try to secure as much equity as possible," Winnie said.
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