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Fortunate 56: Xiaomi's IPO Earn 200-fold Returns on Early Employee Investment

via:博客园     time:2018/5/22 15:02:26     readed:445


According to Bloomberg News on May 22, Beijing time, eight years ago, before Xiaomi sold a smart machine, 56 of the earliest employee partners made a profit of $11 million to invest in Xiaomi. For this investment, these ordinary employees took out their savings and borrowed money from their parents. A receptionist even used her dowry.

Now they have become fortunate 56 people. Xiaomi has become one of the most successful smart machine manufacturers in the world and is preparing to launch the highly anticipated IPO. The value of Xiaomi’s shares they hold may soon reach $1 billion to $3 billion, depending on the size of Xiaomi’s stock sold in the IPO. Based on the median value of these shares, the average value of the millet shares held by each employee is US$36 million.

Early investment return 200 times

This lucky decision came from employees like Li Weixing. Li Weixing was an engineer at Microsoft and was Xiaomi's No. 12 employee. In 2010, they worked 7 days a week in a simple office park in Beijing, maintaining the normal operations of the then-unknown millet. When he learned that Lei Jun and other co-founders of his own had invested in Xiaomi's round of VC financing, Li Weixing and others wanted to join their camp.

Li Weixing participated in the development of Xiaomi's mobile phone system. At that time, he had savings of approximately RMB 500,000 (approximately US$ 79,000). "The money is not enough to buy a house, so he asked if he can use this money to invest in millet," Lei Jun said in an interview at the Beijing headquarters in March, "We said at the time, we can not just let Li Weixing invest, so we Let all employees participate. ”


Some of Xiaomi’s early employees were already very rich, including Lei Jun. He earned his first pot of gold by leading software developer Jin Shan and investing in Chinese startups. However, at the time many of the Xiaomi employees needed to be patched together to raise the money needed to invest in Xiaomi. Li Weixing and others are more willing to invest in what they know than in the stock market where there is uncertainty. Now, based on Xiaomi's IPO valuation, Li Weixing is expected to earn $10 million to $20 million through this investment.

Xiaomi’s No. 14 staff is a receptionist and currently works at the Xiaomi Human Resources Office. She contributed a dowry worth about RMB 100,000 to RMB 200,000 (about US$ 16,000 to US$ 31,000) to invest in Xiaomi. She now holds millet shares worth between $1 million and $8 million.

Xiaomi refused to let her or other early employees interview. Li Weixing declined to comment.

Lei Jun controls employee investment

After the first round of investment boom, Lei Jun decided to limit the investment of ordinary employees to RMB 300,000 per person. On the one hand, it reduces risks and on the other hand, it prevents employees from investing in loans. "Employees have great interest, but we have made restrictions because we worry that if everyone invests a lot of money, once the company fails, the results will be very bad," Lei Jun said in an interview in March.

According to Xiaomi’s prospectus, if Xiaomi’s valuation at the time of listing in Hong Kong later this year is US$100 billion and the sale of 15% of the shares, then the total value of Xiaomi’s shares held by these 56 people will reach US$3 billion (assuming Existing shareholders do not sell shares, and the $11 million of early employee financing is part of the B-2 round of financing in the Xiaomi's prospectus. It is more conservative to predict that if Xiaomi sells 25% of the shares at a valuation of US$50 billion, they will hold a stock value of US$1.4 billion.

In this case, the earliest employees of Xiaomi are expected to get about 200 times the return on their original investment. More millet employees should make a fortune through stock options.

Lei Jun and other co-founders have invested the most in this round of financing, and they have obtained far more returns than ordinary employees. According to a calculation by Bloomberg, the five co-founders of millet are expected to become new billionaires. After several rounds of investment accumulation, the value of Xiaomi's stock held by Lei Jun may reach US$27 billion.

In addition, Qiming Venture Capital, Morningside Group and other investment giants are also expected to receive huge returns from Xiaomi's IPO this year. Xiaomi's IPO is expected to be the largest listing transaction since Alibaba Group's 2014 IPO.

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