27: Chapter 27 Financial Upgrade

After the five new employees joined, the office suddenly became lively. It used to be so quiet you could hear the wall clock ticking; now, the ringing of phones, the clatter of keyboards, and the humming of the printer were all mixed together. Occasionally, someone would shout, "Hyo-jin, could you take this customer?" It felt like a small workshop, but Chairman Wang Shunyi thought this liveliness was quite good.

After Choi Min-ju took over social media, Park Min-ji finally didn't have to stare at her phone to scroll through comments every day. She started focusing on bigger things—like negotiating next quarter's promotional plan with CU, or planning a nationwide offline tasting event. One evening, as Chairman Wang Shunyi passed her office, he saw her staring blankly at a huge mind map drawn on the whiteboard. The board was covered in colorful sticky notes, stretching from "Channels" to "Promotions" to "New Products," all packed tightly together.

After Li Dongxu joined the procurement department, Zhang Junhao's workload suddenly dropped by a third. He no longer had to call suppliers to haggle every day, nor did he have to go to the docks to inspect goods himself. Li Dongxu was a man of few words, but he was meticulous. After every batch of konjac powder arrived, he would perform spot checks and organize the test reports into tables to send to Zhang Junhao. Once, Zhang Junhao looked at the table and remarked, "Dongxu's working style is very similar to mine." Li Dongxu just smiled and said nothing.

Zheng Yilin was the one who made Chairman Wang Shunyi the most at ease. She established a complete quality inspection process—raw materials were inspected upon arrival, the production line was spot-checked every two hours, and finished products were checked again before leaving the warehouse. Every batch of products had a serial number, and the production date, the batch of raw materials used, and the person responsible for inspection were all on record. Chairman Wang Shunyi once flipped through her logbook; the handwriting was neat and tidy, with not even a single correction. He asked her, "Yilin, was it like this at your previous testing agency?" She replied, "Even stricter than this. I'm just applying the requirements from there."

Park Hyo-jin and Kim Tae-min were responsible for customer service and administration, keeping all those miscellaneous tasks organized. Previously, customer complaints had to be reviewed by Chairman Wang Shunyi himself; now, Park Hyo-jin filtered them first, handling what she could and only forwarding the rest to him. Kim Tae-min was even more impressive; he archived all the company's contracts, invoices, and qualification documents in chronological order and made an index to stick on the filing cabinet, making everything clear at a glance. Zhang Junhao said, "If Tae-min had come three months earlier, I would have had a lot less gray hair."

The team was bigger, and efficiency was higher, but Chairman Wang Shunyi soon discovered a new problem—the financial department couldn't keep up.

It wasn't that the accounts were messy; it was just too rudimentary. Zhang Junhao used Excel for bookkeeping; sales, costs, profits, and cash flow were all on one sheet. The data was accurate, but it wasn't detailed enough. For example, regarding marketing expenses, they only knew the total spent that month, but not where it was spent or how effective it was. Regarding inventory costs, they only knew how much stock was in the warehouse, but there were no statistics on the turnover rate of different products or the proportion of stagnant inventory.

That afternoon, Chairman Wang Shunyi called Zhang Junhao into the small meeting room.

"Jun-ho, we need to upgrade our finances," he said, getting straight to the point.

Zhang Junhao handed over the latest financial statement, covered in dense numbers. "I've been thinking about this too. At our current scale, Excel can still manage, but it definitely won't work as we continue to grow. Besides, I don't have time to dig deep into a lot of the data; I can only do a rough estimate."

"How was last month's data?" Chairman Wang Shunyi took the report and flipped through two pages.

"Sales were 280 million. fire chicken noodles were 150 million, river snail rice noodles were 50 million, self-heating hot pots were 30 million, light spicy fire chicken noodles were 20 million, and the CU limited edition was 30 million." Zhang Junhao didn't need to look at the notebook; the numbers were all in his head. "In terms of costs, raw materials were 110 million, accounting for 39 percent. Production and packaging were 40 million, accounting for 14 percent. Personnel salaries and rent were 30 million, and marketing expenses and other miscellaneous items totaled about 40 million. Net profit was around 60 million, with a net profit margin of 21 percent."

Chairman Wang Shunyi nodded. This profit margin was quite good in the food industry, but he knew in his heart that as competition intensified, this number would eventually drop.

"What about cash flow?"

"There is 300 million in cash in the account. It sounds like a lot, but with the upcoming production expansion, new product launches, and increased marketing, this money won't last long." Zhang Junhao paused. "So I was thinking, should we consider external financing?"

Chairman Wang Shunyi leaned back in his chair without responding. He remembered what senior Min-gyu had said—financing wasn't just about having someone treat you to a meal; once you take someone's money, you have to let them have a say.

"An investment institution contacted me last week." Zhang Junhao opened his phone and scrolled through it. "It's called Shinhan Investment. They aren't large, but they specialize in consumer and retail projects. Their investment manager wants to schedule a time to chat."

"What did you say?"

"I said I'd consider it and discuss it with you first."

Chairman Wang Shunyi thought for a moment and said, "Meeting them is fine; let's hear what they have to say first. But don't rush to agree; talk to a few more and compare."

"Okay."

Three days later, the representative from Shinhan Investment came to the company.

The person who came was named Lee Seung-hwan, thirty-five or thirty-six years old, wearing a dark blue suit, his hair combed neatly, carrying a briefcase. When he entered, he scanned the office first, wearing that professional smile—neither cold nor warm, just right.

Chairman Wang Shunyi received him in the meeting room. Zhang Junhao sat to the side, and Park Min-ji also came, sitting at Chairman Wang Shunyi's right hand.

"President Wang, I've heard much about you." After Lee Seung-hwan sat down, he took a document out of his briefcase and handed it over with both hands. "The development of Shunyi Foods over the past six months is truly impressive. Going from a night market stall to entering CU and GS25 took less than a year, which is rare in the Korean food industry."

"Manager Lee is too kind." Chairman Wang Shunyi took the document but didn't look at it immediately, placing it on the table. "Please get straight to the point. What are your company's thoughts on us?"

Lee Seung-hwan nodded and opened the document. "This is our draft investment term sheet. We are willing to invest 2 billion won in exchange for 15 percent equity in Shunyi Foods. At the same time, we can provide some resource support, such as channel connection, brand promotion, management consulting, and so on."

Two billion for 15 percent. Chairman Wang Shunyi quickly calculated in his mind; the valuation was about 13.3 billion. For a company that had been established for less than a year, this number was not low. But he didn't rush to express his stance; instead, he picked up the term sheet and looked at it carefully.

"If we accept the investment, what rights do we have to give up?" he asked.

"Mainly some standard clauses. Pre-emptive rights, anti-dilution clauses, board seats, etc. We will send a representative to join the board, but we will not interfere with daily operations; you will still hold control of the company."

"What about liquidation preference?"

"Standard 1x liquidation preference. If the company is acquired or liquidated, we will recover our investment principal first, and then distribute the remaining assets according to the equity ratio."

Chairman Wang Shunyi nodded and turned the page. "What about the valuation adjustment mechanism?"

Lee Seung-hwan smiled. "President Wang is very professional. Indeed, we hope to set some performance valuation adjustment mechanism clauses. For example, if the sales target isn't met next year, we want to obtain additional equity compensation."

"What is the specific target?"

"For total sales next year, we expect to reach 30 billion won."

Thirty billion. Chairman Wang Shunyi calculated in his mind; this year's sales were expected to be around 5 billion, so 30 billion meant a six-fold increase. He looked at Zhang Junhao, whose brow furrowed slightly.

"This target is too high." Chairman Wang Shunyi closed the term sheet and pushed it back to the center of the table. "Reaching 15 billion next year, I think that is reasonable."

Lee Seung-hwan didn't show a surprised expression; it seemed he had already expected him to say this. "The target can be discussed further. However, President Wang, our logic is—Shunyi Foods' growth curve is currently very steep; if you can maintain this momentum next year, 30 billion is not impossible. Of course, the specific numbers can be adjusted according to your actual plans."

Chairman Wang Shunyi didn't respond. He glanced at Park Min-ji, who nodded slightly, meaning "Keep talking, don't rush to decide."

"Manager Lee, I'll keep the term sheet and look at it carefully later. In addition, I hope you can provide some background information—projects invested in previously, the situation of the investment team, and what specific resource support you can provide to the invested companies."

"Of course." Lee Seung-hwan stood up and reached out his hand. "Looking forward to further cooperation with President Wang."

After sending Lee Seung-hwan off, the three returned to the small meeting room. Zhang Junhao closed the door, Park Min-ji sat in the chair by the window, and Chairman Wang Shunyi stood in front of the whiteboard, holding a pen but not writing.

"A valuation of 13.3 billion is not low, but not high either." Zhang Junhao spoke first. "The valuation adjustment mechanism clause is a bit harsh; the 30 billion target is unrealistic."

"He said it could be discussed, but it's hard to say how much he will concede." Park Min-ji said, "Also, 2 billion in funds looks like a lot, but if we are to expand on a large scale next year, it might still not be enough."

Chairman Wang Shunyi put down the pen and turned around. "I'll ask someone else."

He called his university senior, Kim Min-gyu. Min-gyu was an investment manager at a private equity fund in Seoul and had been in the industry for seven or eight years; he had seen far more investment cases than he had.

"Senior Min-gyu, are you free? I'd like to ask for some advice."

"Sunyi, it's been a long time. Sure, how about we have lunch together tomorrow?"

The next day at noon, the two met at a barbecue restaurant in Jongno-gu. Min-gyu was five years older than Chairman Wang Shunyi, wore black-rimmed glasses, spoke slowly, and looked very refined, but drank very heartily. The pork belly was sizzling on the grill, and Min-gyu flipped it twice, picked up a piece, and put it in Chairman Wang Shunyi's bowl.

"Tell me, what's the matter?"

Chairman Wang Shunyi roughly explained the contents of Shinhan Investment's term sheet. Min-gyu listened while flipping the meat, and after listening, he put down the tongs and picked up his glass for a drink.

"Shinhan Investment? I've heard of them. They aren't large, but their reputation is okay. They previously invested in a company that made healthy drinks, which was later sold, and the return rate was decent." He thought for a moment. "A valuation of 13.3 billion is neither high nor low for a company of your size. But that valuation adjustment mechanism clause is indeed a bit harsh."

"I also think 30 billion is too high." Chairman Wang Shunyi picked up a piece of meat but didn't eat it, placing it on the plate.

"Then negotiate. It's normal for investors to propose conditions favorable to themselves; what you need to do is not to accept everything, but to strive for a result that both parties can accept." Min-gyu counted on his fingers. "A few key points. First, raise the valuation. You have good momentum now; you can ask for 15 billion to 20 billion. Second, lower the valuation adjustment mechanism target, between 15 billion and 20 billion, or just cancel the valuation adjustment mechanism—though this is difficult, investors usually won't budge. Third, you can give board seats, but ensure you have veto power on major matters."

Chairman Wang Shunyi listened carefully and noted these points in his phone's memo.

"Also, don't just focus on one company." Min-gyu picked up a piece of crispy grilled pork belly, dipped it in sauce, wrapped it in lettuce, stuffed it in his mouth in one go, chewed twice, and said, "Talk to a few more and compare the terms. There is plenty of capital in the market now; you have room to choose."

"Understood. Thank you, Senior Min-gyu."

"Don't mention it." Min-gyu raised his glass. "I wish Shunyi Foods continued growth."

Chairman Wang Shunyi clinked glasses with him and drank it all in one gulp.

After returning to the company, he called Zhang Junhao and Park Min-ji together and explained Min-gyu's suggestions.

"My thought is, don't rush to agree to Shinhan Investment." Chairman Wang Shunyi said. "Continue to negotiate with them and strive for better conditions. At the same time, contact other investment institutions to have more choices."

"I agree." Zhang Junhao said. "Also, I can find ways to optimize the finances here first. For example, negotiate longer payment terms with suppliers and shorter settlement cycles with channel distributors. This way, even if we don't get financing temporarily, the cash flow can last longer."

"Bank loans can also be considered." Park Min-ji added. "Our sales data is very impressive now; banks should be willing to lend."

Chairman Wang Shunyi nodded. "Good. Jun-ho, please help me prepare a detailed business plan that can clearly demonstrate our growth potential—sales data, channel expansion, new product planning, write it all in. No matter which investment institution we talk to, this material will be the stepping stone."

"Okay."

Park Min-ji also said: "On the marketing side, I'm planning a nationwide offline tasting event recently. If the effect is good, it can become a bargaining chip. Investors like to see this kind of action that can directly drive sales."

"Very good."

After the meeting, Chairman Wang Shunyi sat alone in his office. Outside the window was the gray sky of Seongdong-gu, and in the distance, there were a few high-rise buildings under construction, the arms of the tower cranes slowly turning in the gray-white sky. He thought of himself a year ago, lying in a semi-basement, worrying about a job with a monthly salary of less than two million. Now, someone wanted to throw 2 billion into his company, but he was hesitant.

It wasn't that he didn't want the money, but he was becoming increasingly clear about one thing—money could buy equipment and channels, but it couldn't buy control of the company. He was no longer the poor kid who would risk everything. He had a team, a brand, and people who had been fighting with him for so long. He had to protect this company for them.

He opened his phone and sent a message to Zhang Junhao: "Jun-ho, can the business plan be ready by this Friday?"

Two minutes later, the reply came: "Yes."

He sent another message to Park Min-ji: "Dinner together tonight?"

She replied with one word: "Okay."

He put his phone face down on the table, stood up, and walked to the window. Downstairs, a courier was moving boxes onto a truck, moving one after another, moving very fast, as if racing with someone. In the distance, pigeons flew by, their gray-white wings almost invisible in the gray-white sky, but he knew they were there.