When wave field founder Sun Yuchen acquired BitTorrent in one of the most popular technology acquisitions this year, it turned out that he was not the highest bidder.
More importantly, the wave field is not even the only encryption startup that wants to develop a peer-to-peer file-sharing software company. Based on internal documents and multiple interviews with people close to the deal, Coindesk found Sun Yuchen’s competitor to be a $ 1.5 billion blockchain project, Neo.
Through the documents of its related venture capital firm Neo Global Capital ( NGC ), Neo provided a higher offer than Sun Yuchen, a fact confirmed by NGC and multiple sources familiar with the transaction.
According to Weiyu “Wayne” Zhu, the head of investment at Neo Blockchain, and the internal BitTorrent file obtained by CoinDesk, NGC ‘s bid is $ 170 million, which is $ 50 million more than the $ 120 million acquisition price of Sun Yuchen, the founder of the wave field. However, Sun Yuchen’s proposal was finally successful.
The wave field did not respond to the request for comment. BitTorrent also refused to respond to the interview request.
Sun Yuchen announced in July that he acquired BitTorrent on behalf of the wave field. The acquisition marks the first time that Encryption has successfully acquired one of the mature Internet companies, which has made the wavefield investors excited.
At the time, observers speculated that Sun Yuchen purchased the company for his user base.
Both Wavefield and Neo are trying to build faster, more scalable blockchains. Similarly, both have a common competitor, the world’s second largest blockchain – Ethereum.
The wave field aims to “ spread the Internet ” and mainly positions itself as an alternative to Ethereum. Sun Yuchen’s tweet indicates that his project is “ better”.
Similarly, Neo calls itself ” China’s Ethereum. ” The project focuses on smart contracts, digital identities, and digital assets, and has a market capitalization of $ 1.5 billion, which is comparable to the $ 1.6 billion in the wave field.
Although NGC has more than $ 50 million more than Sun Yuchen, the BitTorrent board of directors still stated in the document that NGC ‘s proposal “is not good for the firm and share holdersders s ” and approved Sun Yuchen’s proposal.
But what is even more concerned is that both projects are located in China and must face obstacles to capital control.
“ Only specific business objectives will be approved by the Chinese government, ” Chen Minhui, a partner at Global Blockchain Innovation Capital ( GBIC ), told CoinDesk. “ This process will take several months. ”
But it turns out that the Chinese government is not the main focus of NGC.
Two bids, one transaction
Sun Yuchen first took action to open the tendering process.
According to the file details of the acquisition, Sun Yuchen in 2017 Nian 12 in late January to DCM (a controlledBitTorrent majority stake in the venture capital firm) investor David Chao help. However, Sun Yuchen did not initially try to acquire BitTorrent.
Instead, he tried to buy BitTorrent ‘s controlling stake by buying DCM ‘s preferred stock, which accounted for 99 % of the total preferred stock. According to public documents submitted to the California State Secretary of State in June, the unit price of these stocks in the final transaction is about $ 1.85.
Sun Yuchen provided approximately $ 90 million to $ 100 million in funding for DCM ‘s equity.
NGC entered the stage of buying stocks about a month after the discussion and held talks with DCM and BitTorrent.Unlike Sun Yuchen, NGC tried to be the sole owner of BitTorrent from the outset, offering $ 115 million for all preferred stock and $ 55 million for all common stock.
Zhu said that NGC is very interested because it wants BitTorrent to build a decentralized file storage system that is often useful for any distributed network project or blockchain.
What does the wave field want?
Some BitTorrent employees are worried about the management and direction of the wave field.
Like NGC, Sun Yuchen also tried to force several former BitTorrent employees and major shareholders of common stock to rejoin the company. Sun Yuchen gave up this condition before submitting the final offer.
Founded in 2004 by Cohen and Ashwin Navin, BitTorrent is a file sharing protocol that allows users to download a file from multiple peers simultaneously, increasing speed.
The core of BitTorrent ‘s architecture – the decentralized network is in line with the blockchain. Most of the technical backbone left BitTorrent at the end of 2017. Shortly before the acquisition was finalized, BitTorrent acquired a small stake in Cohen ‘s new company, the environmental blockchain agreement Chia.
These shares were transferred to Sun Yuchen, who transferred BitTorrent to the Silicon Valley office in Wavefield to establish a beachhead position for Chinese companies in the United States.