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PostsMARS View | How to view the placement of the Fourth Paradigm?
On July 17, 4Paradigm announced that the company would place 25.9 million shares at a price of HKD 50.5 per share to fund R&D and investment in stablecoins, RWA, and related industries.
Upon the news, the market and most retail investors interpreted it as negative, but I have a different perspective.
It is an indisputable fact that the placement dilutes the shares of all shareholders, including small and medium-sized ones. However, from a macro perspective, the largest dilution still falls on the major shareholders and investment institutions directly involved in the company's strategic decisions.
If the company can raise funds through a placement to supplement its cash flow for trend-driven product R&D, this is not entirely negative for small investors.
For entrepreneurs who want to grow their businesses, a placement is undoubtedly a tough decision. On one hand, they must dilute some equity to secure short-term cash flow for specific projects. If the company's valuation has significant growth potential, the diluted shares will appreciate over time, making the deal seem less favorable.
However, the placement price, based on mutual expectations of the company's current value, is reasonable. Introducing new external capital to replace early-stage venture capital that is gradually exiting can be beneficial for the company's capital management and operations.
As discussed in the previous article "Thoughts on Xiaomi's Placement," raising USD funds and bringing in new international partners for Xiaomi's automotive expansion reflects institutional confidence in the current price and long-term optimism.
The key question is whether 4Paradigm can succeed in stablecoins and RWA. The following are personal views for reference only.
4Paradigm started by helping banks with SaaS-based financial risk control products. Today, major investment banks and institutions remain its clients. Among SaaS-listed companies, 4Paradigm is undoubtedly a seasoned player in banking operations.
In the B2B sector, don’t just talk about your products or technology. Over years of client interactions, every company exaggerates its offerings. What clients want to know is how these products and technologies solve their pain points.
Stablecoins are not just a gimmick but a bridge between fiat and digital currencies. Circle’s core solution addresses the pain points of digital currencies in transactions. If a currency’s value fluctuates 24/7, people focus more on its financial attributes than its use.
4Paradigm’s decision is not purely trend-chasing but stems from years of accumulated insights from working with banks.
If a novice enters this field, I’d be concerned. The complexities and pitfalls are numerous. R&D isn’t about brute-force investment but leveraging one’s strengths.
The biggest barrier in B2B is earning client trust. Once established, this first-mover advantage creates immense pressure for competitors, who must expend far more effort to capture even a small share of orders—often over multi-year cycles.
Unless the supplier makes fundamental mistakes—like poor client relations or product failures causing major losses—most clients prefer the original SaaS provider for easier upgrades, iterations, and maintenance.
4Paradigm’s early-mover advantage and stable relationships with financial clients are key reasons for its confidence in stablecoins.
RWA is an even grander vision. In the AI era, beyond the physical and digital worlds, a third world—like Westworld’s human-AI coexistence—may emerge, requiring a new monetary system for AI-driven commerce. Years ago, this seemed far-fetched, but with ChatGPT and large models, it feels closer.
When this third world arrives depends on advancements in humanoid robots and large models. While tracking progress, we must also define ethical limits to ensure technology aids, not replaces, humanity.
As Oppenheimer asked Einstein about the chain reaction potentially igniting the atmosphere: "I believe we did."
July 17, Mars, Qinghe.
$PHANCY(06682.HK)
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