in the previous edition of the investor said “series of activities, hunting cloud small train to hangzhou substation, guest speaker Gao Liangping share with entrepreneurs in the process of financing, entrepreneurial teams need to pay attention to something. This period, substation cloud small train arrived in chengdu, hunting hunting you invited in by the high pitch, managing director of Zhou Hongliang, sharing of entrepreneurial teams how ownership structure, reasonable design, and the exit mechanism of equity partners.
this guest have Zhou Hongliang Ren Yingfei’s securities fund CEO, previous investment including biodegradable cardiovascular stents projects, medicine, advanced intermediates, rich hydrogen water project, medical projects, vertical and electricity, etc.; A O2O real estate investment is the nearest electricity project. At present, in the value chain upstream and downstream with high investment focus on TMT’s early incubation and investment, over the global alumni resources and electronic science and technology university alumni spheres of technology and talent, do early incubation and acceleration. It is understood that in a high pitch and Israeli ministry of economic affairs, environmental protection agency, the department of agriculture has established the close cooperation relations, is committed to introduce Israeli high-tech industries and strategic investment, to help enterprises, technology, products and services in the Chinese market.
at the beginning of sharing, Zhou Hongliang with the examples of unreasonable equity structure design about the proportion of equity structure and founder of communication. Zhou Hongliang think, reasonable proportion of equity ownership structure should comply with the following principles:
first, founder absolute holding, the core founding team personnel contribution proportion of shareholding – holding proportion within the team to design science, as the soul and spiritual leader of the team, founder of absolute holding; Core founding personnel, in accordance with each person’s contribution holding proportion design, contribution is the ability, resources and channels, and dedication of time, create performance and so on.
against all shareholding system – a total of equal to no, all shareholding system can lead to the lack of real in the team the executive and management itself is practical, so all the case of shareholding system mostly ended in failure.
against financial investors holding.
4, the depth of the bundled upstream and downstream industry investors – upstream and downstream industry investors will bring resources, core technology and talent, resources integration ability and coordination ability, team need is small, large resources.
5 to seed, angel investors at an appropriate time to – when the project is the pre – A or A round of funding, require early investors to reduce or exit the stake, because angel investors low bargaining, subsequent investors high bargaining, if early investors hold shares is too high will affect the subsequent financing.
in addition, Zhou Hongliang also said that the entrepreneurial teams choose to prospective investors, for the wise investor, he should not exceed 20% of the total equity of the ownership, founding team has the most core technology, should have more than 30% of the equity.
about how to avoid too high risk brought by the VC ownership, Zhou Hongliang gives his solution : first of all, the internal agreement to the terms of the voting rights, amplify the voting rights by the founder of 10-20 times, the founder of the security control and management, and secondly, that we just discussed, request early investors to reduce or exit holdings, A round of investors are very cautious, they will not ignore the existence of any risk before investment.
equity allocation is closely connected with the founding partner of choice, entrepreneurs should be how to choose the founding partner?
“we believe that the founding partner, is both the entrepreneurship, entrepreneurial mindset, with 3 to 5 years full-time and co-founder of the founders of the investment project expected. Is the founding partner of the company’s biggest contributor, should also is mainly involved in the distribution of equity. Founding a partnership depth is close to the relationship of long-term interests, value, the binding relationship of wealth. After the partnership, the size of the company, have to consult with that partner between, major matters, even partners agreed. The company earn every penny, is directly related to whether and partners, everyone will be carried out in accordance with the agreed beforehand good stake distribution. Distribution of interests, management is not a problem.” Zhou Hongliang said.
moreover, Zhou Hongliang classification of equity partners, one by one in detail and share allocation strategies:
(1) short-term resource commitment & amp; Long-term resource provider
in the early-stage company, may need to use a lot of resources for the development of the company, this time is the most easy to early too short-term resource commitment is a promise of equity, and the resource commitment to become partners. The value of entrepreneurial firms need to invest time and energy to the entrepreneurial teams long implementation, so for only short-term resources committed, but not involved in the business full-time, suggest a priority project commission, talk about the interests of cooperation, a knot, rather than by equity depth binding for a long time.
For long-term resource provider, adopt interest cooperation into, interests and contributions of a progressive, may consider appropriate proportion of equity binding for a long time.
(2) the angels & amp; Vc
Zhou Hongliang said, the logic of venture investment is: (a) investors for a lot of money, and accounts for a small unit, using money to buy equity; (b) small business partners, accounts for large stocks, through long-term earning full-time service in the company. In short, investors only pay, not the output. Founder of money (a small amount of money), and output. Therefore, angel investors buy stock price should be higher than a partner, not shall, in accordance with the standard low price to obtain equity partner. In fact, when angel investors to estimate start-ups, generally from team + technology + industry three dimensions, the most important still is team, good entrepreneurs to want to use every cent of investors.
(3) professional part-time staff & amp; Technology and consultant
for technical people, but not full-time participation business part-time workers, we suggest that the external consultants in accordance with the company standard a small stake (equity from the option pool), not in accordance with the standards of a partner is equipped with a large number of equity.
(4) internal staff & amp; Internal core employees
don’t recommend entrepreneurs equity incentive for ordinary staff at early stage, the stage of the company may not be worth money, employees are likely to think that the company didn’t want to give them salary, through equity to fool them, give them draw pie. So for employees is likely to have an incentive effect, or even a negative incentive. However, if the company in the middle and later to staff motivation, employees are no longer concerned about their equity percentage, but according to the investors valuation or the company’s performance directly how much stock value.
in addition, the proposed stock option pool and virtual stock of core staff incentive, stages and in batches, and the staff issue virtual stock performance.
(5) outside the core resource & amp; Channel partners
according to the equity and all the way to raise, can through the way of stock option pool and virtual stock as a discount on the value of shares and performance incentive binding. Do not change in industrial and commercial registration, by founding partner of a generation or set up a limited partnership enterprise, the relevant person may own equity ownership, receive dividends, but lost the right to vote and management. In a word, to minimize the natural person direct stake. In addition, be sure to avoid state assets and foreign direct stake.
in addition to the equity allocation proportion problems of entrepreneurial teams, on equity withdrawal mechanism, internal and external partners Zhou Hongliang also gives the solution:
(a) managing partner expected
to make partner issuing equity, sufficient depth of communication, manage everyone expected: equity partners, is based on the long-term prospects for development, is willing to long-term participation business; Partner early to piece together a small amount of money, not a partner of a large stake held by the real price. Equity is the main price of, all partners with the company’s long-term binding (for example, 4 years), through long-term service company to make equity; If not set exit mechanism, allowing the midway exits partner to take equity, fairness of exit partner, but for other long-term participation in business partner’s largest unfair, other partners also have no sense of security.
(2) the rules of the game
(1) within a certain period of time (for example, within a year), internal agreed a founding partner of equity by founding shareholders generation;
(2) the partners’ equity and services, the period stipulated equity mature stage (4 years, for example);
(3) through four stages: grant, mature, exercise, converted into cash.
if the shareholder quit, company or other partners shall have the right to the equity premium or discount repurchase partner leaving the equity of immature and mature; For departure did not surrender equity behavior, to avoid the uncertainty of law enforcement, agreed to leave out high penalty due to breach of contract.
(3) of the four main problem solution.
(1) equity partner in installment maturity and departure to repurchase equity withdrawal mechanism, whether can be written into the articles of association of the company?
industrial and commercial bureau often require companies to use their template specified in the articles of association, the exit mechanism of equity is very difficult to write directly into the company’s articles of association. Agreed, however, was also signed an agreement between the partners, equity withdrawal mechanism; The company’s articles of association and shareholders agreement does not conflict as far as possible; In the shareholders agreement, if the company’s articles of association and shareholders agreement conflict, to the shareholders’ agreement shall prevail.
(2) partner exits, how to determine the exit price?
share repurchases is actually “buy out”, he proposed to company founder consider “principle, a method”. “One principle”, is that they generally recommend that the company founder, for exit partner, on the one hand, can recover the stake in whole or in part; , on the other hand, it must be admitted that a partner’s historical contribution, according to certain premium/discount repurchase shares.
(3) if the partners “divorce”, equity should be how to deal with?
once partner “divorce”, then the processing of marital assets, including shares, have to be a thorny problem. “Divorce” will affect the development of the enterprise (for example, tudou), also is likely to lead to actual control company is changed. In principle, property during marriage is both sides of husband and wife common property, but both sides of husband and wife can also agree on the ownership of the property.
as a result, the spouse can sign between “potato” clause, contract spouse to surrender any company claims rights. But, for recognition of contribution to the spouse during the marriage, spouses also to recognize, not a relationship because of red light, on the relationship between equity can be designed transformation “potato” clause, on the one hand, to ensure that the divorce spouse hands-off management affect the company’s business decisions; On the other hand, protect the economic rights and interests of divorce a spouse.
(4) after the equity issue, find a partner to stake its contribution do not match, what should I do?
company one-time grant partners, but the partner’s contribution is in place of the installment, is very easy to cause equity and contribution does not match. To hedge against such risks, consider:
a, first love, get married again. Give the period between partners, is responsible for both;
b, at startup, reserve a large option pool, reserved for later equity adjustment space;
c, set the stake in mature stage and the mechanism of repurchase, itself can hedge the risk of uncertainty.
this period “the investor said” activity dry, full from happy to share, end in a heated discussion, the next issue, hunting cloud small train will firing again, we hope that the collision between investors and entrepreneurial teams more spark, share more valuable content. Continuous attention to hunt cloud network and “investors say” series of activities, to dry all your bowl.
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