But around the "Leishi incident" to start a variety of intense confrontation, essentially the board of directors and management around the control, decision-making power of the non-cooperative game, is the problem of corporate governance on the principal and agent.
Industry venture capitalists have said: "In accordance with established practice, investors should not become the largest shareholder, so too much intervention will affect the development of enterprises. The investor should be more of a financial investment, in the enterprise decision-making, more for entrepreneurs to develop their own, the investor is only advice and accompaniment."
Industry insiders said, to fully assess the current situation of the enterprise and the development prospects of the case to introduce suitable external investors, both sides of the values and the future development direction of the same is to decide whether to invest or not the premise. If the investor and the entrepreneur fall out, or even go to court, the losers will be both sides, and there will be no real winner.
China's market is constantly changing, and companies will always deviate in the process of development, which requires both parties to communicate and make adjustments during the investment process. Only when the interests and strategic vision of both parties are aligned can the enterprise be made bigger and better.
We will present a few cases in full below, hoping to have some help for VCs and enterprises.
ZunKu.com "walks away"
Hou Yujiang, former C.E.O. of luxury goods website ZunKu.com, had four institutions when he raised his Series A round of financing in May 2011*** - a well-known foreign investment institution, a Hong Kong VC, a US VC, and a Goodwill VC. U.S. VC, and the Cape of Good Hope Qihang E-commerce Fund - threw him an olive branch.
Despite the fact that the Good Hope Fund does not have much experience in Internet companies, but because of the higher valuation, the commitment to a faster time to the payment, the urgent need for capital to expand Hou Yujiang chose this fund without further consideration. "After all the ups and downs, it seems that the choice of this company was a mistake." Hou Yujiang said.
In February 2012, Hou Yujiang's board of directors took away his power due to disagreements with the capitalists over the strategic development of the company, and he eventually left the company in disgrace.
South Beauty DingHui's rebuff
On August 26, 2011, Zhang Lan, chairman of South Beauty Catering Group (hereinafter referred to as South Beauty), said in an interview with the media that the introduction of the investor, DingHui, was "the biggest blunder of South Beauty, meaningless" and that "private entrepreneurs are paying tuition. Private entrepreneurs pay tuition. She also said that CDH brought nothing to South Beauty, but diluted "such a big share" with very little money. The conflict between venture capitalists and investee companies was once again exposed to the public.
Publicly available information shows that in 2008, South Beauty chose CDH Venture Capital in the competition among several P E's, and the latter injected about 200 million yuan of capital, occupying 10.526% of the former's shares.
In 2011, South Beauty has been sprinting to the A-share market, but the listing was unsuccessful. Due to the betting agreement signed with CDH, after South Beauty's listing was thwarted, CDH asked Zhang Lan to buy back her shares at a high price. For Zhang Lan, listening to CDH Venture Capital's advice, she offered part of her stake to the executives at a low price, but she still couldn't get listed in the country, and she felt that she had lost money herself. In such a situation, both sides have grievances and conflicts surfaced.
Industrial and financial thinking are different. If the idea is different and there is a conflict of interest, it is easy for both sides to talk about it.
Disputes
In June 2012, the largest coffee producer in the country after the Valley Coffee broke with the PE investors to break up. The company said the PE firms were trying to seize control of the company, while the PE side said that Xiong Xiangjun, the chairman of the company, might abscond with the money, and that there was no hope for the company to be listed in 2012.
Early in 2011, a Beijing fund company and the back of the Valley Coffee reached an investment agreement. After the introduction of this equity investment company, the back of the Valley Coffee parent company Hongtian Group is still the majority shareholder, its shareholding of 59.74%. However, the contract signed by the two sides earlier had stated that the loan must be agreed by two (or more) directors of the new investor to be valid, and the fund side of the director is exactly two. This directly leads to the bank's new loan credit approval has been completed, but the fund refused to sign, so that enterprises are trapped in the "only to repay the loan" situation, after the Valley Coffee capital chain in an emergency.
According to the report, the reason for the fund's delay in signing is that the investor did not see that the funds were really used for the company's normal operation and development. And Hougu accused the investors of aiming to gain control of Hougu Coffee.
Originally aiming to build "China's first coffee stock" after the Valley Coffee, after the introduction of investors not only did not realize the established development strategy, but a new round of bank loans can not be accounted for, the gearing ratio of up to 70% of the Valley almost bankrupt.
It can be seen that private enterprises only clear up the problems left behind by early sloppy management, so as not to be passive in the process of introducing capital. For venture capitalists, not only purely financial investors, but also strategic investors, hoping to make quick money, make a lot of money in the impatient mentality has to be changed, otherwise, once the enterprise itself is not sustainable, PE will also be difficult to escape the fate of the investment in the water.
The Xiangyi Ben Cao incident
July 2012, is rushing to the IPO of the local cosmetics company Xiangyi Ben Cao rumors and investor today's capital relationship deterioration of the news. According to the report, Feng Shuai, chairman of Xiangyi Ben Cao, had internally scolded Xu Xin, president of today's capital, as a liar, and that the aura of a venture capitalist with a head of Zhenkongfu, NetEase and other projects had gotten the best of them.
It is reported that in the first year of the successful introduction of today's capital venture capital, Xiangyi Ben Cao's founder Feng Shuai signed a betting agreement, Xiangyi Ben Cao's growth is expected to be raised from 50% to 70% to 80%, and never advertisements Xiangyi Ben Cao began to appear on television. That year, Xiangyi Ben Cao sales growth eventually reached 150 percent; after three years, Xiangyi Ben Cao maintained an average annual growth rate of more than 150 percent.
Today's side of the capital got a taste for it and wanted to go even bigger. According to the report, from 2008 to now, today's capital "should be the national cosmetics business performance of more than 500 million have been contacted once. The company has a strong opinion of this, claiming that it should not invest in competing companies, and that it intends to create a situation in which the left hand hits the right hand.
At present, the two sides are still in a stalemate. But at the same time, today's capital side of the consumer goods personnel have been divided into a number of groups, looking around frantically to invest in the project. This is today's capital Xu Xin dead order, this year must be invested in a daily chemical retail enterprise.
Red child founder out
October 6, 2008, red child Internet Technology Co., Ltd. general manager Li Yang in the National Day holiday back to work, one of the investors KPCB (KPCB) sent to the red child's representative of the JinPeng to his office told him openly, the board of directors decided to let him leave the company founded by him immediately.
There was no warning. Li Yang was very surprised, red child sales revenue in 2007 has reached 400 million yuan, and in March 2008 jumped over the break-even line, becoming the year's most popular e-commerce company. He asked another entrepreneurial partner - the company's chairman and CEO Xu Peixin, the answer was also: "This is the board's decision." Next, Li Yang was unable to reach any of the major shareholders because "some didn't answer the phone, and some said they were out of the country."
Together with Li Yang, his wife Wang Shuang left the company. Xu Peixin gave the explanation that the board of directors believed that the husband and wife could not serve in the company at the same time, and they did not want to be separated, so they both left. But in the eyes of those involved, it was nothing less than a coup.
In the view of industry insiders, the red child is mainly due to too much intervention by investors, which led to the red child now chaotic situation. Sources say Xu Peixin, the other founder, chairman and CEO of Redchild, has taken a back seat to the executives selected by the VCs to run Redchild's day-to-day operations.
In July 2012, news broke that RedBaby would be acquired by Suning.com. Although both sides of the news are denied, but it is difficult to hide the red child suffered a predicament, but also once again proved that the game between investors and entrepreneurs ultimately hurt the enterprise.