Archive for April, 2010
Pre-money, Post-money Valuation and Calculation in a Venture Capital Investment
What is pre-money valuation and post-money valuation?
The pre-money valuation of a company refers to the valuation of the company before an investor injects capital into the company. The post-money valuation of a company refers to the valuation of the company after an investor has injected capital into the company. Therefore, the post-money valuation of a [...]
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What is Series A Convertible Preferred Stock Funding and Financing in a Venture Capital Investment?
What is Venture Capital?
Venture capitalists provide venture capital to startup, high growth companies usually with a prospect of achieving an IPO within a number of years (e.g., 3-5 years). Venture capitalists generally invest in the form of funds that are privately held limited partnerships (LP).
What is a Venture Capital Fund?
A venture capital fund is [...]
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Risky but High Potential Return Nature of Venture Capital Investments
Risky nature of venture capital investments
A crucial aspect of venture capital investment is the ability to identify novel technologies at a very early stage that have a potential of generating huge return within just a number of years’ time. This is because when a venture capitalist invests in a startup company, the company is [...]
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From Seed Capital to Angel Investors to Venture Capital Funding – Startup Company Financing Model
This article gives an overview of how a startup company goes from seed capital to angel investors to venture capital funding (Series A round) – the classic startup company financing model.
Seed capital / Seed round / Seed funding
Say, 3 people decide to start a business in biotechnology. They do so by incorporating a company [...]
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Anti-monopoly Law – MOFCOM’s decision to block Coca Cola’s proposed US$2.3 billion acquisition of Huiyuan Juice
This article revisits some of the key provisions of China’s Anti-Monopoly Law (反垄断法) and gives a legal review of the decision by the Ministry of Commerce (MOFCOM/商务部) to block Coca Cola Co’s (可口可乐公司) proposed US$2.3 billion acquisition of Huiyuan Juice Group (汇源公司集团).
Anti-Monopoly Law – a brief background
After more than 13 years’ of drafting and debate, [...]
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China to Launch Growth Enterprise Board on May 1, 2009
This article gives a legal review of the China Securities Regulatory Commission’s (CSRC) (中国证监会) announcement on March 31, 2009 regarding the launch of China’s growth enterprise board (创业板) on May 1, 2009.
On March 31, 2009, the CSRC issued the “Provisional Regulations on IPO and Listing on the Growth Enterprise Market” 《首次公开发行股票并在创业板上市管理暂行办法》 regarding the launch of [...]
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What is round trip investment? A review of China’s round trip regulations – Circular 75, M&A Rules, Circular 106
What is round trip investment?
A round trip investment （返程投资）refers to an investment made by a Chinese resident in a Chinese domestic company through an offshore special purpose vehicle (SPV). For example, where a Chinese resident sets up an offshore holding company (e.g., a Hong Kong SPV or a Cayman Islands SPV) and invests into this [...]
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A, B, H Shares of the Chinese public securities capital markets
Freely tradable shares in a listed Chinese company fall into 3 categories:
A-shares
A-shares are shares in companies incorporated in China that are listed on the Chinese A-shares market for trading among Chinese citizens and Qualified Foreign Institutional Investors (QFII) (合格境外机构投资者). A-shares are quoted in RMB.
Examples of QFII as approved by the State Administration of Foreign Exchange [...]
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What is split share structure and split share reform?
What is the split share structure(股权分置改革）?
Not all the shares in a company incorporated in China that are listed on a stock exchange are freely tradable. The split share structure of the Chinese public securities market refers to the existence of a large amount of non-tradable shares, including state-owned shares and legal person shares of a [...]
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What are the requirements of capital contributions (registered and paid in capital) of a Chinese limited liability company?
This article gives an overview of the equity structure of Chinese limited liability companies (有限责任公司). It highlights some of the salient issues regarding the requirements of registered capital (注册资本) and paid-in capital (实收资本). This article is in line with the most updated version of the Company Law of the People’s Republic of China《中华人民共和国公司法》as revised by [...]
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