Control system design start-ups OF: He Dewen (Beijing still Lun Law Firm) [i horse REVIEW] According to an open letter with other information publicly disclosed Ma Alibaba all employees, in order to maintain the listing of the company's founder culture, to make up for short-term capital market by Lee adverse effects on long-term development, Alibaba proposed after the listing remain a partner system to achieve, including the demands of partner team can nominate more than half of the directors of the company. According to the open letter with other information publicly disclosed Ma Alibaba all employees, in order to maintain the listing of the company's founder culture, to make up for the adverse effects of short-term profit for long-term capital market development of enterprises,
Alibaba proposed to retain the company after listing partner system to achieve, including the demands of partner team can nominate more than half of the directors of the company. Problems faced by Alibaba, from the novel is the right to nominate directors, from big to say which is essentially important and sensitive issue of all venture capital-backed start-ups are facing, namely control of the founding team of entrepreneurial business issues. The most secure way: controlling interest entrepreneurial team to achieve control of the business venture, priority is given to controlling interest. Equity is the source and foundation of the other shareholders voting rights, dividend rights, the right to choose managers shareholders are entitled. Some people liken to start a jigsaw puzzle. Development of venture capital companies need stitching, team, market, technology, channels and other social resources. But most of the limited resources available to start-ups themselves. To take advantage of these resources docking equity company start-ups usually use to displacement. Therefore, please consider the dilutive effect of its entrepreneurial business start-up team at stake 'shares for resources.' Especially considering the number of start-ups in the market before will experience more than three rounds of financing, the dilutive effect is more obvious. On Alibaba, it to Softbank, Yahoo financing, as well as external resources thus docking on Taobao beat eBay China, Alipay beat PayPal, so that the Taobao Alipay and Lynx were to become Chinese e-commerce market of each sub-market giant No tyrant contributed. But there is no free lunch, bear a child sets the wolf vain. When docked these external male wigs resources, stake in Alibaba entrepreneurial team is also diluted to less than 10%. After the public offering, Alibaba issued shares to the public will be further diluted equity Ma team, entrepreneurial team is difficult to directly implemented by existing shareholding control of the company. Other control methods in addition to a controlling interest, entrepreneurial team to start-ups can also control the following ways: 1 Main System cow card program 'bull card scheme' or 'dual ownership structure' (dual-class structure) design includes :( 1) A series shares divided into ordinary shares (Class A common stock) and B series ordinary shares (Class B common stock); hold investors and public shareholders (2) A series ordinary shares mainly by institutions, B series ordinary shares mainly held by the entrepreneurial team; (3) A series ordinary shares and series
B common shares set different voting rights. For example, the former only one voting share, which has 10 voting rights per share; (4) A sequence can not be converted to common shares series B common stock, but the series B common shares upon transfer automatically converted into ordinary A sequence shares. By cattle card program, start-ups can sell shares in the docking external resources, entrepreneurial team not to lose effective control of the company. Before Yihuhuhuapiao, we draw attention to the entrepreneur that (1) as it relates to restrictions on the rights of investors, cattle card program will not be free to choose for each start-ups. From a practical perspective, the use of cattle card program are the 'Emperor daughter mentality,' Star Enterprise in a seller's market, such as Google, Facebook, Groupon, Zynga, Linkedin and Berkshire and the like. Baidu Chinese stocks listed in the US and 360 also introduced cattle card program. Therefore, he said cattle Card Scheme is daughter of the emperor's gold, is not too much. (2) This system is mainly applied to the US capital market, follow the 'same shares same rights,' the Hong Kong capital market and the domestic A-share market is difficult to have a direct application space. On Alibaba, as the star enterprise, if it is listed on the NYSE or NASDAQ, entrepreneurial team can achieve control of the company through the implementation of cattle card program. However, the entrepreneurial team of control of the company may not be the choice Alibaba listing is the only consideration. Taking into account the result of Alibaba Alipay VIE event with Taobao fake hub reputation impact on the company's valuation, as well as the US capital markets stringent regulation, Alibaba may not choose to list in the United States. 2. The voting delegate or persons acting voting delegate That investment will correspond to its share of the voting rights delegated to exercise entrepreneurial team. For example, he has invested in Facebook, Groupon and Zynga and other Internet Star Enterprise, also invested in Jingdong Mall Alibaba investment fund Digital Sky Technologies (DST), which voting rights are usually entrusted to the company's core founder exercise. Persons acting namely investors and the founders agreed to take concerted action in consultation on specific issues when voting. When the disagreement, investors follow the founder of the vote. On Alibaba before listing, which allegedly included DST, Silver Lake and Yunfeng Fund investment per capita, including its shareholder voting rights entrusted to the entrepreneurial team exercise. However, if the investors listed in the company to continue to delegate voting rights to angel beats wigs exercise entrepreneurial team, which is likely to affect the investor's Cosplay Costumes exit. Because subsequent disk access investors may not agree to continue the voting rights delegated to Alibaba entrepreneurial team exercise.