Speakers: Lukas Züst, Qinqin Yao
Organizer: Swiss Chinese Chamber of Commerce
On 22 September 2021, Lukas Zuest and Qinqin Yao of our China Desk gave a presentation at the SCCC Legal Chapter 2021 Forum on "Investing in a startup – key considerations for founders and investors".
Based on a case study, they first outlined the options for organizing a venture's structure, and pros and cons of each option. Then they explained the venture's financing in debt and in equity, with a focus on convertible loans, where Switzerland and China have some practical variations. This was followed by a general introduction of the investment process, and the two major investment documents when financing a startup with equity: investment agreement and shareholders' agreement. Preferred shares and common shares are another practical focus that was explained from both the Swiss and Chinese perspectives.
In short, startup investment process in China and Switzerland is comparable and follows international standards. However, it is always recommended that founders and investors dealing with China-Swiss business evaluate thoroughly their investment structure, be particularly attentive to the negotiation of investment documents, and take into account the Chinese ODI and FDI legislation and the interaction between the contractual arrangements and Swiss company law.