Where the Money Goes

Based on our experience in various projects, we have noticed that the enthusiasm for online-to-offline (O2O) type financing projects that has persisted in recent years had begun cooling off in the beginning of 2016. Many O2O projects that were easy and quick to finance or that attracted numerous investors now have difficulties obtaining new funding. Additionally, investors have become more cautious in the face of changing appetites.

In contrast, we have noticed that some projects initiated on the basis of proprietary or superior technologies have started to attract investors. Even if a project may not be as exciting or innovative, or its sector has traditionally been relatively uncompetitive, a project with superior technology or distinct approach can capture investors' attention.

Investors seem to also be losing patience with the huge subsidies and spending required in “idea”-type sectors that allow anyone to get involved and have low technological barriers, and instead appear to prefer diverting their investments to sectors in which one can make big bets with a small amount based on a superior technology. Although such sectors may seem traditional, the continuous evolution of the underlying innovative technologies will provide an uninterrupted flow of potential.

Based on this, we would argue that venture capital projects with superior technology are presently—and will continue to be—relatively hot sectors. In business practice, this will also require lawyers to give up chasing trendy concept sectors and return to achieving an in-depth understanding of the business models in traditional sectors, as this will be the way in which they can better serve clients' demands.

3. How are PE transactions financed? Are deal structures evolving?

Generally speaking, we have noticed that most PE projects are launched by way of one or even more funds investing in equity. This is particularly obvious when the market is active and the amount of fundraising surges, simply because each investor has large funds at hand. However, in a so-called market “ice age”, we have also noticed that certain practices that were rarely seen in the past have become more prevalent.

Firstly, with investors acting more prudently, many projects that could normally be launched by equity financing are turning to convertible bonds. Venture projects urgently need funds, but investors' concerns over uncertainties in a project make it difficult for them to pay directly to obtain shares, and are instead more inclined to provide funds in the form of debt, which they then convert to equity depending on the project's future performance.

Secondly, with respect to projects that are looked upon quite favorably but are less predictable, investors are not rushing to inject the projected investment all at once, but rather are doing so one step at a time. This allows them to reserve the right to expand their share while avoiding the risk of incurring a large loss as the result of an erroneous decision.

There are, of course, rumors of a small number of publicly offered PE financings, but due to numerous problems this is doomed not to be able to become a mainstream financing method.

4. Many Chinese companies have decided to delist from the U.S. and relist on the A-share market over the past two years. Will this trend continue?

Since 2015, Chinese enterprises' delisting from U.S. stock markets and searching for opportunities to list domestically has exploded, a phenomenon that was closely linked to the extraordinary development of the A-share markets during the first half of last year.

Based on our experience in similar projects, we would argue that there are three factors that have driven an increasing number of Chinese enterprises to elect to return to the domestic capital markets:

A clear demonstration effect: The steep rises to the daily trading limit in the “Baofeng Player” project that we handled brought the huge potential of the A-share markets to the attention of Chinese enterprises listed overseas;

The significant challenge posed by foreign regulation: In addition to government agencies, the frequent legal actions brought against, and challenges posed to, Chinese enterprises have had a relatively large impact on the share prices of Chinese enterprises; and

The explosion in onshore capital markets: This has made it easy for domestic investors to raise a large amount of funds to pump them up with the confidence to dangle premiums several times greater than those in overseas markets, further drawing Chinese enterprises back home.

However, since the first half of this year, with the appearance of phenomena such as the repeated delay in the launching of the “strategic emerging industries board” and the increasingly tough regulatory attitude toward shell companies, we would argue that the enthusiasm of Chinese enterprises for pulling out of U.S. stock markets and seeking an onshore listing will cool considerably or even dissipate entirely. The recent withdrawals of privatization offers of several Chinese enterprises listed in the U.S. speak to this issue.

5. Current regulations make it difficult for offshore acquisition financing. How do Chinese companies get around this restriction?

Since the first half of 2016, the exchange control authorities everywhere have stiffened their regulatory requirements with respect to foreign exchange (FX) conversions, purchases and even outward remittances of FX made by individuals and enterprises for their overseas investments. The FX regulators have set forth stricter criteria for reviewing the genuineness, lawfulness and even the reasonability of outbound investment projects. According to online news reports, the FX regulators in certain regions have suspended accepting requests for currency conversions made by individuals and partnerships for overseas projects, and those made for relatively large investments by enterprises with legal personality will usually require an interview.

In the face of such difficulties, a Chinese enterprise will usually consider one of two principal solutions: (1) For an actually existing project that involves an investment in an offshore enterprise (not involving investment round-tripping), it will need to provide a sufficient explanation to the regulators regarding matters such as the reasonability of the project, and it will usually be given a pass by the regulators; or (2) For a project involving investment round-tripping (where the money is reinvested in China after leaving the country), it will attempt to use an alternative transaction structure, such as a method that doesn't necessarily require the Chinese investor to remit money abroad, but allows it to directly invest at the domestic level and secure foreign shares.

We would argue that these challenges are helpful in filtering out fraudulent projects that are disguised as foreign investments but are really only set up for FX conversion and sending the proceeds abroad. From a long-term perspective, this will help more genuine projects proceed smoothly.

6. What are the biggest venture capital market trends in China?

As lawyers, we may not be in the best position to give an answer to this trend. However, from our experience in various venture capital deals and projects with technological barriers that draw investors, and from a compliance and regulatory point of view, projects with clear business and legal compliance attributes are attractive to investors. This signifies that, from the earliest stage of a project, the participation of professionals, including lawyers, is extremely important. A company that is strict and proper in all respects puts investors at greater ease.

Additionally, with recently increasing divestment pressures on numerous investment projects, we are confident that existing projects will be more prudently handled by the market. Before an enterprise ultimately sets off on the path to a listing, the participation of professionals will become more important as, after all, the demands on all parties are higher than they were at the startup phase. Individuals who display professionalism will have greater opportunities to engage in projects.

7. What are the main challenges faced by startups in obtaining funding?

From a legal perspective, we feel that there are at least three important challenges to financing startups:

Excessive haste in establishing a startup fails to leave sufficient room for the founders and future funding, and prevents the retention of appropriate structural flexibility. This means that various adjustments will need to be made when seeking subsequent financing, leading to greater time and financial costs;

Many startups at the outset only focus on business and neglect compliance considerations so that, investors who later enter the scene have their investment confidence shaken by the high compliance costs. In the long run, non-compliance will also affect subsequent financing and even listing operations; and

Insufficient preparation by the enterprise for the rights and conditions normally asserted by the investors can easily lead to strong resistance out of fear of being taken advantage of, ultimately resulting in the financing falling through due to the lack of basis during commercial negotiations.

In short, we recommend that entrepreneurs bring in appropriate advisers from the start, quickly familiarize themselves with the relevant rules and duly prepare in advance for areas where investors may challenge or hold doubts.

8. Are there any tax updates that PE & VC firms should be aware of?

Because during the early stages of a project PE funds are largely focused on successfully investing in the project and obtaining a favorable valuation, they do not spare much attention to the tax costs that could be incurred due to future adjustments or divestments. The lack of a prior agreement could mean neither the founders nor the investors will be willing to bear the tax costs arising from any future adjustments.

In one project we recently participated in, the investor, with a view to achieving a relatively early entry, reached certain tacit understandings with the founder at the start, permitting its shareholding percentage to decrease by appropriate means in subsequent financing rounds. Where shares need to be transferred, the taxes and levies payable by the transferor markedly increase the investment costs. Accordingly, we recommend that the tax team of the PE fund duly carry out the tax planning for the project from the outset. Even if tax isn't their area of specialty, the PE lawyers should nonetheless do their best to sufficiently bring the issue to the attention of the client.

9. What are the major concerns foreign PE clients have in doing deals in China? Are these issues improving?

Like many other foreign investors in China, foreign PE funds are concerned that changes in Chinese laws, regulations or administrative orders or their interpretations could have an impact on the outlook of their investment in China. Particularly due to uncertainties in the level of regulatory enforcement, when making decisions, a PE fund needs to consult with the authorities on the specific legal provisions and simultaneously consider the different requirements in actual practice. As another example, the Chinese government expressly specifies the sectors in which foreign investment is prohibited or restricted: if it wishes to complete an investment, a PE fund may be required to establish a parallel renminbi fund or opt for a more costly method, such as adopting a variable interest entity (VIE) structure for its project so as to realize the investment. Furthermore, given that the government maintains a relatively strict FX control regime, when designing the investment plan, the inflow and outflow of foreign currency funds must be planned in advance in light of regulations and their actual implementation.

With the increasing maturity of China's investment environment, all of these issues have witnessed a turn for the better in recent years, particularly the revision of sectors in which foreign investment is restricted or prohibited, showing the scope of restrictions to be gradually shrinking. However, we would still recommend that PE funds comprehensively consider China's legal environment and, under the recommendation of a lawyer, pay particular attention to the differences between regulations and actual practice.

1. 近期有哪些监管方面的发展影响中国私募市场？

尽管相较资本市场业务的其他领域，私募领域受到的监管相对较少，但政府部门及行业协会等仍然对该领域保有适当程度的监管。其中，中国基金业协会有关私募基金管理人的监管一直是该领域的重点事项。该领域最新的发展是中国基金业协会2016年2月5日发布的《关于进一步规范私募基金管理人登记若干事项的公告》（“2016公告”）。虽然私募投资基金管理人登记和基金备案自2014年起就开始执行，但2016公告的显著特点是对新申请私募基金管理人登记及已登记的私募基金管理人发生部分重大事项变更时，提出需要中国律师事务所出具的法律意见书这一要求。这就意味着，随着律师的介入，过往虽存有诸多不合规之处但仍可通过登记的基金管理人将面临挑战，基金管理人必须在合规上努力，以使得律师可以出具符合要求的法律意见书，而律师在准备法律意见书过程中对基金管理人提出的各项建议有助于规范基金管理人的设立、变更乃至运作。

2. 哪些中国热门领域最吸引私募投资者？

基于参与项目的经验，我们注意到2016年开始，近年来异常火暴的020类融资项目的热潮有逐渐消退的趋势，许多过去很容易融到资、项目进展速度特别迅速或多家投资人争抢的O2O项目出现了新融资困难的情况。同时，投资人面对许多过去被追捧的概念变更更加谨慎起来。

与这些形成对比的是，我们注意到，一些基于独有或优势技术而开展的项目开始得到投资人的重点关注。尽管有一些项目并不是那么令人兴奋或者眼前一亮的新鲜事物，甚至这些项目的领域历来不乏竞争者，但只要一个项目具有独特的优势技术或者具备独特的切入点，就可以凭借这种技术壁垒来吸引投资人的目光。投资人似乎对技术壁垒较低且大家都可以做的“点子”型领域需要的巨额补贴和烧钱失去了耐心，反正会转投这种基于优势技术可以以小博大的领域。尽管这些领域看似传统，但其背后不断涌现的创新技术将为其发展融入源源不断的可能性。基于此，我们认为具有优势技术的创业项目是目前乃至未来较为热点的领域，在业务实践中，这也会要求律师放弃追捧热点的概念领域而回归对传统领域的业务模式等进行深刻理解，才能更好的服务客户的需求。

3. 私募交易以何种方式融资？交易结构是否不断发生变化？

常规而言，我们注意到大部分的私募项目还是通过一个乃至多个基金对其进行股权投资的方式开展的。这一点在市场活跃且募集资金金额高涨的时刻尤其明显，因为各个投资人都手握大量款项，可用于投资。然而在所谓的“市场寒冬”时代，我们也注意到一些以往不太常见的做法变得流行起来。首先是随着投资人的谨慎行事，许多本来可第一时间以股权融资方式开展的项目变为通过可转债的方式开展，即创业项目急需资金，而投资人对于项目的一些不确定性担忧会使得其直接出钱获得股份变得困难，而希望通过借债的方式提供给创业项目资金并视未来的表现情况再进行转股。二是对于一些较为看好但又不太确定的项目，投资人并不着急一次性出完所有预期的投资款项，而是会分期分步投资，这样在保留自己进一步投资扩大份额的权利的同时，又不至于为一次错误的选择承担过大的损失。

当然，我们也听到一些少量私募公募化融资的传言，但因为其可能存在的诸多问题注定不会成为主流的融资方式。

4. 过去两年中，许多中国公司决定从美国退市，在A股市场重新上市。这一趋势是否会持续？

2015年以来，中国企业自美国证券市场退市并择机寻求在国内上市开始变得火暴，这与2015年上半年A股市场的异常发展非常相关。基于我们此前参与的类似项目的经验，我们认为主要有三个因素导致越来越多的中国企业选择回国内资本市场：一是示范效应明显，本所主办的“暴风影音”项目多日连拉涨停使得海外上市的中国企业看到了A股市场的巨大潜力；二是海外监管挑战巨大，除政府机关外，非常有经验的专业人士频繁的对中国企业提起的诉讼和挑战也使得中国企业的股价受到较大影响；三是国内资本市场的火暴也使得国内投资人容易募集大量的资金，可以使得其非常有底气以数倍于海外资本市场的高溢价将中国企业拉回国内。

但是，随着今年上半年以来有关“战新版”推出遥遥无期、监管部门对“壳资源”持有越来越严格的监管态度等事态的出现，我们认为中国企业自美国证券市场退市并择机寻求在国内上市这一热度将明显消退乃至终止停滞，近一段时间以来对数家在美国上市的中国企业的私有化要约被撤回也可以说明这个问题。

5. 近期法规加大了境外收购融资的难度。中国企业如何绕开这一限制？

我们注意到2016年上半年以来，各地外管部门对于个人或企业对外投资行为涉及的换汇、购汇乃至汇出事宜提高了监管要求。外管部门对于境外投资项目的真实性、合法性乃至合理性都提出了更高的审查标准。根据网络上的新闻报道，有一些地方的外管部门对于个人或者合伙企业的对外投资项目予以暂停受理换汇，对于法人企业的较大额投资换汇需求通常需要面谈处理。

中国企业面临前述困难通常考虑的解决方案主要有两种：一是对于本来就真实存在的投资于境外企业（非涉及返程投资）的项目，需耐心对项目的合理性等事宜向监管部门提供足够的解释，通常会获得监管部门的放行；二是对于涉及返程投资（即钱出去以后投回境内）的项目，尝试采用替代性的交易结构，如境内投资人无需将钱汇出而直接投资于境内层面并取得境外股份的方式进行。

我们认为前述面临的困难有助于筛查打着境外投资的幌子实则换汇出境的虚假项目，长远看应更有助帮助更多的真实项目顺利进行。

6. 中国风投市场最主要的趋势是什么？

这个趋势我们作为参与私募融资项目法律链条的律师可能无法代为回答。但就我们参与项目的感受而言，除了上面提及的有技术壁垒的项目可能会越来越吸引投资人的目光，从合规监管方面考虑，从事的业务明晰、法律合规属性明确的项目可能会更吸引投资人的青睐。这就意味着，自项目的非常早期阶段，包括律师在内的专业人士的参与将十分重要，一家各方面井井有条的公司应该会更让投资人感觉放心。

同时，随着几年下来众多投资项目的退出压力增大，相信市场对于既有项目的处理也会变得越发谨慎，此时如同企业最终走向上市之前一样，专业人士的参与将变得更加重要，毕竟此时对于各方的要求都比项目初创时更高一些，也就意味着更专业的人士将有更多机会协助处理项目。

7. 哪些热门领域最吸引风投投资者？初创企业要获得资金面临着哪些挑战？

第一题前文已经回答过。

从法律人士专业角度而言，我们觉得至少有如下三点重要的挑战使得许多初创企业的融资面临困境：第一是初创企业设立的过于仓促，未有为创始人乃至未来陆续融资预留足够空间及保留适当架构上的灵活性，后续融资时需要进行的各种调整会产生较高的时间和经济成本；二是许多初创企业一开始仅顾业务而忽略了合规方面的考虑，使得投资人进入时合规成本较高影响投资人投资的信心；即使投资人进入后，长远看不合规还会影响后续的融资乃至上市操作；三是企业对于投资人惯常主张的权利和条件准备不足，很容易由于特别担心吃亏而非常抗拒，导致最终双方缺乏商业谈判的基础而融资破裂。总体上说，我们依然建议创业者在创业之初就引入适当的顾问，尽快熟悉相关规则，并为投资人可能质疑或者挑战的地方提前做好准备。

8. 私募和风投机构需要了解哪些税务方面的最新动态？

在项目的早期阶段，因为私募基金的工作重点是放在成功投入项目及争取到较为优惠的估值，对于未来的调整乃至退出等可能产生的税务成本等并不是十分在意。这样就会造成一种局面：因为缺乏事先约定，未来的任何调整产生的税务成本往往创始人和投资人都不愿意承担。我们最近参与的一些项目中，投资人一开始为了较早进入而跟创始人达成了一些默契，允许在后续融资中自己的持股比例以适当的方式降低。在需要转股的情况下，作为出让方所要缴纳的税费会显著提高投资成本。因此，我们建议私募基金的税务团队从一开始就做好项目的税务筹划，作为项目的参与方，尽管税务领域并非私募律师的专场，但也应该尽可能多给客户足够的提示。

9. 外国私募客户在中国开展交易有哪些主要顾虑？这些问题是否有所改善？

如同其他外国投资者向中国投资时都会顾虑的，中国法律、法规及行政指令或其解释发生变化都可能对其在中国的投资前景产生影响，特别是因为在法规执行层面时常存在不确定性，需要私募基金在作出决策时既要参考法规明文规定，又要考虑主管政府部门在实际操作中的不同要求。又如，中国政府明确规定了禁止或限制外资进入的领域；如希望完成投资，私募基金可能需要设立人民币平行基金或对投资项目采取协议控制架构等成本更高的方式实现投资。另外，鉴于中国政府对外汇实行较为严格的管理方式，在设计投资方案时，外币资金的流入流出都需要在结合法规和实际执行的前提下提前规划。

随着中国投资环境的日渐成熟，前述提及问题在最近几年都有所好转，特别是中国政府在近年内数次调整限制或禁止外资进入的领域，限制范围呈逐渐缩小的趋势；而我们仍然建议，私募基金应当全面考虑中国的法律环境，在律师的建议下，对法规规定和实际操作方式的区别予以重点关注。

1. What are the latest regulatory developments affecting the private equity market in China?

Despite the relatively light regulation of the private equity (PE) sector compared with that of other capital markets businesses, government authorities and industry associations maintain an appropriate degree of administration. The supervision by the Asset Management Association of China (AMAC) of PE fund managers has always been a key focus.

The most recent development was AMAC's February 5, 2016 issuance of the Announcement on Several Matters Relevant to Further Regulating the Registration of Private Fund Managers (Announcement). Although implementation and record filing of the registration and record filing of private investment fund managers and began in 2014, one of the noteworthy features of the Announcement is that a legal opinion issued by a Chinese law firm is required when submitting an application to register a PE fund manager or notifying changes in certain material particulars of a registered fund manager. This is significant because fund managers that were previously able to secure registration despite having numerous non-compliance issues will face challenges going forward. Fund managers will have to strive for compliance so that lawyers can issue legal opinions that satisfy the requirements. Furthermore, the recommendations that lawyers make in the course of preparing their opinions will help ensure compliance during the establishment of, changes in, and even the operation of, fund managers.

2. What are the hottest sectors attracting PE investors in China?

Based on our experience in various projects, we have noticed that the enthusiasm for online-to-offline (O2O) type financing projects that has persisted in recent years had begun cooling off in the beginning of 2016. Many O2O projects that were easy and quick to finance or that attracted numerous investors now have difficulties obtaining new funding. Additionally, investors have become more cautious in the face of changing appetites.

In contrast, we have noticed that some projects initiated on the basis of proprietary or superior technologies have started to attract investors. Even if a project may not be as exciting or innovative, or its sector has traditionally been relatively uncompetitive, a project with superior technology or distinct approach can capture investors' attention.

Investors seem to also be losing patience with the huge subsidies and spending required in “idea”-type sectors that allow anyone to get involved and have low technological barriers, and instead appear to prefer diverting their investments to sectors in which one can make big bets with a small amount based on a superior technology. Although such sectors may seem traditional, the continuous evolution of the underlying innovative technologies will provide an uninterrupted flow of potential.

Based on this, we would argue that venture capital projects with superior technology are presently—and will continue to be—relatively hot sectors. In business practice, this will also require lawyers to give up chasing trendy concept sectors and return to achieving an in-depth understanding of the business models in traditional sectors, as this will be the way in which they can better serve clients' demands.

3. How are PE transactions financed? Are deal structures evolving?

Generally speaking, we have noticed that most PE projects are launched by way of one or even more funds investing in equity. This is particularly obvious when the market is active and the amount of fundraising surges, simply because each investor has large funds at hand. However, in a so-called market “ice age”, we have also noticed that certain practices that were rarely seen in the past have become more prevalent.

Firstly, with investors acting more prudently, many projects that could normally be launched by equity financing are turning to convertible bonds. Venture projects urgently need funds, but investors' concerns over uncertainties in a project make it difficult for them to pay directly to obtain shares, and are instead more inclined to provide funds in the form of debt, which they then convert to equity depending on the project's future performance.

Secondly, with respect to projects that are looked upon quite favorably but are less predictable, investors are not rushing to inject the projected investment all at once, but rather are doing so one step at a time. This allows them to reserve the right to expand their share while avoiding the risk of incurring a large loss as the result of an erroneous decision.

There are, of course, rumors of a small number of publicly offered PE financings, but due to numerous problems this is doomed not to be able to become a mainstream financing method.

4. Many Chinese companies have decided to delist from the U.S. and relist on the A-share market over the past two years. Will this trend continue?

Since 2015, Chinese enterprises' delisting from U.S. stock markets and searching for opportunities to list domestically has exploded, a phenomenon that was closely linked to the extraordinary development of the A-share markets during the first half of last year.

Based on our experience in similar projects, we would argue that there are three factors that have driven an increasing number of Chinese enterprises to elect to return to the domestic capital markets:

A clear demonstration effect: The steep rises to the daily trading limit in the “Baofeng Player” project that we handled brought the huge potential of the A-share markets to the attention of Chinese enterprises listed overseas;

The significant challenge posed by foreign regulation: In addition to government agencies, the frequent legal actions brought against, and challenges posed to, Chinese enterprises have had a relatively large impact on the share prices of Chinese enterprises; and

The explosion in onshore capital markets: This has made it easy for domestic investors to raise a large amount of funds to pump them up with the confidence to dangle premiums several times greater than those in overseas markets, further drawing Chinese enterprises back home.

However, since the first half of this year, with the appearance of phenomena such as the repeated delay in the launching of the “strategic emerging industries board” and the increasingly tough regulatory attitude toward shell companies, we would argue that the enthusiasm of Chinese enterprises for pulling out of U.S. stock markets and seeking an onshore listing will cool considerably or even dissipate entirely. The recent withdrawals of privatization offers of several Chinese enterprises listed in the U.S. speak to this issue.

5. Current regulations make it difficult for offshore acquisition financing. How do Chinese companies get around this restriction?

Since the first half of 2016, the exchange control authorities everywhere have stiffened their regulatory requirements with respect to foreign exchange (FX) conversions, purchases and even outward remittances of FX made by individuals and enterprises for their overseas investments. The FX regulators have set forth stricter criteria for reviewing the genuineness, lawfulness and even the reasonability of outbound investment projects. According to online news reports, the FX regulators in certain regions have suspended accepting requests for currency conversions made by individuals and partnerships for overseas projects, and those made for relatively large investments by enterprises with legal personality will usually require an interview.

In the face of such difficulties, a Chinese enterprise will usually consider one of two principal solutions: (1) For an actually existing project that involves an investment in an offshore enterprise (not involving investment round-tripping), it will need to provide a sufficient explanation to the regulators regarding matters such as the reasonability of the project, and it will usually be given a pass by the regulators; or (2) For a project involving investment round-tripping (where the money is reinvested in China after leaving the country), it will attempt to use an alternative transaction structure, such as a method that doesn't necessarily require the Chinese investor to remit money abroad, but allows it to directly invest at the domestic level and secure foreign shares.

We would argue that these challenges are helpful in filtering out fraudulent projects that are disguised as foreign investments but are really only set up for FX conversion and sending the proceeds abroad. From a long-term perspective, this will help more genuine projects proceed smoothly.

6. What are the biggest venture capital market trends in China?

As lawyers, we may not be in the best position to give an answer to this trend. However, from our experience in various venture capital deals and projects with technological barriers that draw investors, and from a compliance and regulatory point of view, projects with clear business and legal compliance attributes are attractive to investors. This signifies that, from the earliest stage of a project, the participation of professionals, including lawyers, is extremely important. A company that is strict and proper in all respects puts investors at greater ease.

Additionally, with recently increasing divestment pressures on numerous investment projects, we are confident that existing projects will be more prudently handled by the market. Before an enterprise ultimately sets off on the path to a listing, the participation of professionals will become more important as, after all, the demands on all parties are higher than they were at the startup phase. Individuals who display professionalism will have greater opportunities to engage in projects.

7. What are the main challenges faced by startups in obtaining funding?

From a legal perspective, we feel that there are at least three important challenges to financing startups:

Excessive haste in establishing a startup fails to leave sufficient room for the founders and future funding, and prevents the retention of appropriate structural flexibility. This means that various adjustments will need to be made when seeking subsequent financing, leading to greater time and financial costs;

Many startups at the outset only focus on business and neglect compliance considerations so that, investors who later enter the scene have their investment confidence shaken by the high compliance costs. In the long run, non-compliance will also affect subsequent financing and even listing operations; and

Insufficient preparation by the enterprise for the rights and conditions normally asserted by the investors can easily lead to strong resistance out of fear of being taken advantage of, ultimately resulting in the financing falling through due to the lack of basis during commercial negotiations.

In short, we recommend that entrepreneurs bring in appropriate advisers from the start, quickly familiarize themselves with the relevant rules and duly prepare in advance for areas where investors may challenge or hold doubts.

8. Are there any tax updates that PE & VC firms should be aware of?

Because during the early stages of a project PE funds are largely focused on successfully investing in the project and obtaining a favorable valuation, they do not spare much attention to the tax costs that could be incurred due to future adjustments or divestments. The lack of a prior agreement could mean neither the founders nor the investors will be willing to bear the tax costs arising from any future adjustments.

In one project we recently participated in, the investor, with a view to achieving a relatively early entry, reached certain tacit understandings with the founder at the start, permitting its shareholding percentage to decrease by appropriate means in subsequent financing rounds. Where shares need to be transferred, the taxes and levies payable by the transferor markedly increase the investment costs. Accordingly, we recommend that the tax team of the PE fund duly carry out the tax planning for the project from the outset. Even if tax isn't their area of specialty, the PE lawyers should nonetheless do their best to sufficiently bring the issue to the attention of the client.

9. What are the major concerns foreign PE clients have in doing deals in China? Are these issues improving?

Like many other foreign investors in China, foreign PE funds are concerned that changes in Chinese laws, regulations or administrative orders or their interpretations could have an impact on the outlook of their investment in China. Particularly due to uncertainties in the level of regulatory enforcement, when making decisions, a PE fund needs to consult with the authorities on the specific legal provisions and simultaneously consider the different requirements in actual practice. As another example, the Chinese government expressly specifies the sectors in which foreign investment is prohibited or restricted: if it wishes to complete an investment, a PE fund may be required to establish a parallel renminbi fund or opt for a more costly method, such as adopting a variable interest entity (VIE) structure for its project so as to realize the investment. Furthermore, given that the government maintains a relatively strict FX control regime, when designing the investment plan, the inflow and outflow of foreign currency funds must be planned in advance in light of regulations and their actual implementation.

With the increasing maturity of China's investment environment, all of these issues have witnessed a turn for the better in recent years, particularly the revision of sectors in which foreign investment is restricted or prohibited, showing the scope of restrictions to be gradually shrinking. However, we would still recommend that PE funds comprehensively consider China's legal environment and, under the recommendation of a lawyer, pay particular attention to the differences between regulations and actual practice.

1. 近期有哪些监管方面的发展影响中国私募市场？

尽管相较资本市场业务的其他领域，私募领域受到的监管相对较少，但政府部门及行业协会等仍然对该领域保有适当程度的监管。其中，中国基金业协会有关私募基金管理人的监管一直是该领域的重点事项。该领域最新的发展是中国基金业协会2016年2月5日发布的《关于进一步规范私募基金管理人登记若干事项的公告》（“2016公告”）。虽然私募投资基金管理人登记和基金备案自2014年起就开始执行，但2016公告的显著特点是对新申请私募基金管理人登记及已登记的私募基金管理人发生部分重大事项变更时，提出需要中国律师事务所出具的法律意见书这一要求。这就意味着，随着律师的介入，过往虽存有诸多不合规之处但仍可通过登记的基金管理人将面临挑战，基金管理人必须在合规上努力，以使得律师可以出具符合要求的法律意见书，而律师在准备法律意见书过程中对基金管理人提出的各项建议有助于规范基金管理人的设立、变更乃至运作。

2. 哪些中国热门领域最吸引私募投资者？

基于参与项目的经验，我们注意到2016年开始，近年来异常火暴的020类融资项目的热潮有逐渐消退的趋势，许多过去很容易融到资、项目进展速度特别迅速或多家投资人争抢的O2O项目出现了新融资困难的情况。同时，投资人面对许多过去被追捧的概念变更更加谨慎起来。

与这些形成对比的是，我们注意到，一些基于独有或优势技术而开展的项目开始得到投资人的重点关注。尽管有一些项目并不是那么令人兴奋或者眼前一亮的新鲜事物，甚至这些项目的领域历来不乏竞争者，但只要一个项目具有独特的优势技术或者具备独特的切入点，就可以凭借这种技术壁垒来吸引投资人的目光。投资人似乎对技术壁垒较低且大家都可以做的“点子”型领域需要的巨额补贴和烧钱失去了耐心，反正会转投这种基于优势技术可以以小博大的领域。尽管这些领域看似传统，但其背后不断涌现的创新技术将为其发展融入源源不断的可能性。基于此，我们认为具有优势技术的创业项目是目前乃至未来较为热点的领域，在业务实践中，这也会要求律师放弃追捧热点的概念领域而回归对传统领域的业务模式等进行深刻理解，才能更好的服务客户的需求。

3. 私募交易以何种方式融资？交易结构是否不断发生变化？

常规而言，我们注意到大部分的私募项目还是通过一个乃至多个基金对其进行股权投资的方式开展的。这一点在市场活跃且募集资金金额高涨的时刻尤其明显，因为各个投资人都手握大量款项，可用于投资。然而在所谓的“市场寒冬”时代，我们也注意到一些以往不太常见的做法变得流行起来。首先是随着投资人的谨慎行事，许多本来可第一时间以股权融资方式开展的项目变为通过可转债的方式开展，即创业项目急需资金，而投资人对于项目的一些不确定性担忧会使得其直接出钱获得股份变得困难，而希望通过借债的方式提供给创业项目资金并视未来的表现情况再进行转股。二是对于一些较为看好但又不太确定的项目，投资人并不着急一次性出完所有预期的投资款项，而是会分期分步投资，这样在保留自己进一步投资扩大份额的权利的同时，又不至于为一次错误的选择承担过大的损失。

当然，我们也听到一些少量私募公募化融资的传言，但因为其可能存在的诸多问题注定不会成为主流的融资方式。

4. 过去两年中，许多中国公司决定从美国退市，在A股市场重新上市。这一趋势是否会持续？

2015年以来，中国企业自美国证券市场退市并择机寻求在国内上市开始变得火暴，这与2015年上半年A股市场的异常发展非常相关。基于我们此前参与的类似项目的经验，我们认为主要有三个因素导致越来越多的中国企业选择回国内资本市场：一是示范效应明显，本所主办的“暴风影音”项目多日连拉涨停使得海外上市的中国企业看到了A股市场的巨大潜力；二是海外监管挑战巨大，除政府机关外，非常有经验的专业人士频繁的对中国企业提起的诉讼和挑战也使得中国企业的股价受到较大影响；三是国内资本市场的火暴也使得国内投资人容易募集大量的资金，可以使得其非常有底气以数倍于海外资本市场的高溢价将中国企业拉回国内。

但是，随着今年上半年以来有关“战新版”推出遥遥无期、监管部门对“壳资源”持有越来越严格的监管态度等事态的出现，我们认为中国企业自美国证券市场退市并择机寻求在国内上市这一热度将明显消退乃至终止停滞，近一段时间以来对数家在美国上市的中国企业的私有化要约被撤回也可以说明这个问题。

5. 近期法规加大了境外收购融资的难度。中国企业如何绕开这一限制？

我们注意到2016年上半年以来，各地外管部门对于个人或企业对外投资行为涉及的换汇、购汇乃至汇出事宜提高了监管要求。外管部门对于境外投资项目的真实性、合法性乃至合理性都提出了更高的审查标准。根据网络上的新闻报道，有一些地方的外管部门对于个人或者合伙企业的对外投资项目予以暂停受理换汇，对于法人企业的较大额投资换汇需求通常需要面谈处理。

中国企业面临前述困难通常考虑的解决方案主要有两种：一是对于本来就真实存在的投资于境外企业（非涉及返程投资）的项目，需耐心对项目的合理性等事宜向监管部门提供足够的解释，通常会获得监管部门的放行；二是对于涉及返程投资（即钱出去以后投回境内）的项目，尝试采用替代性的交易结构，如境内投资人无需将钱汇出而直接投资于境内层面并取得境外股份的方式进行。

我们认为前述面临的困难有助于筛查打着境外投资的幌子实则换汇出境的虚假项目，长远看应更有助帮助更多的真实项目顺利进行。

6. 中国风投市场最主要的趋势是什么？

这个趋势我们作为参与私募融资项目法律链条的律师可能无法代为回答。但就我们参与项目的感受而言，除了上面提及的有技术壁垒的项目可能会越来越吸引投资人的目光，从合规监管方面考虑，从事的业务明晰、法律合规属性明确的项目可能会更吸引投资人的青睐。这就意味着，自项目的非常早期阶段，包括律师在内的专业人士的参与将十分重要，一家各方面井井有条的公司应该会更让投资人感觉放心。

同时，随着几年下来众多投资项目的退出压力增大，相信市场对于既有项目的处理也会变得越发谨慎，此时如同企业最终走向上市之前一样，专业人士的参与将变得更加重要，毕竟此时对于各方的要求都比项目初创时更高一些，也就意味着更专业的人士将有更多机会协助处理项目。

7. 哪些热门领域最吸引风投投资者？初创企业要获得资金面临着哪些挑战？

第一题前文已经回答过。

从法律人士专业角度而言，我们觉得至少有如下三点重要的挑战使得许多初创企业的融资面临困境：第一是初创企业设立的过于仓促，未有为创始人乃至未来陆续融资预留足够空间及保留适当架构上的灵活性，后续融资时需要进行的各种调整会产生较高的时间和经济成本；二是许多初创企业一开始仅顾业务而忽略了合规方面的考虑，使得投资人进入时合规成本较高影响投资人投资的信心；即使投资人进入后，长远看不合规还会影响后续的融资乃至上市操作；三是企业对于投资人惯常主张的权利和条件准备不足，很容易由于特别担心吃亏而非常抗拒，导致最终双方缺乏商业谈判的基础而融资破裂。总体上说，我们依然建议创业者在创业之初就引入适当的顾问，尽快熟悉相关规则，并为投资人可能质疑或者挑战的地方提前做好准备。

8. 私募和风投机构需要了解哪些税务方面的最新动态？

在项目的早期阶段，因为私募基金的工作重点是放在成功投入项目及争取到较为优惠的估值，对于未来的调整乃至退出等可能产生的税务成本等并不是十分在意。这样就会造成一种局面：因为缺乏事先约定，未来的任何调整产生的税务成本往往创始人和投资人都不愿意承担。我们最近参与的一些项目中，投资人一开始为了较早进入而跟创始人达成了一些默契，允许在后续融资中自己的持股比例以适当的方式降低。在需要转股的情况下，作为出让方所要缴纳的税费会显著提高投资成本。因此，我们建议私募基金的税务团队从一开始就做好项目的税务筹划，作为项目的参与方，尽管税务领域并非私募律师的专场，但也应该尽可能多给客户足够的提示。

9. 外国私募客户在中国开展交易有哪些主要顾虑？这些问题是否有所改善？

如同其他外国投资者向中国投资时都会顾虑的，中国法律、法规及行政指令或其解释发生变化都可能对其在中国的投资前景产生影响，特别是因为在法规执行层面时常存在不确定性，需要私募基金在作出决策时既要参考法规明文规定，又要考虑主管政府部门在实际操作中的不同要求。又如，中国政府明确规定了禁止或限制外资进入的领域；如希望完成投资，私募基金可能需要设立人民币平行基金或对投资项目采取协议控制架构等成本更高的方式实现投资。另外，鉴于中国政府对外汇实行较为严格的管理方式，在设计投资方案时，外币资金的流入流出都需要在结合法规和实际执行的前提下提前规划。

随着中国投资环境的日渐成熟，前述提及问题在最近几年都有所好转，特别是中国政府在近年内数次调整限制或禁止外资进入的领域，限制范围呈逐渐缩小的趋势；而我们仍然建议，私募基金应当全面考虑中国的法律环境，在律师的建议下，对法规规定和实际操作方式的区别予以重点关注。