Bet-on Agreement in Chinese Venture Capital Market
For various reasons, China’s distinctive venture capital market has uncommon legal instruments. One such instrument is the Valuation Adjustment Mechanism (VAM), which permits to formalize the relationship between venture capital investor, target company and its founder, so that the financial performance of the company would provide additional benefits to the investor or founder.

As a rule, such agreements are generally implemented in three forms:

  • payment of monetary compensation;

  • payment of equity compensation;

  • taking over the control over the board of directors.

The payment of compensation by the founder to the investor or vice versa may be subject to various conditions, including:

  • financial performance (e.g. EBITDA margin);

  • non-financial data (e.g., product quality metrics);

  • certain events (e.g. IPO).

For more information about the VAM agreements and issues related to their practical implementation, please refer to the cards below.
Read also
04/2/2025
The Singapore International Arbitration Centre (SIAC) has accepted over 1,000 cases for consideration in the last two years. This venue is popular due to its fast and high-quality administration, reasonable cost, and high reliability of decisions. Most cases are international disputes.
03/28/2025
On March 27th, KKMP Counsel Dmitry Raev spoke at the conference Modern Offices: From Space to Efficiency, organized by the Administrative Director magazine.
03/26/2025
On March 25, KKMP Senior Associate Elena Klutchareva spoke at the XII Moscow Innovation Legal Forum during the session Responsibility of Managers and Founders of Business.