China’s venture market runs on “equity in name, debt in substance” and 2%–5% FA fees

deedydas · x · 2026-07-29

The post highlights two quirks of China’s venture ecosystem from a linked article.

“明股实债” is described as equity in name but debt in substance, where founders take personal liability and must return capital within a 6–8 year horizon to satisfy investors’ hurdle rates.
FA intermediaries broker startup–VC deals for a 2%–5% fee, providing “relationship liquidity” in a market where cold inbound is rare and introductions happen through WeChat groups.

The author says the article’s author, Bohan, has strong knowledge of China’s ecosystem and is worth reading.

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