In VAM agreements, financing enterprises are often in a weak position and bear higher risks than investors, so enterprises should treat VAM agreements rationally and should not blindly sign VAM agreements with capital institutions in order to obtain financial support. In order to effectively control the risks of VAM agreements, financing enterprises can adopt the following countermeasures.

(1) In-depth analysis of its own development strategy.

Enterprises should have an in-depth understanding of their own development strategies, be able to systematically plan for future development, make more scientific and reasonable financing decisions on this basis, make full use of financial resources, and avoid blind financing.

(2) Rational analysis of the company's own development capabilities.

Scientifically assess the advantages and disadvantages of the enterprise, clarify its own development capabilities, and determine whether it has the ability to fulfill the conditions agreed in the VAM agreement.

(3) Reasonably set the exercise criteria and bargaining chips for the VAM agreement.

Conduct in-depth communication with investors, formulate fair and reasonable exercise standards based on the basic principles of mutual benefit and win-win cooperation, and set VAM chips on the premise that it will not affect the normal operation of the enterprise.

(4) Flexibly set the stop-loss clause of the VAM agreement.

In the era of mobile Internet, where new things are emerging, the uncertainty of the future increases significantly, and regulatory policies may also change, resulting in the eventual inability of the enterprise to complete the VAM. In order to avoid major losses as a result, the financier can enter into a stop-loss clause with the investor to ensure that the company can continue to survive in the event of an emergency.

(5) Formulate a plan to deal with risks.

VAMs are inherently risky, and financing companies should have a correct understanding of their risks, understand their destructive power, list various possible scenarios, and formulate corresponding response strategies.

VAM agreements are like a double-edged sword, and when used properly, they can achieve win-win cooperation between investment and financing, and vice versa, a lose-lose situation will be formed. In the process of signing a VAM agreement with an investor, the financing enterprise and the investor should unify their interests and give full play to the positive role of the financing agreement in locking in risks and motivating the management of the financing enterprise, so that the financing enterprise can achieve sustained and stable growth and ultimately achieve win-win cooperation.

Corporate Finance: Equity Financing× Debt Financing× IPO Listing × M&A Financing2.6.4 Strategies for Dealing with VAM Risks is in hand, please wait a moment,

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