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[The sluggish domestic and overseas listing environment has increased the difficulty of exiting. The expiring of funds that were established intensively has pushed investment institutions to their limits. After the high-priced fundraising of start-ups and investors bidding up for projects in the primary market, the valuation has continued to shrink in recent years, resulting in "price inversion", which has also become the direct reason why the industry has difficulty in introducing new financing or finding mergers and acquisitions.]

[Among the IPO projects accepted by the Shanghai and Shenzhen Stock Exchanges in 2023, about 65% of the companies have set up repurchase clauses in the agreements. Among startups that have not yet submitted applications, this proportion may be even higher.]

Many entrepreneurs are currently facing a "lose-lose" dilemma: choosing to fulfill the contract and then go bankrupt, or to openly default and be eliminated by the market. Whether they can survive this repurchase crisis will also determine whether enterprises or investment institutions can stay at the table.

"Based on the universal use of repurchase clauses, it may not be an exaggeration to say that tens of thousands of startups are facing repurchases." The latest "VC/PE Fund Repurchase and Exit Analysis Report" released by Shanghai Lifeng Law Firm recently shows that among the IPO projects accepted by the Shanghai and Shenzhen Stock Exchanges in 2023, about 65% of the companies have set repurchase clauses in the agreement. Recently, with the expiration of funds and unsuccessful exit, the repurchase clauses of a large number of companies have been triggered.

Where does this widespread "buyback crisis" come from? And how should companies and investors respond?

Yicai Global's interviews with multiple parties found that the sluggish listing environment at home and abroad has made exits more difficult. The expiration of funds that were previously established in large numbers has pushed investment institutions to their limits. After the primary market experienced high-priced fundraising by start-ups and investors bidding up prices to grab projects, valuations have continued to shrink in recent years, leading to "price inversion", which has also become a direct reason why the industry has difficulty introducing new financing or finding mergers and acquisitions.