Equity Incentives and Debt Financing for AI Companies in China: Where the Two Decisions Collide
An option pool and a bank facility are usually negotiated by different people at different times, yet both run through the same cap table. This article sets out how Chinese AI companies size and paper an ESOP, when the tax deferral under Caishui [2016] No. 101 applies and where it fails, what lenders actually diligence in a debt financing, and the three points where the two instruments collide.