Ma Chao, CTO of InnoTREE, shows the company's new product to cash in options. [Photo/GMW]
On the afternoon of January 17th, Inno way, a famous street in Zhongguancun, was in the doldrums. In contrast, there’s a constant stream of visitors in front of the No.2 Building. InnoTREE, an Internet-based equity financing and investment service provider, is holding a meeting about its new product to cash in options.
For investors and businesspeople, this information is quite a sensation. Can options be cashed in?
Options overthrow the traditional relationship between bosses and workers--- from employment to partnership.
Lei Jun, CEO of Xiaomi, China's second-largest smartphone maker, said companies are not seeking employees but partners. Partners are both risk-holders and interest sharers. Employees who join start-ups usually take big risks and huge pressure but receive very low returns. Options, serve as economic compensation for cooperation. It helps the staff and companies stay close with each other. This relationship---coexistence and co-prosperity---brings about higher willingness to work and lower human costs, and thus, makes it easier to survive and grow. In this sense, options are the wings of start-up companies and a financial instrument which contributes to future growth.
In China, the exercise period usually takes three to five years, in which employees put in huge chance and opportunity costs. Since employees spend time and opportunities, they enjoy freedom to transfer income and in conformity with the law.
Personal investment usually misses golden opportunities. However, employees with start-ups often wish to improve their lives. So cashing options in is a rigid demand, which may run ahead of existing rules and regulations. It is an improvement of the status quo from the market side.
Although options are a form of economic compensation to the employees, it is hard to put them into practice. Cashing in options, in contrast, changes the situation and it improves the credibility of start-up companies.
Teng Fang, founder of InnoTREE, said that he was not afraid to be the first mover but he would never break the law. In the future, InnoTREE will come up with more financial products catering to the market and clients. And they will lower the risks and the threshold to participate and make the first class equity market more effective and efficient.
