Chinese venture capitalists are using redemption rights clauses to hound failed founders for repayment, leading to asset seizures and placement on a national debtor blacklist, hindering their ability to start new businesses. With over 80% of Chinese venture deals including redemption provisions, founders face severe consequences for failing to meet set targets. The absence of personal bankruptcy laws in China exacerbates the situation, leaving many entrepreneurs trapped in debt and facing legal actions from investors seeking to recoup their investments.
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