This case describes the background to an upcoming negotiation between a Chinese social entrepreneur (Jamie Zheng) and a venture capitalist (Chris Liu). Case (A) describes the situation from Jamie’s point of view trying to get a first-round investment to make Smart Health, founded by Jamie, grow better. Jamie’s corporate purpose, however, includes not only the pursuit of profit, but also the desire to make a difference in society by making life easier for older people. This presents a potential conflict as Jamie’s social purpose can hamper the company’s commitment to the pursuit of profit. After negotiations with five investors, Jamie was still unable to reach an agreement, especially since the social goal of smart health is an important prerequisite for future development. However, Jamie is optimistic about this meeting with Chris, as Jamie believes that Chris shares the same vision and understands the uniqueness of Smart Health as a social enterprise. Case (B) is Chris’s perspective, who personally likes Jamie’s idea of helping the elderly. However, as a traditional venture capitalist and broker at XYZ Capital, Chris knows the importance of investing in companies based on their potential returns. Therefore, Chris must ensure a strong return on investment that includes some control over how the company makes financial decisions going forward. Students are asked to play Jamie or Chris and negotiate how to reach an agreement on the potential investment of the venture capital company in smart health and what level of control the venture capital company should have over smart health to ensure that you meet your financial obligations. You have to haggle on a topic, social purpose. The key question for this negotiation is: how do you reach an agreement when there is more than just a financial incentive? How do you negotiate when the corporate purpose of the company is one of the issues?
Byron Lee, Liman Zhao
Byron Lee, Liman Zhao
China Europe International Business School (CB0001-PDF-ENG)
August 10, 2020
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