The Relationship Between Financing And Internal Governance In Enterprise Life Cycle

In the context of supply-side reform,economic structural adjustment and the prosperous development of venture capital,start-ups based on mobile Internet,biotechnology,new materials and other technologies have injected new vitality into the Chinese economy.In the development process of start-ups,there are also many problems exposed.The most prominent one is that the enterprise,with the pursuit of capital,obtains huge amount of financing and valuation,but loses its competitiveness and first-mode-advantage due to the internal forces pulling and managing each other,and finally fails.The most typical examples are OFO and Panda Live.In the face of this situation,the author wants to help enterprises take into account both financing and internal governance in the development process by studying the relationship between financing and corporate internal governance in the process of enterprise development.Taking New Classic Media as an example,the author divided its 12-year development process into three periods: baby,youth and peak years,analyzed the financing and internal governance of enterprises in different periods,and combined with theories for analysis.The author finds that in the early stage of development,the financing constraints of enterprises are large and flexible,and the financing behavior of enterprises will affect the internal governance of enterprises.With the development of enterprises into the growth stage,enterprises will choose to go public in order to obtain more funds.At this time,the importance of corporate internal governance becomes prominent.The chaos of internal governance will affect the financing constraints of enterprises and thus restrict their financing behaviors.Therefore,the author believes that the founding team should take into account the internal governance of the enterprise when financing,and add more constraints on internal governance to the financing agreement.Secondly,internal governance should be improved in the initial stage of the enterprise.Only in this way,can the team take into account the interests of all parties when making financing decisions,avoid agency problems,and at the same time eliminate potential internal governance risks in the future.