JP Gan（甘剑平）, Founding Partner of INCE Capital, shared views in an interview with The Wall Street Journal. Some of his comments appeared in “Coffee’s for Closers: How a Short Seller’s Warning Helped Take Down Luckin Coffee” in the Journal:
Ultimately, it is difficult for even the most sophisticated investors to avoid falling prey to a publicly listed company that is determined to cheat, said J.P. Gan, a Chinese venture investor and founding partner of Shanghai-based INCE Capital.
“The basic principle of capital markets is trust. The default assumption is everyone is good because the bad apples have been screened out, or it won’t be listed,” he said.
In the interview, JP also shared with the Journal on how investors should conduct due diligence: investors need to have a well-developed industry network, experience and industry insight, assess whether the founding team of the invested enterprise has sufficient knowledge and resources in its industry, and its reputation in the industry is very important; It is necessary to conduct a comprehensive background survey; the research should be conducted through professional third party organizations, such as accounting firms, law firms, consulting firms, etc.; whether you are acting as the lead investor or co-investor, the level of due diligence should not be different; before issuing the Term Sheet, background surveys should be completed. Whether investors are professional or insightful often depends on these dimensions. JP believes that there’s always a chance of idiosyncratic cases, but the mission of excellent investors and investment companies is to try their best to avoid such risks.
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