Core Viewpoint - The "betting and repurchase dilemma" between investors and entrepreneurs in the primary market has become increasingly challenging, with new judicial interpretations expected to clarify rules regarding equity repurchase agreements and their implications for both parties [1][5]. Group 1: Judicial Interpretation and Regulations - The recent draft interpretation by the Supreme People's Court addresses frequent disputes over equity repurchase agreements, introducing specific rules for repurchase types, including conditional repurchase, conditional and optional repurchase, and time-limited repurchase [1][2]. - The draft also standardizes litigation procedures, requiring the target company to be added as a third party in lawsuits related to equity repurchase, ensuring that all relevant parties are included in the legal process [2]. - New provisions allow investors to request the auction or sale of shares if the repurchase obligation party lacks sufficient assets, enabling investors to recover their investments [2]. Group 2: Impact on VC/PE Institutions - The judicial interpretation aligns with existing industry practices, providing a legal framework for operations that were previously based on customary agreements [3]. - Data indicates that equity repurchase remains a significant exit strategy for investment institutions, with a reported 17.46% decrease in repurchase events in the first ten months of 2025 compared to the same period in 2024, although institutional participation has increased significantly [3]. - Some venture capital firms are exploring more flexible repurchase terms, such as a "two-year assessment" mechanism, which allows for valuation adjustments and potential repurchase if performance targets are not met [3][4]. Group 3: Innovative Solutions and Future Outlook - New models have emerged, such as replacing original repurchase obligations with equity from newly established companies by founders, which has received approval from state-owned LPs, alleviating pressure on entrepreneurs while preserving potential returns for investors [4]. - Investors express a willingness to provide more leeway to entrepreneurs who demonstrate diligence and lack moral hazard, indicating a shift towards a more supportive investment environment [4]. - The long-term resolution of the betting and repurchase dilemma will depend on the venture capital industry finding a balance between risk control and innovative flexibility, which will be a central theme for future industry development [5].