"For your future career, don't fight the company..."

PatPat, a cross-border e-commerce company for mothers and infants, has been in the limelight recently, having successfully completed its C, D, and D+ rounds of financing and made a profit of US$670 million.

When the good news of PatPat's successful financing came out , Liu Mingguang, a former senior executive of PatPat, broke the news to Yien.com that the founder of PatPat was "fishing for law enforcement" in order to get himself out of the game after successfully helping the company raise $670 million and making significant contributions to the company ...

After helping PatPat raise $670 million, executives were accused of "leaking company secrets"

The following are the detailed revelations made by Liu Mingguang to Yien.net.

Liu Mingguang stated that on July 1, 2020, he joined Shenzhen Yingfusi Technology Co., Ltd. (PatPat) as vice president of supply chain. The conditions for joining the company were an annual salary of xxx million after tax plus 1% of the company's equity, and the 1% equity was exercisable over 4 years.

The picture shows part of the Equity Transfer Agreement

The condition for obtaining equity is that one must not violate laws and regulations, have no major faults, and be able to create benefits for the company during his tenure at PatPat .  

In terms of creating benefits for the company, Liu Mingguang said that as a member of the company's core partnership team, he successfully assisted PatPat in completing its C, D, and D+ rounds of financing from the second half of 2020 to the first half of 2021, earning a profit of US$670 million. "Because investors are currently paying close attention to the supply chain of cross-border e-commerce, and I have rich experience in this area, it is very important for me to support the company in this area when raising funds."

After helping the company achieve significant results, Liu Mingguang said that at this time, PatPat's CEO Wang Can arranged for him to take a three-month paid leave on the grounds of "leaking company secrets" and "pressure from investors."  

According to Liu Mingguang, on June 7, 2021, when part of the company's equity commitment was about to be "exercised", the company's CEO Wang Can suddenly came to talk and said: "There is pressure from the capital side, because you are suspected of seriously leaking relevant company secrets in an industry information interview arranged by a consulting agency on June 3, 2021, and you need to leave the company immediately."

"I was very confused and bewildered when I heard this wording," Liu Mingguang told Yien.com. He later verified from many sources that, as a rule, investors would not use this as evidence to force the company they invested in to remove a core management member. But on the day Wang Can came to talk, Liu Mingguang said that he did not know about this matter. At the same time, based on the attitude of trusting the other party, he and Wang Can agreed to compromise and reached a certain consensus: he would take a three-month paid leave first.

The so-called capital party turned out to be the company's core supplier

According to Liu Mingguang's own account, he thought it was just a minor incident at work, but the subsequent development of the matter was far from as simple as he had imagined.

Liu Mingguang said that the day after he started his vacation, the company's CEO Wang Can made major adjustments to the organizational structure within the company and the supply chain, requiring everyone to start reporting directly to him. On June 18, 2021, Wang Can suddenly sent another message saying that investors were looking for trouble with him again, and for the first time revealed that he was going to "sue" himself for this.

"At this time, I really felt that this matter might not be that simple, so I mobilized the help of friends in the industry and consulting circles." As a result, I discovered a shocking "truth". "It turned out that the client who commissioned the consulting company to interview me on June 3, 2021 was not the capital party mentioned by Wang Can, but the core supplier of PatPat."

Liu Mingguang said that after learning about this, he immediately called the boss of the supplier and asked him why he set up a trap to "harm" him. However, the boss of the supplier said that although the company was under his name, it had actually been handed over to PatPat company for actual operation a long time ago, and he had no idea about these specific company matters.

After talking with the supplier, Liu Mingguang admitted that he felt incredible: "PatPat actually resorted to sting operations to recover the 1% of shares that it had promised and confirmed with black and white signatures. The purpose was to try to kick out a core executive who had worked diligently and conscientiously for the company and achieved certain results within a year."

According to Liu Mingguang's own account, the company did much more than that in order to get him out with a clean slate and resign voluntarily.

During the three-month vacation , Wang Can arranged for the head of the company's supervisory department to conduct a comprehensive investigation of him and the supply chain team. By visiting suppliers, interviewing subordinates, investigating colleagues in related departments, etc., he collected and listed evidence that could be used as a basis to fire him.

However, in the end, nothing was achieved.  

During this period, the head of a department of the company also persuaded him to resign voluntarily, and made it clear that the "equity grant agreement" signed and stamped by the company's CEO Wang Can was invalid because "the company can find any reason to take back the shares for free..." and " considering your future career, don't confront the company ... "

Having received the notice of termination of labor relations, Liu Mingguang said he is actively defending his rights

Liu Mingguang told Yien.com that in August this year, he finally received a "Notice of Termination of Labor Relations" from PatPat:

The termination notice stated that Liu Mingguang used the information, experience, resources or position he gained while working at PatPat to accept paid consulting services on a certain platform and seek personal gain in external affairs unrelated to the company, seriously violating the company's "conflict of interest" related systems and regulations (including the company's promulgated (PatPat Management Ten Red Lines) and the "Anti-Corruption Regulations").

"Although I felt like a target had fallen from my chest when I received the termination notice, it was still incredible to see that I was eventually kicked out by the company for such a casual reason."

Liu Mingguang told Ennet that the termination notice stated that he had accepted paid consultation on a certain platform. He had indeed been interviewed by the platform before, and the company knew about it and did not raise any objections. And when accepting industry consultation, he never involved any commercial secrets or operating information of PatPat, and simply made comments on the general industry status of the clothing supply chain.  

Liu Mingguang also said that the "Ten Red Lines of PatPat Management" and "Anti-Corruption Regulations" mentioned in the "Notice of Termination of Labor Relations" were all formulated after his vacation, which was equivalent to the company using the newly formulated system to apply previous things.  

"This termination is for the sake of termination, and the real intention is obvious," Liu Mingguang said. Regarding the labor dispute, he will file a complaint with the relevant national human resources management authorities.

Regarding what Liu Mingguang said, Yien.com asked PatPat to verify whether it was true. The editor added PatPat CEO Wang Can and his company employees on WeChat, but none of them were accepted. The editor also tried to call Wang Can and the company employees, but no one answered Wang Can's call. After the editor got through to the relevant employee's call, the other party hung up the phone just after he introduced himself and before he could explain his purpose. When he called again, he could not get through.

Yien.com just hopes to get a response from PatPat to verify whether what Liu Mingguang said is true, but as of press time, PatPat has not responded or made any statement on this matter.

PatPat raised $670 million in financing within one month , with a valuation of $3 billion

I believe that most of the industry’s attention to PatPat started on July 19, when it successfully completed US$510 million (about RMB 3.3 billion) in Series C and Series D financing. This financing is the largest single financing amount disclosed in the domestic cross-border e-commerce industry, shocking the industry.

What was unexpected was that only one month later, on August 17, PatPat announced that it had completed a US$160 million D2 round of financing exclusively invested by SoftBank Vision Fund.

After two more rounds of financing, PatPat's valuation has risen from US$700 million last year to US$3 billion, and some people have even called for a high price of US$5 billion.

At this time, PatPat kicked Liu Mingguang out, which really makes people think of the phrase "killing the donkey after it has done its work".

"According to the agreement, from July 1 last year to July 1 this year, I can exercise 0.25%," said Liu Mingguang.

PatPat was officially established in Silicon Valley, USA in 2014, and has now won the favor of consumers from more than 100 countries and regions around the world. In the United States, PatPat has become the first in the user recommendation index and is the preferred brand for American consumers to shop.

With capital strength as its background, PatPat plans to complete the strategic expansion of the global children's clothing market in the next 3 to 5 years and gain global influence as a consumer brand.

If everything goes well, PatPat's future will be defined by money, and owning shares means the right to profit distribution and dividends.

It is reported that in order to protect his rights, Liu Mingguang has filed a lawsuit with the Nanshan District Court regarding equity issues, and the case has been filed online.  

Beware of the bubble of independent websites behind the crazy pursuit of capital

Capital will flow to where good business is. There is no doubt that cross-border e-commerce is currently recognized as a good business by capital, and capital has flocked to it in recent years.  

Independent websites, in particular, have been particularly favored by capital since last year. Whether it is the unnamed project that has received $30 million in financing, or PatPat's $510 million, the largest single financing amount disclosed in the industry, we can see that capital is crazy about this cross-border independent website track.

However, in Liu Mingguang's opinion, there is a big bubble in today's independent websites.  

According to news, after the latest round of financing, the valuation of cross-border e-commerce unicorn SHEIN has exceeded 300 billion yuan. With such a good example, investors have too many fantasies about independent websites.

"SHEIN painted a big picture for investors in the past, making them think that independent sites could achieve such a scale. But now investing in SHEIN is either impossible or very expensive, so they have turned their attention to other independent site projects," said Liu Mingguang.

He said that projects like PatPat and SHEIN are only a minority after all. In many cases, the GMV of those independent station projects themselves is not that large, and the temporary conditions cannot make it that large, but their valuations are very large.

At the same time, most of the independent station projects that are constantly raising funds or going public or constantly raising funds have capital advantages, but not necessarily advantages of the projects themselves.  

Recently, due to Amazon's large-scale account suspension, sellers' enthusiasm for transforming to independent websites has been very high. In addition, independent website projects have frequently received financing, and their emotions are unprecedented. Therefore, the editor reminds sellers that at this time, they must remain rational and sort out their own advantages before entering the market.