Why does the mature equity market not have "betting the farm" gambling?

Professor Wei Zhang of Singapore Management University (many know him better by his pen name 'Qingcheng Jun') has a widely circulated opinion: the valuation adjustment mechanism (VAM) is a purely domestic product, not found abroad, at least not in the United States.

He wrote two widely read articles, one titled "No VAM in Silicon Valley" and the other "No VAM on Wall Street."

Silicon Valley, the birthplace of venture capital, does not use it, nor does Wall Street, the center of M&A activity.

This is a fact worth pondering. Silicon Valley and Wall Street are the places on this planet that most believe in the market and respect contractual freedom. Why is there no VAM?

In theory, whatever protection investors want, as long as the other party agrees to sign, the law generally upholds it.

Yet it is precisely in these two places that VAMs cannot grow, especially not the most striking feature of the Chinese-style VAM: requiring founders to use personal assets to guarantee investors' principal and returns.

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