【Entrepreneurial Incentive Trust – Rational Support for Youthful Dreams】

Mr. Zhao, a shareholder in an internet company, has a 24-year-old son passionate about entrepreneurship but repeatedly facing setbacks. He wishes to support his son's pursuit of dreams but worries that blind financial support may encourage a speculative mindset. To balance support with risk control, he establishes an Entrepreneurial Incentive Trust.

He injects 5 million yuan in cash and part of his equity income into the trust, instructing the trustee to strictly enforce the funding rules. His son must first submit a comprehensive business plan, which will be evaluated by a third-party professional agency. Only if the project is deemed viable will he receive the initial seed funding.

If the business reaches predetermined revenue targets during its operational phase, the trust will unlock the next round of funding as agreed. However, if the venture incurs losses for two consecutive years, financial support will be suspended.

To mitigate entrepreneurial risk, the trust includes a fallback provision: if the project fails, the son can apply for a study abroad stipend to pursue a business degree. After gaining further expertise, he may resubmit his startup proposal. Additionally, the trustee appoints industry experts to regularly track the project’s progress, provide strategic advice, and ensure proper fund utilization.

Mr. Zhao Uses a Family Trust to Instill Responsibility and Business Acumen

• A "performance-based funding" model replaces unconditional financial gifts, encouraging a rational approach to entrepreneurship.
• Third-party evaluations reduce subjective decision-making risks and prevent family ties from interfering with business judgment.
• The educational compensation clause provides a safety net for failure, reinforcing the value of "wealth must align with capability."