Wow, quite a riveting story.<p>Frankly, I don't know that the guys did anything particularly wrong along the way. It was a series of small things, and at each one, I'm sure they were telling themselves "well, it's not a major deal, we've come too far..." etc. I've been in similar situations before.<p>The things I keep in mind when fund-raising:<p>1. The deal is not done until the money is in <i>your</i> bank account.<p>2. There's no such thing as a "formality". If there's a step in the process, there's a step in the process. It's almost always possible for something to go wrong at any step.<p>3. Signed term-sheets are tricky. Once signed, there's usually a "no-shop" clause (so you have to halt conversations with other investors). Along side that, the termsheet is non-binding. So essentially, the investor can back-out if they want.<p>4. Not sure how it's done in China, but here, if the first version of a contract does not match the terms in the termsheet, I'd push back hard and fast. That's not the deal that was agreed to.