China’s JD.com to launch equity crowdfunding platform
Chinese online retailer JD.com has launched an equity crowdfunding platform through which local entrepreneurs can raise capital from potential early-stage investors.
As opposed to a reward-based system - in which investors receive a small reward by supporting projects or businesses on the crowdfunding platform - an equity-based system actually allows investors to take a slice of equity in start-ups.
The new JD Equity Crowdfunding platform will help to create an ecosystem supporting start-ups through the online sales stages of development, according to a statement.
They will participate in training courses run by seasoned investors and entrepreneurs. Each project will be led by a professional investment manager from a VC firm or a company with similar experience. That person will be responsible for ensuring clear and transparent communications between investors and the companies raising funds. Start-ups will also be pre-screened.
JD will take a small equity stake in the projects successfully raise capital. Capital Today, ZhenFund and Sequoia Capital are among the VC firms that will help develop the ecosystem.
There are 11 companies in the first batch to feature on JD Equity Crowdfunding. They include Thunderobot, a laptop used for playing games; Fastwheel, a transportation devices maker; and WeBuzz, a social media company.
"The launch of JD Equity Crowdfunding marks a major step forward in JD.com's vision of providing a wider range of fundraising options than have traditionally been available to China's entrepreneurs," said Shengqiang Chen, CEO of JD Finance. "We are dedicated to developing an ecosystem that ensures China's most innovative entrepreneurs have access to the support they need for success, from early fundraising and training, to an outstanding national e-commerce distribution network."
Last July JD launched a reward-based crowdfunding platform, JD Coufenzi, that has so far helped start-ups raise more than RMB280 million. The e-commerce site claims to be the largest crowdfunding platform in China, contributing about a third of all money raised through such platforms.
Crowdfunding has been gaining traction in China. In December last year, the Securities Association of China (SAT) published draft regulations for the industry. In order to qualify as an accredited investor, an individual must the following criteria: invest at least RMB1 million ($161,310) in a single project; have net assets of RMB10 million; have financial net assets of at least RMB3 million or an average annual income of RMB500,000 for the past three years.
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