Having failed to raise further venture capital, Make.V, a startup on online content production and distribution, turned to Taobao to sell its stake which is priced at 120 Yuan for every 100 shares. Surprisingly, within a month, 1191 individuals bought a total of 680 thousand shares that amount to 816 thousand Yuan.

This is, actually, the second time Make.V sold shares on Taobao. The first round happened in last October, totaling the funding to 1.2 million Yuan for 6% of the company. Make.V would, based on contracts, will hold the shares for thus many investors and pay dividends accordingly.

It’s a common practice to raise private money; however, when it is posted somewhere online like on Taobao, it becomes a public offering. It is illegal for a company like Make.V to have so many investors, according to Chinese regulations. In China the number of shareholders a limited liability company has cannot be more than fifty. A private joint stock company has to limit the shareholder number to 200.

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Tracey Xiang

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com