Ant Financial Services Group, Alibaba’s financial affiliate, has launched a beta version of their long-awaited online equity crowdfunding platform, ANTSDAQ.
ANTSDAQ has set limits for investors to meet Chinese financial regulations in line with other local equity crowdfunding sites.
Participants are required to have financial assets of at least RMB1 million ( US$170,000) and have earned no less than 300,000 RMB ( US$48,000) in annual average income for the last three years. The company has developed an internal system to assess potential investors.
Projects are required to be registered customers of Alipay for enterprise, and investors need to be registered users of Alipay’s payment service as well as Yu’ebao, the money market fund available on Alipay. The platform currently doesn’t charge investors any fees.
Currently the site features four startups, Jiemo, a supply chain finance platform, Renren Xiang, a restaurant chain, Lyan Coffee, a coffee delivery company, and Zero Carbon Technology, which produces energy-efficient appliances. The companies are intending to raise between RMB 13 million and RMB27 million each ($2-4.2 million USD). Initial fundraising campaigns will launch next week and run until the end of December.
Investment roadshows will take place in the coming weeks on Dingtalk, also known as Dingding, the team collaboration app developed by Alibaba.
Ant Financial, formerly part of Alibaba Group, has been making online loans to small and medium-sized merchants within its e-commerce marketplaces as well as through other channels. Ant Financial made a strategic investment in 36Kr this October, which operates a startup database and their own equity crowdfunding platform.
The Development Of Equity Crowdfunding In China
The Securities Association of China issued draft rules on online equity crowdfunding in late 2014, requiring them to put a limit on investors’ financial assets and annual average income. According to the existing financial regulations, no more than 200 individual shareholders are allowed to invest in a company.
Ant Financial is one of the first three, together JD.com’s finance arm and Ping An’s consumer loan company, that has been approved by Chinese authorities to operate an official equity crowdfunding platform.
JD’s Dongjia was launched in March this year, with every round of funding on the platform led by a professional investor. It also has set limits on participants’ annual income and financial assets. Ping An unveiled its Qianhai CrowdFunding in April this year, adopting a model similar to JD’s.
AngelList-like equity crowdfunding platforms have been operating in droves on the mainland even before the regulations were issued. A total of 1 billion RMB (about US$166mn) was raised from more than 3000 transactions through Chinese equity crowdfunding sites in 2014, according to a report by venture capital firm Zero2IPO. More than a dozen equity crowdfunding sites were launched in the first half of 2015.
ZhenFund, the early-stage venture capital firm, launched Zhen Shares (Zhen Gu in Chinese) in June this year. The platform helps startups that have received angel funding from ZhenFund to raise money from their core users. Its first project was an online fitness community that raised more than RMB117,000 (about US$19,000) from selected users (source in Chinese).
There’re some other variations in online equity crowdfunding in China. VC.cn (formerly Chuangtouquan), founded in 2011, doesn’t consider itself a crowdfunding site. However the only major difference it has from other equity crowdfunding platforms is it only accepts experienced angel investors.
The company charged startups for services including financial advice before July 2014. It then decided to make returns by investing in projects with their own money. More than 150 projects on its platform have raised a total of over 200 million RMB as of July 2014, according to the company.
image credit: Ant Financial, Shutterstock