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July 31, 2014

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Equity-based crowdfunding soars

CHINA’S crowdfunding sector saw rapid growth in the first half with cash raised via equity-based crowdfunding skyrocketing in June to surpass the January-May total, a report said yesterday.

Crowdfunding refers to funding a project or a company by pooling money from many people, usually online. From January to June, a total of 188 million yuan (US$30.5 million) was raised for 1,423 campaigns, according to a report by ZERO2IPO Research.

Most funds were raised via equity-based crowdfunding, which allows investors to receive a stake in the company being funded. In June, 87.76 million yuan was raised via the mechanism, more than the January-May total.

According to the report, the 156 million yuan raised through equity-based crowdfunding in the first six months was only 7.64 percent of demand, which totaled more than 2 billion yuan, illustrating the financing difficulties China’s small and micro businesses face, it added.

Crowdfunding first emerged in the US almost a decade ago, but it’s a nascent sector in China. A previous World Bank report forecast China to have the world’s largest crowdfunding sector by 2025.

 




 

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