Business / Technology

Crowdfunding for startups hits record high in Sept

By JIANG XUEQING (China Daily) Updated: 2015-10-16 09:29

The number of crowdfunding investors hit a record high in September, according to the latest report from a Web portal that tracks the peer-to-peer lending industry.

Nearly 3.75 million Chinese chose to invest via crowdfunding last month, a 38.54 percent increase from August, said the report from Wangdaizhijia. During the same period, the expected amount of investment in new projects also surged 27.83 percent to 2.88 billion yuan ($454 million).

New business ventures have been given a significant boost by crowdfunding, which gathers small amounts of capital from a large number of individuals, typically via the Internet.

The growth in the number of investors and amounts raised from sources other than the traditional financial system has also benefited greatly from government support.

A State Council executive meeting presided over by Premier Li Keqiang on Sept 16 proposed creating new platforms and modes to broaden the number of finance channels available to startups and entrepreneurs.

And the Wangdaizhijia report said that with such strong government support, the popularity of crowdfunding will continue to rise.

By the end of last month, there were 234 crowdfunding platforms operating in 21 provinces across China, it said.

Those in Beijing have taken the national lead, raising 246 million yuan last month alone, closely followed by Guangdong and Zhejiang provinces.

Of the 3,963 individual projects pitched last month, the majority (3,013) were reward-based schemes in which entrepreneurs raised money by preselling a product or service to launch a business concept without incurring debt.

Those using platforms launched by China's e-commerce giants and Alibaba Group Holding Ltd were mainly reward-based.

Last month, the two sites raised 156.84 million yuan, attracting more than 500,000 investors, and 57.5 million yuan and 400,000 investors, respectively, well beyond market expectations.

Despite overall growth in crowdfunding, money raised via equity-based peer-to-peer lending-wide groups of investors funding startups in return for equity-dropped 37.15 percent from August to 225 million yuan, which the report blamed largely on a notice issued by the authorities to prohibit any institution and individual from issuing shares illegally under the name of crowdfunding.

Deng Ge, a spokesman for the China Securities Regulatory Commission, said in August that the regulator will inspect online equity-based crowdfunding platforms to correct illegal activities.

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