E-commerce giant and Alibaba rival, JD.com has launched a new equity crowdfunding platform and one of the world’s most famous philanthropists is using it to build its business in China.
JD Equity Crowdfunding will allow investors to fund startup companies and small businesses in return for equity. If a project doesn’t meet its funding goal, investors will get their money back. Only professional investors will be allowed to invest. JD already runs the Coufenzi crowdfunding site which invites investments in projects and products. JD Equity, however, functions specifically to find early-stage funding for entrepreneurs.
Grameen, the non-profit microfinance organization founded by Nobel Peace Laureate, Professor Muhammad Yunus, is using the JD crowdfunding platform to raise money to establish operations in China. Other startups that have raised money on JD Equity Crowdfunding include gaming laptop builder Thunderobot (RMB 13 million/US$2.1 million), the online auction site Qingchujia (RMB 6 million/US$1 million) and social media news app WeBuzz (RMB 4 million /US$650,000).
This latest initiative will help to create an ecosystem supporting start-ups from the funding through the online sales stages of development. In addition to capital through crowdfunding, companies will have access new training courses provided by JD.com and seasoned investors and entrepreneurs, as well as to the company's broader Internet financing tools. Companies will also be able to sell their products through the company's e-commerce platform.
"I know from personal experience how important it is for entrepreneurs to have access to knowledge and early funding," said Richard Liu, founder and CEO of JD. "As the leader in Chinese e-commerce, JD.com is ideally positioned to create a premium platform to give China’s early-stage companies access to resources and seed capital from a broad range of investors."
Shengqiang Chen, CEO of JD Finance said the company wants to develop an ecosystem that ensures China's most innovative entrepreneurs have access to the support they need for success, including early fundraising, training and JD’s distribution network.Each project will be led by a professional investment manager from a VC company or a company with similar experience who will be responsible for transparent communication between investors and the companies they invest in.
As part of the program, JD.com will take a small equity stake in the projects that successfully raise funding through JD Equity Crowdfunding.
JD’s rewards-based crowdfunding platform, JD Coufenzi, which was launched in July 2014, has so far helped companies raise more than RMB 280 million (US$45 million), with a fundraising success rate of more than 90%.
In its press release JD claims it’s now the largest crowdfunding platform in China, contributing about a third of all money raised through crowdfunding in the country.