China's crowdfunding sector expands

BEIJING - China's crowdfunding sector saw rapid growth in the first half of 2014, with cash raised via equity-based crowdfunding skyrocketing in June to surpass the January-May total, data from a Chinese independent research team showed on Wednesday.

Crowdfunding refers to funding a project or a company by pooling money from many people, usually via the Internet. From January to June, a total of 188 million yuan ($30.5 million) was raised for 1,423 crowdfunding 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 alone, 87.76 million yuan was raised via the mechanism, more than the total in January-May.

According to the research team, the surge in June was because equity crowdfunding platforms have started to form a fairly large pool of user investors.

However, the total 156 million yuan raised via equity-based crowdfunding from January to June was only 7.64 percent of demand, which totaled over 2 billion yuan, illustrating the financing difficulties facing China's small and micro businesses, it added.

Crowdfunding platforms first emerged in the United States almost a decade ago, but the sector is only nascent in China. A previous World Bank report forecast China to have the world's largest crowdfunding sector by 2025, estimated at more than $50 billion.

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