Alibaba made waves when it went public, but it is its competitor, JD.com, which has the potential to change the world right now. They are looking to begin a crowdfunding site that will specifically benefit start-up organizations. Built on their ability to fill nearly 700 million orders in the last 12 months alone, JD Equity Crowdfunding allows users to contribute funds to individual projects.
This crowdfunding platform is designed to meet the needs of entrepreneurs who need to find angel investors in their early stages. JD.com isn’t creating the first crowdfunding platform in China. Far from it, in fact. What makes this venture unique is the fact that more resources are backing JD Equity Crowdfunding than other platforms, making it arguably the largest platform available right now.
Start-Ups Will Be Pre-Screened On This Platform
JD.com isn’t just going to be taking any application to begin crowdfunding. All start-ups are going to be pre-screened before being allowed to raise equity. The idea is to create a stable ecosystem where entrepreneurs, angels, and other equity investors can come together and literally change the world.
In a unique twist, JD.com isn’t going to take a cut of the money that gets raised for the start-up if their campaign is successful. They will be taking a small equity stake in the companies that are successfully funded and they are disclosing what that percentage is going to be.
Several Challenges Currently Exist
JD.com doesn’t have an easy path to follow. The laws for equity crowdfunding are vague at best and regulation enforcement only comes in pockets here and there. The company has a reputation for investing into its entrepreneurs, but only when they are vendors on their own platforms. There is also a general lack of understanding on how this type of crowdfunding model works or could perform.
Will JD.com find a way to better compete with Alibaba by using crowdfunding as a means to grow equity shares in potentially successful businesses? There is a lot of potential in this move. The results could be amazing or it could be an idea that only looks good on paper. Equity crowdfunding is undoubtedly the future of entrepreneurship. It’s good to see that it is becoming a global phenomenon.
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