What is "reverse crowdfunding"? What's the case?

Ten classic cases of crowdfunding in China

Crowdfunding originated from the foreign word crowdfunding. As the name suggests, it is to use the power of everyone to pool everyone’s funds, capabilities and channels to provide small Provide necessary financial assistance to micro-enterprises, artists or individuals to carry out certain activities.

Equity Crowdfunding Although equity crowdfunding is developing rapidly, this model challenges existing laws and regulations. At present, our country’s legal provisions on equity crowdfunding are completely blank.

According to the "Company Law", the number of shareholders of a limited liability company shall not exceed 50, and the number of shareholders of an unlisted joint-stock company shall not exceed 200, which puts an upper limit on the financing objects of equity crowdfunding. In addition, the act of “issuing securities to unspecified objects” and “issuing securities to a specific object in total exceeding 200 people” is also a public offering of securities. The Securities Law stipulates that it must be approved by the China Securities Regulatory Commission and underwritten by a securities company. A limited partnership is a business form between a partnership and a limited liability company. It consists of one or more general partners and one or more limited partners, and is established by two or more but less than fifty partners.

In late July 2014, the China Securities Regulatory Commission stated at a press conference that the China Securities Regulatory Commission had completed multiple rounds of industry research and that the relevant regulatory rules for equity crowdfunding were being researched and formulated.

Crowdfunding is still in its early stages in China, and there are many cases of various crowdfunding financings, but successfully implemented projects are rare. Next, I will share ten classic cases of domestic crowdfunding:

Case 1: Meiwei Venture Capital - Voucher-based crowdfunding

Zhu Jiang decided to start a business, but could not get venture capital. On October 5, 2012, a store appeared on Taobao called "Meiwei Membership Card Online Direct Store". The owner of the Taobao store is Zhu Jiang, the founder of Meiwei Media. He used to be an executive in several Internet companies.

Consumers can take photos of membership cards with corresponding amounts in Taobao stores, but this is not a simple membership card. In addition to enjoying the rights of "e-magazine subscription", buyers can also own the original content of Meiwei Media. 100 shares. Zhu Jiang started listing company equity on his Taobao store on October 5, 2012. Four days later, netizens raised 800,000 yuan.

Meiwei Media’s crowdfunding test has caused huge controversy on the Internet. Many people believe that it is suspected of illegal fundraising. Sure enough, before the transaction was completed, Meiwei’s Taobao store was closed in February. It was officially shut down by Taobao on the 5th, and Alibaba announced that the Taobao platform does not allow public offerings.

The China Securities Regulatory Commission also interviewed Zhu Jiang and finally announced that the financing behavior was illegal, and Meiwei Media had to provide a full refund to all investors who purchased the certificates. According to the Securities Law, any issuance of securities to unspecified objects, or the issuance of securities to specific objects to a cumulative total of more than 200 people, is considered a public offering and requires approval by the securities regulatory authorities.

Later, Zhu Jiang, the founder of Meiwei Media, retold the plot and revealed a story much richer than the word "stop":

"On my Weibo There are many fans who have been paying attention to this matter. When I said that I couldn't get investment and start the business, many fans said, how about we raise some money and let you do it? I thought, okay, this is it. It was also a way, I had no money at that time."

“This made me realize the terrifying power of social media, and then I started to really think about this matter: how to plan and treat financing as a product.”

So, Zhu Jiang started crowdfunding on Taobao store in February 2013.

"In about a week, we attracted more than 1,000 shareholders. In fact, the real number was more than 3,000. After that, we withdrew more than 2,000, and one day more than 3,000 investors called. 3.87 million...

Currently, the company has 1,194 investors."

"After receiving the money, my assistant held an annual planning meeting in Shanghai. I received a call: Hello, I am from the China Securities Regulatory Commission and I would like to find your Zhu Jiang.

”

“I was very calm at first, thinking why would the China Securities Regulatory Commission come out to take control? When I went to the China Securities Regulatory Commission, I felt very relaxed along the way, but at the door of the China Securities Regulatory Commission, I suddenly felt heavy. It must have been the stone lions at the door that shocked me (the two stone lions in front of the door were not in vain), four Within months, we had nine meetings with the China Securities Regulatory Commission." (Obviously, it lasted until the "stop" mentioned by the media)

"My lawyer is well-known in Beijing. The agreement reached the plans of so many investors. There is no template for such an agreement. It was all drawn up for me line by line. The lawyer told me that the holding agreement he made was mainly for industry and commerce, taxation and public security. I didn’t expect that the China Securities Regulatory Commission would come to regulate me. This is the most important thing. One department opened up and I had good luck. ”

“At the first meeting, I sincerely admitted my mistake and reflected on my weak legal awareness. The leader of the China Securities Regulatory Commission said that I was not weak at all. The entire legal document was written quite professionally and that I did not have a weak legal awareness. Written by people. What was discussed in the next eight meetings was whether the previous agency agreement was a valid agreement or an invalid agreement. The China Securities Regulatory Commission, in conjunction with multiple departments, reviewed our company’s accounts.”

“One of the most remarkable things that the China Securities Regulatory Commission did to me was that it called 1,194 investors. Half of the investors hung up immediately after receiving the call. They all thought it was a scammer. They said in the group that a scammer called today and said it was the China Securities Regulatory Commission and wanted to know about Meiwei Media. I told them that it was indeed the China Securities Regulatory Commission who was investigating. . ”

According to Zhu Jiang’s description, the China Securities Regulatory Commission asked all investors two questions: First, did Zhu Jiang promise you to protect your capital? Second, did Zhu Jiang promise a fixed rate of return every year?

Case 2: 3W Coffee - Membership-based Crowdfunding

Internet analyst Xu Dandan has had great success in the past two years, transforming from an analyst to the founder of 3W Coffee, a well-known venture capital platform. It is a crowdfunding model, raising funds from the public. Each person has 10 shares, 6,000 yuan per share, which is equivalent to 60,000 yuan per person. At that time, Weibo was the hottest time, and soon 3W Coffee gathered a large group of people. Well-known investors, entrepreneurs, senior corporate managers, including Shen Nanpeng, Xu Xiaoping, Zeng Liqing and hundreds of other celebrities, the shareholder lineup is gorgeous. 3W Coffee detonated the popularity of crowdfunding entrepreneurial coffee in China in 2012 .

Crowdfunding-style 3W coffee has appeared in almost every city. 3W quickly used entrepreneurial coffee as an opportunity to expand the brand into entrepreneurship incubators and other fields.

3W The rules are very simple. Not everyone can become a shareholder of 3W, which means you don’t have to invest only if you have 60,000 yuan. Shareholders must meet certain conditions. 3W emphasizes the top circles of Internet entrepreneurship and investment circles. People will invest for the dividends that 60,000 yuan can bring in the future. The value return of 3W to shareholders lies in the value of the circle and connections. Just imagine if an investor finds a good project in 3W, how many 60,000 yuan will it cost. Earn it back. Similarly, entrepreneurs can get to know a large number of equally outstanding entrepreneurs and investors by spending 60,000 yuan. This has both the value of connections and the value of learning. The wisdom of many top entrepreneurs and investors cannot be bought with just 60,000 yuan.

In fact, the membership-based crowdfunding equity club M1NT Club in the UK has also performed very well. M1NT has many celebrity shareholder members in the UK and has set up many thresholds. It once rejected the famous star Beckham. The reason was that Beckham was playing football for Real Madrid and was based in Spain, not the UK, so he did not meet the conditions. Later, M1NT opened a club in Shanghai and attracted 500 wealthy shareholders from the Shanghai area, mainly foreigners.

Case 3: Everyone Invests in Crowdfunding - Angel Crowdfunding

On December 10, 2012, Li Qunlin invested in his crowdfunding website Everyone (originally called "Zhongbang") Angel Network") moved online.

After that, in the 10 months until today, he has done five "big things" - crowd-funding an angel investment for "Everyone Tou", launching a leader-following investor mechanism, and launching a limited partnership first By re-investing in the investor shareholding system of the project company and launching the fund custody product "Tou Fu Bao", "Jian Da Investment" has its first successful case outside of its own.

Li Qunlin used to work in technology and products. In 2012, he wanted to start a business, but he didn’t have enough money. He wanted to find investment but didn’t know any angel investors. Looking around, China is so hot for entrepreneurship. There are many entrepreneurs like him who have no channels to promote their ideas and are struggling to find investors. At the same time, in addition to those angel investors who can invest hundreds of thousands or millions, there are also a large number of people in China who have some savings and spare money. Moreover, there are currently too few angel investors in China, which is far from meeting the needs of entrepreneurs. Li Qunlin thought of building a crowdfunding website to showcase entrepreneurs' business ideas and bring together investors so that they can choose more efficiently.

At that time, China's earliest crowdfunding website Roll Call had been launched for more than a year. At first, Li Qunlin wanted to try his luck on it and see if he could help himself raise project funds first. But he found that the roll call time was in the form of pre-purchase. Just like the law at the time, the rewards given to supporters by crowdfunding websites could not involve cash, stocks and other financial products. That is to say, for supporters, participating in crowdfunding was A purchase. Li Qunlin feels that this is a bit unrealistic for him. When doing Internet projects by himself, most of the products and services he launches are virtual products and services. Moreover, given the free nature of the Internet in China, it is difficult to agree on a return method with supporters in advance. Not only is it not suitable for him, Li Qunlin also feels that this subscription method has limited appeal. There is insufficient motivation to buy things. Spending money to support others just to help others realize their ideals is not very suitable for the pragmatic spirit of the Chinese people, at least it is difficult to spread. Li Qunlin judged that using crowdfunding as a purchasing behavior would limit its growth rate and scale. He felt that using it as an investment behavior was more in line with everyone’s needs for participating in crowdfunding. So, he decided to build a crowdfunding website with an equity financing model.

The first experimental subject is his own project "Everyone Vote". Li Qunlin put the "Everyone Invests" project description on the website. At that time, his idea was very simple. Entrepreneurs would display their projects on the website, set a target amount and time limit, and investors would come to communicate if they thought it was good. Then they would invest and become shareholders of the project. As more people invested, they gradually started to invest. Get the money together. After the crowdfunding is completed, the platform charges a service fee.

Soon, someone gave him advice that this would not work. Investment requires professional ability, and investors need to be driven. It is best to set up a mechanism for leading investors to follow investors. Through professional investors, more people who have no professional ability but have funds and investment willingness can be brought together. More investment power. At the same time, during the investment process and post-investment management, there is a general executor who represents the investor on the project company's board of directors to exercise project decision-making and supervision powers. Li Qunlin adopted this suggestion and added this rule to "Everyone Invests". Investors can apply to become a lead investor on their own, and they can obtain this qualification after being reviewed and approved by the platform.

“If you want to crowdfund quickly, it is best for entrepreneurs to combine acquaintances with strangers.” Li Qunlin repeatedly emphasized this sentence when talking about projects that have not yet been successfully funded on the website. Crowdfunding is a platform that brings together strangers. It is best for entrepreneurs to first mobilize their acquaintances to support themselves, and then let the actions of these acquaintances motivate strangers on the platform. This is Li Qunlin's experience. "Everyone Invest" successfully raised 1 million yuan in three months in March this year, and obtained support from a total of 12 investors even though he was the only one on the project team. That’s what support does.

Among the 12 investors we invested in, only 5 have investment experience. This is a bit like what Americans say that the earliest seed capital should come from the 3F, Family, Friends and Fool.

After being rejected by some angel investors, Li Qunlin turned his attention to Weibo and various venture capital salon activities to find people who agreed with him.

Finally, he found Yu Bo, a partner in Shenzhen Innovation Valley. Yu Bo felt that the equity financing crowdfunding model they invested in was a business model that could fill the gap in financing channels for start-ups and build a micro-angel investment platform, so he decided to do this kind of financial innovation. The driving force behind it. As a result, Innovation Valley became the first investor and the only institutional investor in the "Everyone Invest" project itself. With the credit endorsement of Innovation Valley, our investment successfully attracted 11 other investors. These twelve investors came from eight cities across the country. Six of them attended the shareholders' meeting, five of them completed the procedures remotely, and four of them even decided to invest without having any contact with the project.

The model of Jiajia investment website is: after the entrepreneurial project is released on the platform, a sufficient number of small investors (angel investors) are attracted, and the financing quota is filled, the investors will follow their respective Establish a limited partnership based on the capital contribution ratio (the lead investor serves as the general partner, and the following investors serve as limited partners), and then invests in the invested project company as a legal person of the limited partnership and holds the shares transferred by the project company. After the financing is successful, Dajia Investment, as the intermediary platform, will draw a financing advisory fee of 2%.

Just like Alipay solves the trust problem between e-commerce consumers and merchants, WeTou will launch an intermediate product called "TouFubao". To put it simply, it is the custody of investment funds. Investors who are interested in the project first transfer their investment funds to a third-party account hosted by Industrial Bank, and then allocate funds to the company when the company is officially registered and capital verified. The advantage of Toufubao is that it can allocate funds in batches. For example, if you invest 1 million, you will allocate 250,000 yuan first, and decide whether to continue to allocate funds based on the company's products or operating progress.

For entrepreneurs, after the investment funds are escrowd, investors need to transfer the investment funds to the escrow account when committing to the project, and the commitment can be effective, thus effectively avoiding the need for previous investments. The situation where people regret easily will greatly improve the financing efficiency of entrepreneurs; since the funds deposited by investors in the custody account are transferred to the invested enterprise in batches, this greatly reduces the investor's investment risk, and the investor's participation in the investment is Enthusiasm will be greatly improved, which will also greatly improve the financing efficiency of entrepreneurs.

The emergence of social media allows ordinary people’s personal charisma to be transmitted to strangers other than friends through social media, making it possible to obtain more resources and funds for start-up companies.

Case 4 - Luo Zhenyu used the crowdfunding model to change the media form

The most eye-catching self-media event in 2013: It also seems to prove the effectiveness of the crowdfunding model in content production and community operations Potential: "Luoji Thinking" has launched two "most unreasonable" paid membership systems in history: for ordinary members, the membership fee is 200 yuan; for hardcore members, the membership fee is 1,200 yuan. Buying a membership does not guarantee any rights, but it has raised nearly 10 million in membership fees. If you like it, support it; if you don’t, just wait and see. Everyone is willing to crowdfund to support a self-media program they like.

The topic selection of "Luo Ji Thinking" was jointly determined by a professional content operation team and enthusiastic Luo fans, using "knowledge crowdfunding". The speaker Luo Zhenyu said that he studied by himself After all, there is a limit to how much you can accumulate. You need to find talented people from different fields to play with. The crowdfunding participants are called "knowledge assistants" and they plan and choose topics for the video program of "Luo Ji Thinking" every Friday, with Lao Luo doing the work in vain. A classmate named Li Yuan from Renmin University was very popular because he mentioned it many times in the video because of his thorough research on history. You should know that "Luo Ji Thinking" currently has more than 1.5 million WeChat fans, and each video has more than one million clicks.

Luo Zhenyu used to be a CCTV producer. He wanted to get rid of the layers of approval and closed speech of traditional media, so he left the TV station and started his own self-media. He relies on crowdfunding from fans to support himself, and he is living very well. This is a warning from self-media people to traditional media people.

Case 5: Letong Music Crowdfunding - a crowdfunding platform focused on initiating and supporting music projects

According to Ma Make, the founder of Letong Music, a hundred-year-old music project was recently completed Crowdfunding of tens of thousands of music hardware products. It has become one of the many classic cases of successful financing in the original association.

Mark said that the current main expenditure of Letong Music is labor costs, and the proceeds of financing will be used to develop more products, and the content will also change. It will expand more music derivatives and artist performances, and break through the existing music industry model. Explore more new possibilities.

Mark believes that the crowdfunding model has changed many industries and chains, and this method is very valuable. He has previously settled on the open platform of Crowdfunding Network to help Letong Music integrate resources and product exposure. Very helpful. This time, he once again cooperated with Yuanhui, a subsidiary of Netcom Finance, to launch financing. He said that he was very benefited and had confidence in equity crowdfunding, a new financing method.

As a vertical crowdfunding website focusing on music, Letong Music has made great achievements in music crowdfunding and physical pre-sales of music peripherals, and is quite famous in the industry.

When talking about the secret of Letong Music’s successful financing, he believed that in addition to clear business goals and future plans, for a start-up, investors attach great importance to the execution ability of the team, because this It will directly affect the operation of the enterprise.

It is understood that in addition to Letong Music, Yuanhui has also helped many companies successfully raise funds. Public information shows that as of now, Yuanhui has more than 2,000 cooperative entrepreneurial projects, with more than 1,000 investors (institutions), and has successfully financed 8 projects, with the financing amount exceeding 100 million yuan.

Tao Ye, CEO of Yuanhui, said that based on the advantages of the Internet, crowdfunding will eventually change traditional offline financing to online financing. On the one hand, investors can find massive financing on this platform. On the other hand, investment changes can also be found on our platform, and there will not be one-to-one offline channels. In addition, on this platform, Internet investors and financing parties can quickly match each other in this massive information and quickly find buyers and sellers. The main reason why Letong Music was able to successfully raise funds in Yuanhui was that its projects were excellent enough. "Internet finance is an emerging industry, and the equity crowdfunding market has great potential. Gradually transferring traditional offline investment and financing to online investment and financing is a transformative thing and a revolution.

Case 6: Angel Hui's self-crowdfunding - breaking domestic financing record

On October 30, 2013, Angel Hui, the angel crowdfunding platform, launched crowdfunding on its own fundraising platform to seek investment for Angel Hui itself. As of 5:30 tonight (November 1), Angel Investment's current total financing has exceeded 10 million, which is twice the 5 million financing target set by Angel Investment, setting a record for the fastest financing of tens of millions.

Angel Crunch, an angel crowdfunding platform, was established in November 2011. It is the number one crowdfunding financing platform for small and medium-sized enterprises in China. It provides online financing docking services for investors and entrepreneurs and is a leader in domestic Internet finance. Representing enterprises. Angel crowdfunding is a way for multiple investors to invest in angel rounds and A rounds of small and medium-sized enterprises through joint investment. Compared with traditional investment and financing methods, Angel Investment provides entrepreneurs with a more standardized and convenient display. The platform provides one-stop financing services for entrepreneurs

Case 7: United Photovoltaics uses crowdfunding model to change corporate financing

Although equity crowdfunding has always been controversial, But this still cannot change the enthusiasm of enterprises to use crowdfunding projects to finance. In February of this year, United Photovoltaics launched a crowdfunding project to build the world's largest solar power station on the crowdfunding website. The project is a typical equity crowdfunding model.

The project is expected to raise 10 million yuan, with each share raising 100,000 yuan. Each user can purchase at most one copy, and all supporters will become shareholders of this project. As of now, the project has exceeded the quota. The scheduled tasks were completed, and the total amount raised reached 10 million yuan.

The United Photovoltaic project has served as a model for the entire crowdfunding industry in terms of scale and implementation. The controversial part is that with the signing of the US Jobs Act last year, the Securities Regulatory Commission officially put equity crowdfunding on the agenda this year. It is very likely that equity crowdfunding will receive relevant legal support.

When relevant laws and regulations are promulgated, I believe that other companies will follow United Photovoltaic's example and use the crowdfunding model to raise funds.

Case 8: LeTV used crowdfunding to pioneer the use of crowdfunding marketing by enterprises

LeTV, a well-known domestic video website, joined hands with Crowdfunding Network to launch the World Cup Internet Sports Season event and launched it online for the first time A crowdfunding project - "I sign Ronaldo, you decide". As long as 10,000 people support it (each person invests 1 yuan) within the specified period, the project will be declared successful, and LeTV will sign Ronaldo as the spokesperson of the World Cup. At that time, all supporters will also become free members of LeTV and have the opportunity to participate in a series of follow-up activities. This may be the first time in China that crowdfunding has been used to invite celebrities.

The significance of this crowdfunding project is that it is the first time for an enterprise to use the crowdfunding model for marketing. First, the potential user research function of the crowdfunding model was utilized. LeTV dares to release the project of signing Ronaldo this time. I believe LeTV has already prepared to sign a contract with Ronaldo for the World Cup. Through this cooperation with the crowdfunding network, LeTV can conduct a user survey before officially signing the contract.

Secondly, LeTV cooperated with crowdfunding network to warm up the signing of Cristiano Ronaldo to endorse the World Cup. LeTV made full use of the potential social and media attributes of crowdfunding, and fully warmed up the World Cup before it arrived. Finally, LeTV can contact this event to boost World Cup ratings and accumulate users for activities after officially signing Ronaldo.

This initiative of LeTV not only brings crowdfunding websites more and more into everyone’s attention, but also plays a leading role in the entire crowdfunding industry. But hidden behind the activity, it is worth thinking about for other companies with the same idea, how other companies can play through the crowdfunding network.

Case 9: Li Shanyou uses the crowdfunding model to change entrepreneurship education

“Please donate! Pay tuition! Don’t sell your body! Only sell your future!” Following the work of 91 assistants Xiong Jun and Diao Ye Niu Meng After a group of entrepreneurs such as Xing Xing and other high-profile online crowdfunding, Qian Keming, the founder of Weiwo, followed suit. He posted a message in Weibo Moments a few days ago, selling his future to his fans, and raised 11.8 yuan from the China-Europe Entrepreneurship Camp. Ten thousand yuan tuition fee.

"Crowdfunding Tuition" is the first practical task assigned by Professor Li Shanyou, founder of CEIBS Entrepreneurship Camp, to new students. The students need to use Internet thinking to raise tuition for themselves. These articles on the Internet, which are either sincere or humorous, come from the third batch of "quasi" students of the CEIBS Entrepreneurship Camp.

Case 10: HER COFFEE Coffee - Overseas Returnee Bai Fumei Crowdfunding

If we want to talk about the most fashionable Internet financial concept at the moment, it has to be crowdfunding. But recently, news broke that the HER COFFEE coffee shop crowdfunded by 66 overseas returnees Bai Fumei was on the verge of bankruptcy after less than a year of operation. After an initial uproar, more and more crowdfunded coffee shops are now losing money. Why can’t crowdfunding coffee shops work?

If the most popular topics in Internet finance last year were Yu'e Bao and P2P, the most popular topic at that time was undoubtedly crowdfunding. Whether it is the "Entertainment Treasure" launched by Alibaba or the "Joiner" launched by JD.com in early July, the pursuit of crowdfunding by giants has also made crowdfunding known to more and more people, and it has become a novelty in the eyes of many people. investment and financial management methods. However, as a transplantation of the most primitive crowdfunding form overseas, the earliest batch of crowdfunded coffee shops that emerged faced the dilemma of losing money and closing down after the hustle and bustle.

Not for profit ≠It doesn’t matter if you lose money

I remember a female writer said that there are several dream elves deep in every girl’s heart, including Kai The dream of a coffee shop of my own. It’s just that there were very few girls who dared to turn their dreams into reality in the past. However, with the help of crowdfunding, in August last year, 66 returnees Bai Fumei from all walks of life invested 20,000 yuan each, and raised 1.32 million yuan. Yuan opened a cafe in Jianwai SOHO, Beijing, called Her Coffee.

Nearly all of these beautiful shareholders have backgrounds in prestigious foreign schools, and most of them work in investment banks, funds, and the Internet industry. At first, eight or nine people got together to open a coffee shop. Because they didn’t have enough money, they started working separately. Many friends came in, and finally opened this cafe known as "the most beautiful shareholders in history".

I remember that on the day of the opening, film and television star Li Yapeng, hosts Wang Liang and Li Xiang, Baofeng Video CEO Feng Xin, Yintai.com CEO Liao Bin and many other celebrities and entrepreneurs came to support it. It was so lively.

At the beginning, the shareholders of this coffee shop claimed that they would hold various theme activities to attract entrepreneurial women to gather here. However, who would have thought that less than a year after opening, there were rumors that the store would be closed. news. Li Tong (Weibo), one of the shareholders, said that they are indeed discussing this issue at present. She said: "Maybe it's a preparation. You have several decisions that need to be approved by the shareholders' meeting. For example, if new shareholders intervene, will the store be temporarily closed or a new location be changed? If we don't have new shareholders, If the plan comes out, then close the store and then choose a new location.”

In fact, Her Coffee’s situation is not an isolated case. Last year, a crowdfunding cafe in Changsha that attracted 144 shareholders was also exploring the future. A year later, it was facing bankruptcy due to continued losses; a crowdfunded cafe in Hangzhou with 110 shareholders had been open for a year and a half, but the same had never been achieved. There are countless examples of the same.

However, what is interesting is that when almost all the small owners of crowdfunded coffee shops were asked what they would do if their business performance was poor in the future when they first opened the shop, they almost all answered, "We do not make profits. for purpose”. In their view, crowdfunding coffee shops are not only a very novel and interesting form of entrepreneurship, but also the petty bourgeoisie atmosphere exuded by the coffee shop itself and the function of a natural communication platform are their most important selling points.

Just to use a somewhat vulgar saying: The ideal is very full, but the reality is very basic. Not making a profit does not mean that you are guaranteed not to lose money, and not aiming to make a profit does not mean that it does not matter if you lose money. The reason why many crowdfunded coffee shops are reported to be facing bankruptcy after nearly a year of operation is precisely because the original funds raised by crowdfunding when opening the shop are only enough for the initial investment expenses in the first year, that is, decoration, furniture, coffee machines, etc. Hardware investment and first year’s rent. If the coffee shop continues to lose money in the first year, it means that the coffee shop has only two ways out: either to conduct a second crowdfunding to raise in advance the rigid costs of rent, raw materials, water, electricity, employees, etc. for the second year and continue to burn money; Otherwise, it would close down and break up.

Facts have proved that for most shareholders who participate in crowdfunding, the rhetoric of "not for profit" or even "public welfare" is just a high-sounding statement. After all, thousands of dollars have been invested. Even with tens of thousands of hard-earned money, most shareholders still hope that the coffee shop can make money and bring them a return on investment. Even if it does not make money, it will be fine if the coffee shop can maintain operations. But if losses continue, who will bear the funding gap? The success of the first crowdfunding relies on hopes and dreams. When the hope of profit is shattered, how many people are willing to throw money into this bottomless pit of losses through a second crowdfunding? So closing down business became the most rational choice.

(Meitou.com Crowdfunding)