Research Of The Crowdfunding Risk And Risk Control

The concept of equity crowd-funding was introduced into the Chinese market in the year of 2011. At first, it did not receive enough market awareness. The emerging of Internet Finance, however, enables the bambooning of equity crowd-funding platforms and thus making equity-funding a more universal idea. As a new tool of Internet Financing, equity crowd-funding empowers broad groups of investors to fund startup companies and small business in return for equity. It is not only an essential compliment to the traditional equity raising, but also it has a meaningful impact on the improvement of the multi-level capital market, the cultivation of innovation and entrepreneurship and the promotion of economic structural transformation.Since equity crowd-funding is at a very nascent stage development in China, it has experienced a long blind period in terms of legal regulation. Proper laws and standards are not yet available on the market. With the promulgation of the relevant regulations still undergoing, the current equity crowd-funding involves various risks, including the legal consequences of illicit fund-raising, the systematic risk and credit risk due to the highly risky nature of the angel investment as well as the liquidity risk arising from investors’ lack of exit strategies.With several typical case studies, this paper aims to explore the current condition of the development of equity crowd funding along with the risks involved and eventually providing some suggestions on possible risk preventions and regulation selections. Among them, the paper focuses on the market risk faced by investors, through hierarchical analysis method, deduce a simple project evaluation model of equity crowd funding.