Case Studies On“Da Jia Tou”Equity-based Crowdfunding

Crowdfunding is a financing model that refers to start-up business or projects release project information via the Internet platform for investors to browse and to provide funds. Over the years, financing difficult and financing expensive problem that China’s enterprises are facing is always difficult to solve. The emergence of crowdfunding broaden the financing channels of start-up companies and programs, reducing the investment threshold of investors, expanding investor groups, so that those companies which are difficult to obtain funds from traditional financing channels see a new hope. At the same time, the crowdfunding will also play an important role in promoting the development of multi-level capital market and deepening the reform of the financial system. Therefore, the emergence and the development of crowdfunding especially equity crowdfunding aroused great concern of the whole society. While the emergence of crowdfunding make up the field that is not covered by traditional financing channels so that more start-up enterprises and programs can obtain financing, but under China’s existing financial environment and legal framework, crowdfunding especially equity-crowdfunding is facing risks of the illegal fund-raising and protecting the interests of investors. At present, China’s crowdfunding platforms try to avoid those risks through a special mode of operation. However, the further development of equity crowdfunding is still facing many constraints. Therefore, modification of legal and institutional is particularly necessary. Firstly, this article takes the "da jia tou" equity crowdfunding platform for example to compare the same and difference between equity-crowdfunding and traditional financing channels, such as, bank loans, securities finance, venture capital, private equity. Secondly, this paper analyzes "da jia tou" platform’s business model characteristics and how these characteristics play a role in risk aversion. Again, this paper analyzes constraints of the further development of crowdfunding, which cannot be evaded by crowdfunding platform. Finally, this paper learn from the US JOBS Act regulatory measures and put forward some viable development proposal for the development of crowdfunding.This paper is divided into five sections: Introduction section introduces article writing background, significance, research methodology, literature review, and innovation. The second part introduces the selected cases, including "da jia tou" platform introduction, "da jia tou" platform operational processes, and introduction of success financing stories through "da jia tou" platform. The third part analyses the selected case, and this section is divided into three sub-parts, including an overview of crowdfunding,such as, definition, classification, production and development process, the comparison between equity-crowdfunding and other traditional financing channels, such as bank loans, securities finance, venture capital, private equity, and characteristics of “da jia tou” equity-crowdfinding platform. The fourth part learn from the US JOBS Act regulatory measures and put forward some viable development proposal for the development of crowdfunding.