Listed on the mainboard of the Australian Stock Exchange (ASX), Singapore-based CoAssets has today announced that it has made a RMB1 million (about US$146k) investment in Fujian’s crowdfunding startup Da Xian Bing for a 10 percent equity interest.
Key terms of the investment include the cash consideration for 10 percent equity with 60 percent to be recouped from CoAssets’ joint venture partner Fujian Yaosheng. Besides, CoAssets will also appoint one of their four directors to the board of Da Xian Bing.
Additionally, there is also a performance-based consideration of up to RMB4 million (about US$582k), linked to the company’s revenue and user-based hurdles.
Pro-acquisition, the stake in Da Xian Bing will grant CoAssets the access to a rapidly growing user base of more than 300,000 users as well as to expand its business footprint in China, where it already maintains operations through a 40 percent joint venture with Fujian Yaosheng.
“With a growing middle class that has increasing disposable income to spend and invests, China has always been one of the key markets for us,” said the CEO and co-founder of CoAssets, Getty Goh.
“Having secured this deal, I am pleased to note that CoAssets is one of the very few homegrown crowdfunding platforms that has managed to break into a market as competitive as China,” he further adds.
In spite of the competitive nature and maturity of China’s crowdfunding and P2P market, Goh also highlighted that CoAsset’s role as an oversea-listed company coupled with the brand strength it possessed as a Singapore enterprise lies in a whole different category.
Moreover, the collaboration with Da Xian Bing will provide a much greater market reach and penetration, given that it operates in the product crowdfunding space rather than investment crowdfunding like CoAssets.
Commenting on the investment prospects, CoAssets conservatively expects to increase its user base in China by 300,000 within 6 months of the investment in Da Xian Bing.
“We will be rolling out a series of marketing initiatives to engage Da Xian Bing users and we hope to convert most, if not all, of them to become registered investors of our CoAssets China platform,” said CTO and Co-Founder of CoAssets, Dr. Seh Huan Kiat.
CoAssets currently has 70,000 registered investors and expects to see more than 370,000 registered investors by mid-2017 and potentially exceed the 400,000 registered investors market by the end of 2017.
“If we are able to maintain our investor conversion rate and investment amount at the average of about 2% and S$10,000 respectively, the number of crowdfunding projects we can undertake will significantly increase,” Dr. Seh adds.
Unlike CoAssets which acts as an investment crowdfunding platform, Da Xian Bing itself operates in the space of product crowdfunding. Both companies believe that this deal demonstrates a good potential for synergy between both firms and users.
By Vivian Foo, Unicorn Media