Chinese cyber security company, Qihoo 360, launched the equity crowdfunding platform ‘360 Taojin’, or 360 Gold Panning, on Tuesday with Zeng Chunqiang, the former Investment Manager of Qihoo 360, appointed as CEO.
360 Taojin adopts the model of forward pricing, a less favorable model among equity crowdfunding platforms. The valuation of a crowdfunded company in this round will be calculated in proportion to the company’s next round of financing. If the company fails to raise another round of funding within an agreed time span, the platform will adopt certain methods to secure investor money including compulsory repurchasing.
“Once the startup receives its new round of financing within the agreed upon time, the fundraising amount will be converted into shares at a discounted price upon the new valuation. If it fails to finish the new financing, investment can be converted into shares based on the valuation of the last round of financing, an agreed upon valuation, or be purchased back by the company. We operate from the investor’s perspective and provide all flexible approaches to secure investor interests,” CEO of the crowdfunding platform Zeng Chunqiang said.
To ensure success, 360 sets high standards for projects. Projects fundraised through 360’s platform must have, first, at least attracted a single round of investment from a professional institutional investor – with a minimum 5% stake – prior to beginning a crowdfunding campaign.
The investment team at 360 Taojin will be responsible for project selection, due diligence investigation, fundraising, post investment management and capital exits. Only after a successful exit, will the investment team at 360 enjoy the carry of the investment.
The first project hosted on 360 Taojin, ‘Z-Cherry’, is a production company and talent agency with a claimed quarterly revenue of RMB eight million (USD 1.23 million) for the fourth quarter of 2015. The project has raised RMB 19.8 million (USD three million) in the week since launching on December 29, 2015.
Qihoo 360, a NYSE-listed company, recently finalized a USD 9.3 billion buyout offer to take the company private. Qihoo plans to return to China’s Mainboard at the end of 2016.
360 Taojin crowdfunding platform’s major rivals include the JD.com-backed JD Finance crowdfunding platform and Demohour. JD Finance announced in September that its crowdfunding platform has raised RMB one billion (USD 167 million).