How does e-commerce website finance?

Electronic commerce

For the lack of funds for e-commerce sites, securities market financing, venture capital, bank loans three kinds of financing methods, which is more suitable for their own?

Wen/Ye Jing

With the rapid development of the Internet, E-commerce sites have sprung up, but the development of a period of time, have invariably encountered the same problem: funding shortage.

Many sites do not lack good development ideas, not lack of brain talent, but there is no money. So the entire E-commerce site has the same situation, the site construction to a certain period, the person in charge regardless of the content, but everywhere to find the money, from the bank loans, or attract venture capital, or direct listing financing.

There is no rigid indicator that some companies should choose what kind of financing channels, each operator has its own understanding and choice. So, as a website operator, how to choose the right to their own web site development financing channels? Perhaps, look at the forerunner, compare oneself, we will find some doorway.

Securities Market Financing

Financing through the securities market belongs to the direct financing activities. It refers to the enterprise directly to investors issue corporate bonds or stocks, to raise funds to expand the scale. The following is an analysis of Amazon's listing financing.

Amazon was listed in May 1997. In the early 1998, less than 10 dollars per share, by the December 1998 one day, the opening price is already 243 dollars, and once broke through 300 of dollars. On January 11, 1999, shortly after the stock was divided into three divisions, Amazon's shares opened at $158.875 trillion, then closed at 160.25 dollars, and also hit a record high of 199.125 dollars after the split. It is also the continued rally that has allowed Amazon's market capitalisation to be valued at $25 billion trillion in early February 1999. Interestingly, Amazon was a losing company at this time, and Bezos never hid it, even reminding short-term and small investors. What is the reason? At the time, Wang Juntao said, many people thought that a company like Amazon deserved to die, and that it was so much more of a bubble, but it started making money when it was said to be. "It is not in front of the so-called ' bubble ' accumulation, there will be no profit today!" But I can't think of a bubble. No matter what industry needs some time to mature, and the greater the investment in the industry, the brighter the industry, its growth period is longer. If you put a cigarette stall, then of course you can make money soon. But if everyone is doing this kind of ' cigarette stall ' business, who cares about the industry? ”

Unlike Amazon, Baidu is the Nasdaq myth. August 5, 2005, "the most worthy of the Chinese concept this year," said Baidu company officially landed in the United States Nasdaq, in accordance with the company before the United States Securities and Futures Commission submitted to the relevant materials, the listing of a total of 109 million U.S. dollars, refreshing the current Chinese Internet companies overseas listing financing records.

Thus, through the securities market financing has been very popular in the E-commerce industry, and there have been successful cases. However, for High-tech e-commerce companies, financing is not the earlier, the more the better. The financing of enterprises must pay the corresponding cost and cost, to embody the principle of income and loss, but also to embody the principle of winning or even more win. The specific includes: the Enterprise management risk can be effectively dispersed, the human capital investment value full request, the limited enterprise control right, enterprise's survival and sustainable development and so on.

Venture capital

Venture capital originates from English "venture capitals", meaning it has risky investment. In fact, venture capital is not only financing and investment, but also related to management, some people call it "venture capital Operation", also known as entrepreneurial investment, is a financial, innovation, science and technology, management and market in one of a new type of capital operation mode. The perfect venture capital should have three functions: (1) reforming the company management, (2) revising the company strategy according to the trend of global market technology development; (3) providing funds. The involvement of venture capital can improve the success rate of start-up companies from exploiting the market to forming the industrial chain.

When it comes to the venture capital of E-commerce companies, it will naturally be associated with Alibaba, which has not yet been listed but has accumulated abundant funds through financing.

Alibaba's four rounds of financing are done through private placement, rather than the most attractive IPO (Initial Public offering, the investment target). In October 1999, Alibaba introduced the first 5 million Dollar Angel fund, including Goldman Sachs, Fidelity Investment (Fidelity Capital) and Singapore government Science and Technology Development Fund, Invest AB, etc. In January 2000, SBCVC invested 20 million dollars to Alibaba. This is Alibaba's second round of financing. February 2002, Japan SoftBank Asian investment company injected 5 million U.S. dollars. At this time the Internet industry a downturn, the Nasdaq stock price plunged, MA Yun successfully completed the third round of private placement. February 17, 2004, Alibaba announced from SoftBank Asia, Fidelity (Fidelity) venture capital, Granite Global Ventures and TDF Venture Capital limited private equity 82 million dollar strategic investment funds, this is China's internet industry's largest private equity fund.

We don't know what kind of glamour Alibaba has to attract so much venture capital. However, Alibaba's successful financing, undoubtedly to the e-commerce companies show a feasible way of risk financing. While technology-oriented e-commerce companies have certain technical risks and market development risks, but often because of the excellent performance of High-tech products, advanced production technology, low cost of production, product competitiveness and other advantages, and make capital gains higher than the general industry, so venture capitalists will be more favored by technology-oriented e-commerce companies.

In addition to venture capital, there are two common types of investments: Angel Investment and conceptual investment. The former refers to the investment in the development stage, which is different from the investment in the medium term project. The latter is also known as risk-free investment in relation to venture capital. It does not target technologies and projects that are being developed and being creative, but for the application of innovative project investment, that is, before the capital injection, the concept of a considerable degree of operability, with a short payback period, low risk, easy for domestic and foreign investors to accept the characteristics of its investment sequence, operating mode, project risk, The evaluation method and standard of the profit return are different from the venture capital, once the project of the concept investment gets the recognition and injection of the investor, the success rate is very high, which is a new investment way of "low risk and high return" in the investment field for China with imperfect credit system. It avoids the high risk of venture capital in the process of technology forming, and based on the organic integration and management of various resources, the dependence of the former investment on technology becomes the interdependence of the whole resources. Compared with the venture capital with 4% success rate, the concept investment should have a success rate of more than 90%.

Bank loans

Bank loans are the most common way for companies to raise funds. Now, through the way of bank loans to finance has been quite mature, whether the government, banks or enterprises themselves, have a fairly reliable safeguard mechanism.

In addition to applying for liquidity loans to commercial banks, technical support electronic commerce companies may apply for fixed asset loans through the relevant science and technology authorities. Through the local CST or the central relevant Ministry of Science and Technology Department (Bureau), according to the National Science and Technology Commission of various types of scientific and technological Loan Project plan, to the National Science and Technology Commission to declare the torch plan and other types of science and technology projects, at the same time apply for the development of bank loans to the state Economic and Trade Commission At the same time to the bank to apply for technology development loans, technical innovation loans, through the Local Planning Commission to the State Development Commission to declare "major scientific and technological achievements industrialization Plan" project, at the same time, can apply for loan support.