Local Crowdfunding investment in SME

[specuvestor]

(Bloomberg) -- China’s savers are rushing to pull money from peer-to-peer lending platforms, accelerating a contraction of the $195 billion industry and testing the government’s ability to maintain calm as it cracks down on risky shadow-banking activities.
In some cases, savers are turning up at the offices of P2P operators to demand repayment, spooked by reports of defaults, sudden closures and frozen funds. At least 57 platforms have failed in the past two weeks, adding to 80 cases in June, the biggest monthly tally in two years, according to Shanghai-based Yingcan Group. The researcher defines failed platforms as those that have halted operations, come under police investigation, missed investor payments, moved into other businesses, or had operators flee with client money.
“Investors have lost confidence in the smaller platforms, because they have no idea if those companies will survive,” said Dexter Hsu, a Taipei-based analyst at Macquarie Capital. Only a handful of the 2,000 or so remaining firms are likely to endure, he said.
China’s P2P industry, the world’s largest, is one of the riskiest and least-regulated slices of the nation’s sprawling shadow-banking system. A government clampdown has weighed on P2P platforms for two years, but the pressure intensified in recent months after China’s credit markets tightenedand the banking regulator issued an unusual warning to savers that they should be prepared to lose all their money in high-yield products.

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PS I think Singapore crowdfunding also died?

Interesting summary:

"So Singapore's subaltern finance industry came up with what
looks like an efficient solution for working-capital financing:
crowdsourced promissory notes.
As long as the notes raise S$100,000 ($74,000) or more and
expire within a year, they aren't technically securities that
need to be sold with a prospectus. Earlier this year, Epicentre
Holdings, an Apple reseller, made news by becoming the first
publicly traded Singapore company to get money via crowdfunding,
raising S$1.5 million for a year at 13.5 percent.
But before excitement turns into frenzy and dubious
practices spring up, Singapore has decided to put an end to
crowdsourcing of promissory notes, and have proper securities
sold via regulated platforms instead.
Restricting crowdfinancing to a high-stakes parlor game
among consenting adults makes sense. It should help reduce the
cost of finance for small businesses, and sate the desire for
yield of moderately wealthy Singaporeans who didn't get into
Facebook before its IPO. The former have more assets than cash;
the latter have spare cash, but want assets.    
So why not let them transact?
For middlemen who promise to channel money only from
accredited and institutional investors, the Monetary Authority
of Singapore has decided to drop the base-capital requirement by
80 percent to just S$50,000, and scrap the security deposit of
S$100,000.
As for platforms that want to broaden the field, they don't
have to worry about both a retail investors' expertise and
suitability. If a customer is prepared to lose all his capital
and ready to hold on to an investment for 10 years, he's fair
game, even without a high-school diploma.
Companies can even now raise up to S$5 million in any 12-
month period without having to issue a prospectus.
Crowdfinancing can tap that limit, provided the securities offer
isn't made to the CEO's gym trainer -- unless, of course, she's
looking to get in on such deals"

http://www.bloomberg.com/gadfly/articles...-singapore

http://letscrowdsmarter.com/p2p-portfoli...16-update/

Interesting portfolio. Will be keen to follow up 12 months later.

Unlike Bitcoin that IMHO has no fundamental logic (see my posts in that thread) except scarcity perception, there are fundamental logic in P2P if done correctly though I think the risks are very high as main concern is return of money. For example I would be concern if entities with access to capital markets suddenly need this high cost channel

This guy's portfolio seems to be chugging along despite defaults. Take the % returns with pinch of salt as it doesn't take into account cash drag

http://letscrowdsmarter.com/portfolio-update-may-2016/