Alibaba's Film Crowdfunding Service Swarmed by Chinese Investors, Sells Out in Five Days
The vehicle, which allows ordinary Chinese citizens to make microinvestments in hotly anticipated upcoming movies, met its $11.77 million target in less than a week -- and could have raised tens of millions more.
Yulebao, the crowdsourced film investment fund launched by China's largest e-commerce company, Alibaba, has met its funding target of $11.77 million (73 million yuan) after just five days. The service likely could have raised tens of millions more had it not capped its initial investment round.
Yulebao is an investment vehicle, similar to crowdfunding, that lets thousands of ordinary Chinese become microfinanciers for movies, using smartphone apps via Alibaba's mobile Taobao platform to invest.
The Yulebao fund opened at 10 a.m. on March 31 and closed at 5 p.m. on April 4. In that time, 223,800 investors bought 785,500 shares in hot upcoming Chinese movie projects, like Jean-Jacques Annaud's Wolf Totem and the next two installments of the Tiny Times franchise.
The fund, which translates as "Entertainment Treasure," allows would-be financiers to spend between 100 yuan ($16.13) and 1,000 yuan ($161.3) to invest in popular films.
The fund clearly struck a chord among Chinese investors, who seemed to encompass fans and serious investors alike.
The first project to sell out was a social-networking game featuring leading actress Fan Bingbing, while the most popular projects, with over 100,000 investors, were the two Tiny Times movies.
Mai Hua of LeTV, one of the Tiny Times backers, said Yulebao was a good thing for the film market, as it increased interaction with the consumer.
"You invest in this film and then you will pay attention to this film. For some medium and small films, it has very good promotion effect," said Mai.
The second round of Yulebao will be launched in early May. Thus far, Gao Xixi's Beauty's Dew, featuring Korean star Rain and Chinese actress Crystal Liu, has been named as a movie in the second fund.
The director Gao said investment from Yulebao will allow him to express things he wants on a larger scale.
The funding idea also resonates in the broader Chinese industry. Taiwanese celebrity Annie Yi said she hoped to participate with Yulebao in the future.
The biggest number of buyers were located in the rich coastal provinces of Zhejiang, Guangdong and Jiangsu.
Investors in China are always on the lookout for new vehicles. The stock market is tightly controlled, and the real estate market has become expensive, plus ordinary Chinese are generally not allowed to invest overseas, which could explain the popular appeal of Yulebao.
However, as crowdfunding is associated with Ponzi schemes in China, there were crucial differences. Each individual investor is allowed to buy a maximum of two plans from the available list of projects, and investors were offered an interest rate of 7 percent.
Yulebao's backers indirectly invest in the film industry and earn capital gains on insurance and wealth management products.
The projects focus on movies for young people born in the 1980s and 1990s, and Alibaba said many major TV and movie companies have approached them since the project began.
Alibaba, founded by Internet tycoon Jack Ma, is on fire right now. The company has been valued at between $150 billion and $200 billion. And its eagerly anticipated initial public offering, expected to take place soon in New York, will make it bigger than Facebook.
Alibaba last month bought a controlling stake in ChinaVision Media Group for $804 million, which gives it TV and movie content.