[Preview of the Weekly] Drip Irrigation Financing Emphasizes Revenue Sharing: How Far Can This Controversial Financing Innovation Go? (AI Translation)
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- Mr.JUDY, a new chain hair salon, noticed by Drip Irrigation Tong (滴灌通) in 2021 during the severe pandemic impact on offline businesses, accepted its first investment batch. Founder Wang Jianlin opened over 300 direct stores nationwide, nearly 100 of which received investments from Drip Irrigation Tong.
- Drip Irrigation Tong, co-founded in August 2021 by former Hong Kong Stock Exchange CEO Charles Li Xiaojia, aims to precisely channel international capital into numerous small and micro-enterprises in China. Valued at over $1 billion within three years of establishment, it has signed contracts with 11,190 domestic stores focusing on retail and consumer sectors and invested over RMB 2.4 billion as of November 1, 2023.
- Controversies arose around Drip Irrigation Tong's mission 'to be Wall Street for small and micro-enterprises,' with accusations from well-known investor Song Xiangqian suggesting potential issues like usury and regulatory arbitrage. The disputes focus on product attributes including high return rates, risk control challenges, and regulatory gaps. The company's underlying assets are based on Daily Revenue Contracts (DRCs), a form of Revenue-Based Financing (RBF), which is considered alternative financing that doesn't change equity structure or involve debt recovery beyond contract terms.
文｜财新周刊 王小青、王端 发自香港，刘冉 发自北京
By Caixin Weekly's Wang Xiaoqing and Wang Duan from Hong Kong, Liu Ran from Beijing
“我们在2021年时被滴灌通注意到。当时疫情还比较严重，对线下连锁行业冲击很大，我就抱着试试看的态度，接受了滴灌通的第一批投资。”新型连锁养发馆“Mr.JUDY洗个头发”（下称“Mr.JUDY”）创始人王健霖说道。
"We first caught the attention of Drip Irrigation Capital in 2021. At that time, the pandemic was quite severe and had a significant impact on the offline chain industry. With a try-and-see attitude, I accepted the first round of investment from Drip Irrigation Capital," said Wang Jianlin, founder of the innovative chain hair care salon "Mr. JUDY Wash Your Hair" (hereinafter referred to as "Mr. JUDY").
王健霖称当时拿不到银行贷款。时至今日，他在全国开设了300多家直营门店，其中近100家门店接受了滴灌通的投资。
Wang Jianlin stated that he was unable to secure bank loans at the time. To date, he has opened more than 300 directly-operated stores nationwide, nearly 100 of which have received investment from Drip Irrigation Tong.
滴灌通创立于2021年8月，曾掌舵香港交易所11年的前行政总裁李小加是两位主要创办人之一。他称自己的愿景是将境外国际大资本的资金，精准“滴灌”到境内诸多小微企业中。
Drip Irrigation Capital was established in August 2021, with former Hong Kong Exchanges and Clearing Limited CEO Charles Li Xiaojia, who helmed the exchange for 11 years, being one of the two main founders. He states that his vision is to precisely "drip-irrigate" substantial international capital into numerous small and micro enterprises within the country.
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