Charles Li’s Micro Connect Rallies Key Employees to Invest in ‘Leading Sheep’ Program

Micro Connect, a small-business financing platform co-founded by former Hong Kong Stock Exchange chief Charles Li, is reportedly asking its staff to personally invest in a new venture via the “leading sheep” program. This initiative involves around 20 core frontline employees contributing 1 million yuan ($138,000) collectively, partnered with an additional 9 million yuan from the company, to create a special purpose vehicle [para. 1][para. 2]. The contributions from employees are domestic funds managed through specialized domestic accounts and will not be used for direct investment, adhering to the legal framework that restricts the use of funds raised on the Chinese mainland by the Hong Kong-based company [para. 3].

The goal of this program is to align employees’ interests with the company’s objectives, ensuring they have a heightened sensitivity to the risks and returns related to their investment in the stores financed by Micro Connect [para. 4]. Founded in August 2021 by Charles Li and co-founder Zhang Gaobo, the company aims to combine international capital with micro and small businesses in China to help them overcome financing difficulties [para. 5].

Micro Connect typically enters into 36-month contracts with chain retailers, offering 500,000-yuan loans per store in exchange for a share of daily revenue until the principal is repaid. These contracts are then listed on a financial assets exchange in Macao [para. 6]. By November 2023, the platform had extended over 2.4 billion yuan in financing to about 11,190 stores across China [para. 7].

An internal letter from Li and Zhang stated that the “leading sheep” program aligns with Micro Connect’s phase 2 strategic plan, aimed at motivating frontline staff to engage potential investors and convince them to invest in the company’s revenue-sharing model [para. 8]. In January, the company introduced a new market standard for financing micro and small businesses in China, marking a strategic shift toward becoming a “fully disinterested operator” of the Macao exchange as the number of market participants grows [para. 9]. The core employees involved in the “leading sheep” initiative are tasked with leading specialized investment teams to explore varied investment strategies across different sectors [para. 10].

Micro Connect plans to release an internal update on the progress of the program soon [para. 11]. The company reinforces its commitment to providing effective financial solutions to micro and small businesses while motivating its employees to take an active role in its strategic growth.