August 2007
When Entrepreneurs and Angels come together (II)
In this post I would like to continue my post from last week and add some new online sites that aim to bring entrepreneurs and investors together.
 
504 Bank
Companies seeking financing pay 504 Bank a small transaction fee each time an investor downloads and reads their business plan or profile (announcing companies only pay for results)
Companies listed in 504 Bank have access to more than 7,000 registered investors, servicing more than 1,500 per day, and signing up more than 100 new investors daily.
PRICING:
- 75 cents per Business Plan downloaded
- 45 cents per Executive Summary read
- 15 cents per Bio clicked on
- You set a budget for up to how much you would like to spent
The company was created in 2002 but I have to say the design is horrible and difficult to use
Note: the name of the services is not easy to understand for the general public. It comes from the Rule 504 of Regulation D: this rule provides an exemption from the registration requirements of the federal securities laws for some companies when they offer and sell up to $1,000,000 of their securities in any 12-month period.
A Business Match.com
Potential business buyers or investors create a confidential member profile briefly describing the type of business they are interested in, location, investment size, appetite, etc. (Just like on-line dating).
Potential business sellers or businesses seeking additional capital (for whatever reason) also create a confidential member profile outlining the business opportunity they want to advertise (again – just like on- line dating).
Non-members can browse the member profiles at any time. Members who are Buyers and Investors have full access to our message center for free and can initiate and respond to Sellers or Partial Sellers for free. Only Sellers or Partial Sellers who are paid members will have access to a private message center to contact other members or respond to messages from other members.
You pay nothing as a Seller or Partial Seller unless you want to use this website to contact another member.
More information about pricing
FAQ
vfinance.com
vFinance was created in 1995, but their internet services AngelSearch and VCsearch started much later
If you're an entrepreneur, we can help you find a VC or an Angel. You can also post your business plan for wealthy investors to see.
If you're an Investor, we can provide you with access to the business plans posted on our site. For enhanced services, open an account with vFinance Investments, Inc. and get access to a vast array of traditional brokerage and non-traditional investment opportunities.
If you're a CEO or CFO, we can also help you find a VCor an Angel. You may also qualify for an Executive Account with vFinance Investments, Inc. which provides an ultra-competitive mix of public and private equity opportunities.
PRICING:
A Basic Listing is $79/3 months
A Professional Listing $149/3 months
My Capital
You can send an e-mail message to more than 3,000 venture capitalists. Instantly see investors' replies in your email inbox and take action.
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LaCartoonerie
When I was living in Paris, just before coming to Hong Kong, I went to listen to a talk by the French entrepreneur Yann Mauchamp.
In that meeting I met Alexis Godais. Alexis is one of the founders of La Cartoonerie, a site that enables novice users to create their own cartoon on the Web. Alexis and other 2 co-founders had the idea in 2002 after finishing their studies. LaCartoonerie is perfectly understood under the scope of Web 2.0. Even though similar ideas have been circulating for many years even before 2002, Web 2.0 has only started to popularize not long time ago. I consider LaCartoonerie very visionary in 2002.
Alexis and his associates had been working in the evenings and during the weekends for 4 years and at that time they were looking for money to create a start-up with a viable business model.
The day after that talk, I went to a conference organized by Microsoft in Paris with Steve Ballmer and many important French entrepreneurs such as Pierre Chappaz, who talked about Wikio. In this Microsoft event, I also met Alexis and we discussed about his project.
Shortly afterwards I left France for Hong Kong. But today, one year and a half later, I read an article in Techcrunch.fr saying that LaCartoonerie has raised a total of 500 000 Euros from Club Invest 77 (a business angel network), Hédéra Scientipole Capital and from other angels.
He may not remember me but I remember him. I admire his straight-forward motivation in his eyes and wish Alexis and his co-founders a lot of luck in the future
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My name is Dilbert
Today I was reading Dilbert: my favourite comic strip. I love Dilbert because of the way it portraits the corporate world.
I found these 2 strips which are really familiar to me. Am I getting crazy, doctor?
Dilbert and Software Requirements
Dilbert and Management Problems
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Entrepreneurial Friends & Economic Miracles
 When I left Spain in 2002, I really felt I that was doing the right thing and that, outside Spain, I would have much more opportunities than my fellow friends who stayed in Spain.
Spain has made a huge economic and social development since I left - quite an economical and social miracle. Some people say that in 6 months you can no longer recognize China any more because of the fast development. In my case, when I go back to Spain I cannot recognized it any more. It is so different from Spain I knew in 2002.
At the beginning when I left, I had a relative superiority complex towards Spaniards for several years. But little by little, I realized that those who stayed behind did not lose their time:
A friend of mine (from School) has just created a consulting company in the aeronautics sector. He was a very smart guy and I hope he will be successful.
Another friend of mine (from University) developed an radio simulation software and is providing consulting services to companies in Madrid. I also wish him luck.
These two stories just make me feel I cannot afford any more not trying it.
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The Global Start-up
I would like to reproduce this article from Forbes
 The Global Startup
Erika Brown, 11.29.04
Tech entrepreneurs and venture capitalists are creating multinationals before they even make a nickel.In late September 110 entrepreneurs and venture capitalists from 17 cities flew in for Jerusalem Venture Partners' annual meeting, at the Cafe Gray overlooking Manhattan's Central Park. Businesspeople from Amsterdam, Milan and Singapore sat across from folks from Tel Aviv, Tokyo and Zurich as they sipped coffee and listened to a lecture about the perils and opportunities of China's tech markets. Between presentations JVP founder Erel Margalit darted from table to table shaking hands, bowing and kissing cheeks, interrupting conversations held in Chinese, Hebrew and heavily accented English. Such is the life of the modern venture capitalist. It used to be more parochial: enterprises in Silicon Valley or Boston launched with hometown money and nearby employees. After five years or so someone would think about sending a sales guy to London or Tokyo. These days fledglings go global before they've even made their first sale. Three out of every four investments Margalit makes are multinational. JVP's latest project, Double Fusion, is building software that inserts 3-D ads into online videogames. Its technology and entrepreneurs are from Israel, its funding is from the U.S. and Jerusalem, and its chief executive is Indian. JVP's partners in Asia will take its executives on a tour of China, Korea and Japan later this year to meet with game developers and ad agencies. VCs who once bragged about never driving more than half an hour to visit a portfolio company are jetting to Australia for optical engineers, Israel for security whizzes, India and Kazakhstan for brute software coding, South Korea for online gaming and Japan for graphics chips. For growth across the board China is the place to go. IT spending there is expected to hit $48 billion by 2008, a twofold increase, and grow three times as fast as in the U.S. Its mobile phone users are increasing at 25% a year. One of every three cell phones and eight of every ten DVD players in the world are made in China. Shanghai produces 40% of the world's semiconductors. India's communications minister has set a target of up to 250 million telephones by 2007, with what one VC estimates to be a $30 billion investment in the necessary infrastructure. "VCs in Silicon Valley used to pride themselves on being local," says Margalit, who has $680 million under management. "That was well and good when the U.S. was the mecca for technology, but today the leading markets are China, Japan, Korea, Taiwan. Entrepreneurs need to talk to the people who are determining where the world is going, and they can't do that if everyone around the table is American." A few venture and private equity firms such as WaldenVC, Worldview Technology Partners and Warburg Pincus have been investing in Asia for years--and Apax Partners has long straddled the Atlantic--but the jet-setting ranks are swelling. DCM-Doll Capital Management's David Chao boasts that 40% of his portfolio companies' revenue is derived outside the U.S. Norwest Venture Partners' Promod Haque, who sits atop FORBES' Midas List of tech dealmakers, says he won't even consider investing in an entrepreneur unless that person has worked out an international strategy. In June Haque and his partners took executives from eight portfolio companies on a two-week business-building mission to his native India. One of Norwest's companies, Virtela Communications, initiated five new deals on that trip. A global view is required just to keep pace with foreign firms quick to copy an idea. Yahoo faces serious competition by indigenous copycats in countries such as Korea. Ebay has been scrambling to buy up imitators in Korea and elsewhere. Along with other VCs, Benchmark Capital invested $13million in online networking outfit Friendster in 2003. William Gurley, a Benchmark general partner, now counts at least three Chinese imitators. "You can't plan U.S. success first and then go global ten years from now. They're all reading the tech business magazines and VentureWire. They know what you're building before you get there," he says. Silicon Valley Bank, famed as a lender to young U.S. companies, opened offices in London and Bangalore in September. Next year SVB plans to move into China and Israel. The bank is going abroad to get an edge over its U.S. competition, but it isn't lending in Asia--its staff is there to make introductions for entrepreneurs to potential customers, investors and partners. "Venture capital is a global industry. We are going to see more cross-border companies being funded," says Ash Lilani, head of global sales and marketing at SVB, "and the earlier you get to know startups, the deeper the relationships." Consultancies are seeing a nice boost as well. Kenneth DeWoskin, head of business development for PricewaterhouseCoopers Transaction Services in China, says demand for advice on how to do business in Asia has been so taxing that he has doubled the size of his corps to 6,000 in the last 24 months. He plans to add another 1,000 employees in China next year. "The first thing I tell entrepreneurs is, "Keep your bags packed at all times,'" says DeWoskin.
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Will my location kill me?
 I am worried about risks involved in quitting my job and creating a start-up. According to ReadWriteWeb.com, GigaOM, Paul Graham and other blogs like New Florence New Rennaissance, there is only one best place to create a technology start-up. This place is shown on the picture and is called Silicon Valley. Graham goes one step further and says that not being in Silicon Valley is an error that can kill a start-up!.
Well.... I am not in Silicon Valley. I am here in Hong Kong and I must say that in 2008 and feel like staying in here in the Pearl River Delta (HK, Shenzhen, Guangzhou, Macau...).
From the very beginning, I thought of a global approach for this start-up. This global approach has three legs: Europe, China and US. We already have one leg in Europe, another in China. Now we need a leg in the Silicon Valley.
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Recommended Books for Entrepreneurs
Recommended books about Angel Financing
 
Recommended books about Business Plans
 
Other books
 
 
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Everything is already done!
 One of the most depressing feelings when you are brainstorming to find a suitable idea to create a Start-up is finding out that all your wonderful ideas have already been implemented by somebody else.
A good place to find out this is by using SimpleSpark.
As you all know, Google, the indisputable winner in the Web search engine sector (and beyond), came, in fact, years after search engines were popular on the Internet. However Google won the race. Why? Maybe because their page just had what the user wanted: a field text and a button and nothing more. Or maybe because of something else.
History of Search Engines
This is why today I wanted to make some research about the history of web search engines since the beginnings to the web bubble. I am not including the new search engine initiatives in the web 2.0 era
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1993:
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MIT student Matthew Gray created World Wide Web Wanderer. It was initially used for counting Web servers to measure the size of the Web.
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Martijn Koster created ALIWEB (Archie-Like Indexing of the Web). ALIWEB allowed users to submit their own pages to be indexed.
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Excite was introduced by six Stanford University students. It used statistical analysis of word relationships to aid in the search process.
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1994:
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EINet Galaxy ( Galaxy) was established in 1994 as part of the MCC Research Consortium at the University of Texas, in Austin. It was eventually purchased from the University and, after being transferred through several companies, is a separate corporation today.
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Jerry Yang and David Filo created Yahoo. It started out as a listing of their favorite Web sites. What made it different was that each entry, in addition to the URL, also had a description of the page. Within a year the two received funding and Yahoo, the corporation, was created.
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WebCrawler was introduced. It was the first full-text search engine on the Internet; the entire text of each page was indexed for the first time.
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Lycos introduced relevance retrieval, prefix matching, and word proximity in 1994. It was a large search engine, indexing over 60 million documents in 1996; the largest of any search engine at the time. Like many of the other search engines, Lycos was created in a university atmosphere at Carnegie Mellon University by Dr. Michael Mauldin.
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1995:
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1996
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Inktomi started in 1996 at UC Berkeley.
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1997:
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Google was launched in 1997 by Sergey Brin and Larry Page as part of a research project at Stanford University.
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1998:
Conclusions
In a nutshell Google was one of the last search engines created but they were the winner of the race. Why?
Does it mean that entrepreneurs should not be so afraid of making something, which is not really new?
In my previous post, I discuss the principles to follow in order to become a billionaire: one of them is "Copying pays better than innovating".
This post is based on "A brief history of search engines" by Lee Underwood
Related post: The myth of the great idea
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How to be a billionaire?
I have seen a very interesting post Top Shelf Entrepreneur in which Diane K. Danielson writes a review about the book: How to be a Billionaire: Proven Strategies from the Titans of Wealth by Martin Fridson
 Buy it in amazon!
Diane makes a comment that I find very true:
"Almost all of the men profiled [in the book]– Bill Gates, Warren Buffett, Wayne Huizenga, and Sam Walton, to name a few – were not motivated by a desire to become wealthy; instead, they were motivated by the accumulation of wealth. Most, in fact, kept their modest lifestyles even after they passed the billion dollar mark. In short, they were fascinated and motivated by the process, not the result."
Furthermore the book argues that most billionaire profiles tie back in varying degrees to the following nine strategies:
- Take monumental risks
- Do business in new ways
- Dominate your market
- Consolidate an industry
- Buy low
- Thrive on deals
- Out-manage the competition
- Invest in political influence
- Resist unions
And basic principles:
- Pursue the money in ideas
- Rules are breakable
- Copying pays better than innovating
- Keep on growing
- Hold on to your equity
- Hard work is essential
- Use financial leverage
- Keep the back door open
- Make mistakes, then learn from them
- Frugality pays
- Enjoy the pursuit
- Develop a thick skin
Aslo seen in Spanish in: El blog Salmon
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eBay for Start-ups
 I have read this idea in a Spanish post from 2005 by Mario López de Ávila Muñoz. This is a translation to English of Mario's post.
In this post Mario describes "a kind of eBay for start-ups, a market of online auctions in which business initiatives (start-ups) would offer participation in shared capital to the best bidder in exchange for financing or other necessary assets, like for example, social technology, infrastructure, knowledge or networks. This approach involves decentralizing the financing process of enterprising initiatives.
This eBay for start-ups would limit itself to take care of companies on the way to constitution or of recent creation with modest necessities of financing:
Entrepreneur would create a virtual stand with a more or less complete description of its business, including an estimation of his/her financial needs necessities or another type of resources. In return the entrepreneur would offer either some resources in the agreed conditions or a participation in the property of its company. The entrepreneur should indicate what percentage is arranged to yield (in "as much as" terms ), in what conditions, the terms involved in the liquidation in the agreement, etc.
Investors would study different entrepreneur proposals. The proposal that best fits with the requirements would be the winner and would be subject of agreement to a later negotiation.
Online reputation would be essential in this system. This type of relations is only possible under trust and confidence conditions."
From my point of view there are several stages involved in this ideas:
- Meeting point between entrepreneurs and investors
- Negotiation
- Buying Share: this last part is a real Stock Exchange market and may be difficult to implement due to regulations in most countries.
In my previous post (When Investors and Entrepreneurs come together) I have in made state of the art of similar initiatives of this kind all around the world.
Finally I would like to add some comments: In Barcelona (Spain) a company called Euneo Systems is being currently created, This company will try to implement the idea described in this post (or similar). They are still under construction.
Related links (in Spanish):
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When Entrepreneurs and Angels come together
 In this post, I would like to make a short state of the art about web sites all around the world where entrepreneurs and angels can get together:
According to Jordan Mitchell (Currently Founder and CEO of Others Online) there may be some factors running against this kind of marketplace
· Angels don't need a Web site to let them know about investment opportunities.
· Even if they did, investors like to take a good look under the hood first and therefore usually investy.
· Investors move in herds, frequently investing alongside people they know
Planheaven
- Geographical Scope: US
- Founded: 2007
- Fees: free for entrepreneurs, free for accredited investors
- Start-up Catalogue: you can see some information without login but you need to log to see details
- Approach: Entrepreneurs use video to explain their ideas
- Resources for Entrepreneurs: Consultants, attorneys, accountants, and other resources are searchable by entrepreneurs by location and areas of expertise
- Comments: well organized start-up information (video, executive summary, business plan...), easy navigation
GoBigNetwork 
- Geographical Scope: in theory the whole world but especially US
- Founded: 2006
- Start-up Catalogue: you can see some information without login but you need to log to see details
- Resources for Entrepreneurs: expert advice
- Comments: difficult navigation, most start-up posts are not detailed
Funding Universe 
- Geographical Scope: US
- Founded: 2005
- Start-up Catalogue: not publicly available
- Approach: Unlike PlanHeaven or GoBigNetwork it is not a web based market place. Funding Universe team internally manage which projects are presented to which investor.
- Start-up Catalogue: Not publicly accessible on the web. Only for investors
- Resources for Entrepreneurs: Funding Universe provides legal advice, strategical guidance...
U2IPO 
- Geographical Scope: China
- Founded: 2006
- Start-up Catalogue: publicly available. You need to log for contacting them
- Resources for Entrepreneurs: not really
- Comments: Difficult navigation, most start-up posts are not detailed
- Further information in English: interview to Michael Li (Partner) at BVCapital China Blog
AngelNetwork
- Geographical Scope: US
- Founded: 2007
- Fees: recently dropped. See here
- Start-up Catalogue: Only for investors
- Comments: Difficult navigation
Angel Investment Network UK
- Geographical Scope: UK
- Fees: see here
- Start-up Catalogue: Not publicly accessible on the web. Only for investors
IwantCapital 
Other Sites
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Share your accounts
When I was in Beijing some days I could really not stop thinking about business ideas. One day walking on the street I had the following idea:
Context:
Everyday there are so many new web 2.0 applications. Every time you see something that seems interesting you need to create a new account just to test it and it is very annoying and time consuming.
Idea:
Create a web site where you can share and get anonymous accounts to test different web applications.
There may be two approaches:
- The user can really get a login and a password for the applications. So they can use them whenever they want.
- The user will never get a login and password. The web page should automatically log into the applications with a the right credentials (auto-login) but not allowing the user know which are these credentials to prevent him from using these credentials afterwards.
Risks:
Since accounts should be anonymous, some users may make bad use of them. The most extrema case would be cyber-terrorism.
You just need to see which kind of comments people write on You Tube. The following video is a parody that explains what would happen in a business meeting if we made You Tube-like comments .
Video seen in hombrelobo
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An application like Kiva for China?
 While I was in Beijing I tried to inquire if Kiva.org would work in China. As I discussed in my post some weeks ago, Chinese people are not inclined to Charities.
I discussed with many Chinese people (in Chinese) and the answers I always got is this one:
"Chinese people will lend money on a Kiva like system only if this system gives them an interest rate, which is larger than what they get from the bank"
Chinese bank usually give an interest rate of 2.x %. So let's say that a Chinese Kiva should give 3 %.
Chinese and HK people are getting crazy about buying stock to get more profit from their savings. Many people spend their lunch time buying shares online. In Chinese they call it "fry shares" (which means buying and selling shares). This is why, I think they would lend money to poor entrepreneurs if they get enough interest. Otherwise they will not.
In order to know whether this approach is possible, we really need to understand the business model of Micro Finance Institutions and the way they get financed. This is a very complicate topic where different regulations are involved and above this is the field where many international banks are trying to enter.
In this download-able mp3 interview (audio quality is not very good), Kiva founder, Matt Flannery, explains Kiva's business model and their vision about how to become self-sustainable from an economic point of view. One of his ideas is charging an annual fees from MicroFinance Institutions but he does not talk about charging them interest. I am absolutely not an expert on micro-finances and I assume that Matt knows much more about this than anybody else so there must be a reason for that.
On the other hand, it comes to my attention that Kiva currently has no field partners in China. I know that the Chinese experience in micro finance just started in the nineties and some Chinese Micro-Finance Institutions have had some problems trying to be self-sustainable.
I would be very pleased if you can leave me a comment telling me if you think this approach is feasible
References:
Please have a look at this article from Marc de Sousa-Shields and Cheryl Frankiewicz, called "Microfinance Institutions: The Context for Transitions to Private Capital ".
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Important Meeting Today
 As you know, I have been in on "Learning Holidays" in Beijing to improve my Mandarin skills (because here in HK they speak Cantonese) and "The man over there" has been in South East Asia.
This is probably going to be the last long holiday if we finally start our company as we are planning to do.
In Beijing we have had very limited access to the Internet and the "Man over there" has been lost in the jungle for one month. So we were not able to communicate a lot.
Today we are both back home (I am in HK, the man over there is in Bilbao - Spain) and in 2 hours 18 minutes we are going to have our first Skype meeting after holidays. We have plenty of things on the agenda and we will post about the ideas exchanges on the meeting soon.
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Thoughts about Micro-Credit Web Application
 I would like to post some ideas about micro-credit that my friend, "The man over there" sent me by mail.
He has been on holidays in South East Asia and has thought a lot about NGO activities, in particular micro credit. He just arrived back from Asia yesterday and will be discuss more about this.
He has been thinking about a different approach from the non-profit Kiva.org may be a Web Alibaba style but that puts in contact mini-investors with mini-entrepreneurs, without being necessarily oriented to altruism but having a more business approach.
These are some of points the has learnt in South East Asia
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Normally women are more likely to pay the loan than men, who are usually less responsible.
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People who has received micro credits are usually encouraged to lend money once their business prospers extending the micro credit network by the principle that "since I received before I should give now".
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The role of tourists in a web micro-credit application may be considerable . In countries like Cambodia Internet is so slow that even reading emails sucks. Don't even think about uploading videos. However, tourists arrive, take photos and make videos that they upload when they are back in their country. The problem is that tourists do not go to remote zones. But there are more and more NGO-tourists (volunteer holidays) who do go to these areas. The are more and more NGO tourist sites such us Responsible Travel. A French friend of mine in Paris has spent several holidays working as a volunteer.
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Individuals, who may benefit of a micro-credit, are very difficult to contact because they usually live in remote areas, do not haven Internet access and probably not even phone or a bank account. Therefore Kiva.org needs to deal with proxy organizations (called field partners) like Micro-Credit Institutions or associations (for example, the association of women working in handicrafts in the county of XYZ).
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In Cambodia there are many associations and initiatives to help people. They are created by local people themselves. One example of these initialize is mine museums that support economically people affected by mines, blind people that have learned to give massages.
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In countries like Vietnam or Cambodia there is a lot of corruption and nothing happens without the government receive their part of the pie. A Polish-American volunteer in Vietnam told me (The man over there) terrible histories. Sometimes foreign aid is wasted, Sometimes local institutions really have money but management is disastrous.
Conclusion
There is a dilemma between:
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Western people coming to poor countries to tell them what they need and what they must do rather than letting them express their own need
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In contrast with the idea that sometimes these countries do not prosper because they really do not know that they need and somebody must provide guidance
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Gmail universal password?
 Imagine you were able to log into all your applications using your Gmail login and password?
A friend of mine in the States sent me a mail about a prelimminary idea I posted some weeks ago.
The solution, as I discussed in a previous post, would be a password management system, where you can keep the list of passwords you currently use.
Requirements
These are some of the requirements of such system:
- The system should not have an extra password. Clipperz.com and Passpack.com make the user create a new password when they are trying to simplify password management. Quite a paradox!
- The system should be completely on line. There are many offline solutions (robotform, handypassword). The fact of being offline provides more trust to the user but it is less practical to use.
- The system should be able to automatically fill in the login forms with the right data. This is already done by most above mentioned applications
- The sytem has too be easy to use.
- All commuincations must be secure
- It should be impossible for the administrators of the system to decipher the passwords stored by the users. This one is a difficult point
- The system should work, even if the user changes his Gmail account password. This one is also a difficult point.
- The system should be able to recover information if the user forget his Gmail key
The last three requirements are the most difficult ones to achieve: privacy (from the system administrator), independency from changes in the Gmail password and recovery.
I have been thinking about it and think that some of these three last requirements may be incompatible with each other from an implementation point of view. So it is necessary to find a suitable balance among them.
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Is China ready for a Web 2.0 Charity application?
 As you know from some previous posts one of the web 2.0 ideas that were seducing me these days was applying the Anglo-Saxon Charity 2.0 (Web 2.0 enabled) model to other cultures such as the Hispanic or Chinese worlds. I have been comparing some Charity 2.0 applications and will post about this soon.
Taking advantage that I am in Beijing for improving my Chinese language skills, I decided to find out which role solidarity plays in China.
American and Northern European people are very involved in Charities. Obviously the reason is cultural: the Protestantism's sense of Charity. Southern Europeans like Spaniards are less generous with Charity causes and the reason is that Charity in Catholicism plays a secondary role in comparison to Protestantism.
But what about solidarity in China? Well I have compiled some facts about this?
I asked a very good Chinese friend of mine in Paris for advice and she replied: "The answer is NO. I am not rich so how can I care about poor people. Rich people are care even less than me" And also asked one of my Chinese teachers and literally said: "China lacks the sense of solidarity"
The fact
The sad fact is that Chinese people in general do not possess such high-minded notions of wealth and Charity. People nowadays are more concerned about the ways and means of making money than such things as the culture of wealth, the ethics of wealth and the responsibility of wealth. Under such social circumstances, most people are self-absorbed in the pursuit of money, comfort, success and the good life, while largely oblivious to the social responsibility of wealth.
Statistics
This lack of the sense of solidarity is supported by different statistics:
- Statistics with the Chinese Ministry of Civil Affairs show that Charity donations only accounts for less than 1 percent of China's Gross National Product (GNP) currently, far lagging behind the fast social and economic development of the Chinese society.
- On the other hand statistics from the China Charity Federation indicating that 70 per cent of charitable contributions to the Federation came from foreign countries or from the Chinese regions of Hong Kong, Macao and Taiwan, while charitable donations from wealthy benefactors in Mainland China accounted for less than 15 per cent of the total value of the donations.
- These statistics are not only related to the economic situation of China. They are related to the Chinese culture itself: A study in the United States shows that Americans from Chinese origin are much less involved in Charities than other ethnic minorities.
The view of the Government
The Chinese government clearly promotes the development of the sense of solidarity among the people of China:
- Chinese Vice Premier Hui Liangyu called on the Chinese people to develop their "sense of Charity" (at the awards ceremony of the 2006 China Charity Awards, launched in 2005). According to Hui, "The government should work with non-government organizations and encourage individuals and enterprises to give to Charity"
- Furthermore according to the Vice-Minister of Civil Affairs Li Liguo "The space for developing China's Charity works will expand enormously in the coming years?
Tax benefits & Charities
Many experts agree that tax is the single most important factor that is curtailing business donations:
- In many Western countries, charitable handouts to certified non-profit organizations are tax-deductible.
- In China, the law stipulates that charities are tax-deductible only if they do not exceed 3 per cent of tax payments. Above this demarcation line, donations are basically treated as before-tax proceeds.
- Why don't Chinese tax Authorities study the Western model and amend tax laws to stimulate business gifts? That would surely give business leaders more motivation to find outlets for their innate altruism. But it would also create loopholes for deception (according to a Guangzhou-based sociologist)
Conclusion
So the conclusion of this is:
- China is not yet prepared for Charity 2.0. But anyway, it may not be the bad moment to start a Charity 2.0 initiative since the sense of Charity is expanding a lot and is expected to continue this way.
- To start a Charity 2.0 initiative you really need to start in Hong Kong, where people are more socially aware and where the protestant sense of Charity is more present.
- Since the government clearly promotes the idea of developing Charities, getting the support from the government would be an important milestone in any Charity 2.0 initiative. But will be the Chinese government support a foreign project rather than a local one. Probably not.
References
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Wokai: Microfinance for China
The other day on Facebook I discovered Wokai.org. Wokai.org follows the example opened by Kiva.org but is focused on China. Co-founders of Wokai are Casey Wilson and Courtney McColgan are experts in China as well as in Micro-finance.
Their site is under construction and they are planing to launch in fall 2007.
We have already discussed here in Globthink (See this post) about the possibility of creating a micro finance application which is oriented to the Chinese general public. I made some research about Wokai and it seems to me their idea (or at least initial idea) is that people in US financed micro-finance projects in China rather than Chinese people lending to Chinese people (as discussed in here).
I congratulate the whole team of Wokai and wish them launch with their launch in the next months
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I will be back very soon
 I am in Beijing for three weeks improving my Chinese. I have very limited access to the internet so I cannot post as usually as before. Nevertheless when I am back home in HK, I will continue disccusing web 2.0 ideas with you.
There is a whole chapater about Charities 2.0 that I want to discuss with you very soon. See you soon
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