Connecting Wall Street Capital with Main Street Small Businesses in China: The Case of Micro Connect

Micro and small businesses were considered the lifeblood and backbone of the economy, but financing difficulties impeded their ability to survive, grow, and thrive. Micro Connect was founded in 2021 to connect micro and small businesses in China with global investors. At the core of its business model was the distinctive system of daily revenue contracts (DRCs) whereby an invested store shared an agreed percentage of its revenue on a daily basis with Micro Connect in exchange for the up-front lump-sum capital investment. As a super connector, Micro Connect identified sustainable sources of global capital to channel into micro and small businesses in China. The Micro Connect Exchange would provide a platform where micro and small businesses could capitalize on their revenue streams by listing their DRCs, and investors could deploy their capital efficiently by leveraging liquidity and price discovery. Charles Li and Gary Zhang, the two founders of Micro Connect, were considering further steps they should take to meet the enormous financing demand from micro and small businesses in China and attract more global investors to the Micro Connect Fund and the Micro Connect Exchange.