Micro Connect, a pioneering financial platform that connects small and micro enterprises with global capital, is at the forefront of utilizing fintech to reshape financing and investment approaches. Through their innovative revenue-sharing model, they have revolutionized financing for small businesses, presenting a seamless and sustainable source of capital. With an extensive presence spanning across 220 cities in 31 provinces in China, Micro Connect has so far made impactful investments in over 9,300 small and micro enterprises.
Such remarkable achievements are a testament to the collective dedication of the entire company. Led by Annie Ling, General Counsel and Chief Operating Officer of Micro Connect, the Legal and Compliance Team has played a pivotal role in these successes. This year, the team has been honored by being included in ALB Asia’s Top 15 In-House Teams and has received prestigious recognition, including the title of ALB’s Most Innovative Corporate Legal Team of the Year at the China Law Awards. Annie Ling further shares Micro Connect’s ingenious financing model, investment paradigm, and distinctive journey of growth and insights with ALB.
Would you please introduce Micro Connect and its special financing model and investment paradigm to our readers?
Conventional financing approaches for small and micro enterprises, usually centered around equity or debt, often encounter challenges in scalability. In response, Micro Connect has pioneered a transformative business model for investing in these enterprises – via Daily Revenue Contracts (DRC).
This innovative model operates within a distinctive legal framework, enabling Micro Connect to establish contractual arrangements with small businesses in accordance with Chinese law, to provide them with capital support for store openings and operations in exchange for a defined percentage of their daily revenues. It embodies a cooperative business model, facilitating funding without the need to establish new economic entities or shared operational structures.
Micro Connect has also showcased legal ingenuity in channeling diverse forms of international capital into Chinese grassroots businesses through its intricate cross-border legal framework. For example, beyond its well-established fund platform, Micro Connect has also forged partnership with various international banks to establish cross-border financing arrangements, employing daily revenue sharing as a means to repay overseas financing facilities.
In 2022, Micro Connect obtained a license to establish and operate Micro Connect (Macao) Financial Assets Exchange Co., Ltd (MCEX). This strategic move paves the way for the transformation of DRCs into Daily Revenue Obligations (DROs), and onwards into Daily Revenue Portfolios (DRPs), offering a unique opportunity for global investors. Through MCEX, these investors gain access to invest in grassroots businesses that were previously beyond their reach within China.
What is the role of the Legal and Compliance Team in supporting Micro Connect’s innovative business model?
The Legal and Compliance Team has been pivotal in Micro Connect’s journey. From establishing the revenue-sharing legal groundwork and crafting MCEX rules to designing cross-border legal structures, our team’s innovations have spearheaded a new era in small and micro-enterprise financing.
Amid the dynamic landscape of innovative business, our team consistently delivers practical solutions for intricate challenges, aligned with real-world business needs.
I joined Micro Connect in May 2021 when legal framework were still being established and business preparations were underway. By Q4 of 2022, we achieved the milestone of investing in 1,000 small and micro enterprises, propelling us into an explosive phase of growth.
This past year also marked a remarkable growth for Micro Connect, driving a surge in demand for legal and compliance support. During this period, our Legal and Compliance Team had expanded to 13 professionals, comprising members from international and top-tier law firms, alongside seasoned corporate legal and compliance professionals.
Amid this rapid growth, as General Counsel, the team’s training and development remain to be my priorities. We have embarked on digitizing legal and compliance solutions by building a legal chain system and an internal legal intelligence platform. This automation enhances efficiency and quality, covering standardized clauses, customized terms, and bulk contract approvals. The integration of intelligent tools, technological expertise, and the team’s dedication to high-quality work methods has garnered significant acclaim throughout the company, especially within various business sectors.
What are the most significant challenges faced by your team? What are the upheld values behind your team’s success?
From my perspective, a prominent and ongoing challenge at hand remains striking a balance between work quality and efficiency. Achieving this equilibrium necessitates a fusion of legal knowledge and skills, a comprehensive grasp of various business models, and the strategic implementation of legal innovation and technological advancements. This multifaceted approach empowers the Legal and Compliance Team to effectively allocate their efforts towards intricate matters, enabling each member to genuinely flourish within their respective domains.
Breaking free from the confines of traditional legal workflows has been an ongoing endeavor. Embracing the essence of innovative business models, immersing ourselves in company operations, ingeniously reshaping legal processes have presented continuous challenges. To address these challenges effectively, we’ve established a legal knowledge platform. This platform draws upon insights gained from our daily work, condensing essential knowledge, documenting variances and complexities, and categorizing them systematically. This strategic foundation fortifies our future undertakings.
Beyond the realm of day-to-day legal and compliance affairs, a central facet of the Legal and Compliance Team’s role is collaborating with business team on the company’s strategic development. This entails providing legal and compliance insights for the inception of new business models. Consequently, it necessitates persis-tent regulatory exploration and trials, further cementing our team’s pivotal standing within the company.
Two core values significantly contribute to our team’s accomplishments. First, the positioning of the Legal and Compliance Team as “experts.” This distinct positioning hinges on our unwavering focus on business innovation, adeptly tackling complex challenges, and seamlessly blending legal compliance prowess with innovative business strategies. This alignment is pivotal in facilitating the company’s overall innovation and development.
Second, the Legal and Compliance Team always upholds a “results-oriented mindset.” Approaching challenges with a tenacious problem-solving attitude and a perspective that propels business expansion allows us to shatter traditional thought frameworks. This approach facilitates the delivery of inventive legal and compliance solutions and steadfast support for trailblazing business ventures.
As we peer into the future, our concerted efforts will be dedicated to realizing the company’s overarching strategic objectives. The role of the Legal and Compliance Team will be emphasized in manifesting our company’s visionary aspirations. Moreover, we aspire to garner broader recognition and endorsement for Micro Connect’s pioneering products and innovative business models within the market and industry landscape.
