[MACAO / HONG KONG – January 16, 2024] Micro Connect has released the MCEX Market Accepted Protocol (MAP) to introduce a new market standard for micro and small business financing.
By consolidating and analyzing market information, the MAP aims to provide a universal and convenient set of tools to guide market participants: (1) for investors, how to value the expected cash flows and their corresponding risks of every Daily Revenue Obligation (DRO) listed on MCEX; and (2) for micro and small businesses, how to identify an optimal revenue-sharing ratio and contract period in order to secure funding from investors.
For instance, MCEX has introduced a new metric called Price-to-Net Contract Payout Ratio. Similar to the commonly used Price-to-Earnings Ratio (P/E Ratio) in traditional finance, this metric helps investors evaluate the market value of a DRO based on its expected future cash flows.
Given the novel nature of this new market, Micro Connect had to blaze a trail for investors in its initial stage of development, first with the launch of Micro Connect Leadership Fund to act as the first participant in the market, a business development team to originate investment opportunities among micro and small businesses, and an exchange team to build and operate MCEX.
From the initial buildout of an investment portfolio and a new market, Micro Connect has learned firsthand the huge potential of China’s consumer retail space and the large funding gap faced by brick-and-mortar stores. Micro Connect has also found a way to address this longstanding issue and tap this new market, as Daily Revenue Contracts (DRCs) have become a popular financing instrument among brick-and-mortar stores, and global financial institutions have started using DRCs / DROs to access investments in micro and small businesses.
As the number of market participants continues to grow, Micro Connect is entering its “market operator phase” of its development and will transform itself into a fully disinterested operator of MCEX. With the release of the MAP today, we seek to develop a vibrant ecosystem with broad participation from a diverse set of global investors, micro and small businesses, and market intermediaries.
We welcome feedback from all market stakeholders including investors, consumer retail brands and chains, micro and small businesses, market intermediaries, etc. We look forward to working with the market to refine the MAP as we grow this new market together.
For further details on the MAP, please refer to the Chinese and English versions published on the websites of Micro Connect Group and MCEX.
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About Micro Connect
Micro Connect connects global capital with small businesses. Officially launched on August 3, 2023, Micro Connect Macao Financial Assets Exchange (MCEX) is a global exchange platform for the revenue-sharing asset class and represents Macao’s new endeavor to promote the development of innovative finance and Micro Connect’s mission to provide micro and small businesses with access to sustainable and affordable funding. As of the end of December 2023, more than 10,000 micro and small businesses had raised nearly RMB 4 billion from global investors through the platform.
For more information, please visit www.microconnect.com and follow our journey on LinkedIn: Micro Connect | 滴灌通, and WeChat: 滴灌通Micro Connect.