Supchina Raising Funds At A $45 Million Pre-Money Valuation With Claimed $900K "2021 Run-Rate"

Stupid accounting question:

Why are they adding Discounts Given (IMHO, a contra-revenue account) into their Total Income?

Weirdly or perhaps fittingly 2 China state media people positively commented on SupChina fundraising:

Investing $10,000 or more gets investors private meetings with SupChina's editorial team which is highly atypical and something raises all sources of concerns about journalistic independence (i.e. effectively buying direct time with journalists).

And another:

SupChina offers sponsored content, which is another weird and questionable journalistic practice (we obviously do not nor ever have done that).

However, SupChina's editor in chief responded to this criticism noting:

ok, I'm going to ask what nobody is mentioning.

what does the name SupChina mean - and who named it that and why?

is it 'sup China?' in the hood vernacular or...?

In a new email, SupChina says "we plan to double our subscription revenue in 2022", which would put 2022 subscription revenue at ~$350,000 vs the $45 million pre-money valuation.

Just over one month later, SupChina announces raising over $1 million:

As of today, we’ve successfully raised $1,086,263.60 from 117 amazing investors.

That is an average of just under $10,000 per investor. By comparison, 2 weeks ago, they announced " $576,122.40 from 84 amazing investors". That makes a half million dollars new from 33 investors in December.

Update, 2 weeks later, SupChina has added 13 total investors and ~$65,000 more investment, from email today:

more than 130 investors have seen the value of what we are building and have invested more than $1,150,000

That is obviously a much slower rate than early December, though obvious Christmas was last week and New Year's is this.

Their Early Investor period ends in 5 days:

Early Investor Bonus

All investors who invest a minimum of $1,000 during the first 45 days of the offering are considered Early Investors. The Early Investors will be given additional shares in an amount of equal to 10% of the Shares issued to such investor.

Update: SupChina, now calling itself The China Project has released its 2021 financials. Revenue doubled to just under 1 million:

The company still net loss of over $1 million but that loss was lower than the previous year by more than $400,000 - a good sign:

The bigger question now is what growth rate they can achieve in 2022 and beyond.

As for cash, they had just under a million dollars at the beginning of this year and say their burn rate is ~$600,000 per year:

The company had approximately $934,954 cash on hand as of December 31, 2021. Currently, we estimate our burn rate (net cash out) to be on average $52,600 per month.

SupChina, now China Project, raising prices and has multiple tiers now:

Update, SupChina/TheChinaProject now says its focusing on group sales:

Our team is optimistic that we can hit our goals over the next two years largely by moving our sales strategy from B2C to B2B. In other words, rather than selling individual subscriptions, we are moving towards selling large group subscriptions to multinational corporations, nonprofit organizations, and universities.

SupChina/The China Project is raising more money at a moderately lower value of ~$41.5 vs $45 million last year:

SupChina, now The China Project's CEO was on The Rebooting's podcast - The China Project’s pivot to B2B and subscriptions

Some interesting points made, revenue flat year over year at around a million dollars but core business is growing significantly:

So if you look at our financials for 2022, which we just filed recently, we did a little over a million dollars in revenue, that's about flat overall from the year prior, which is not good. On the good side of things. However, though, our conferences, subscriptions and consulting work were all up like 40 50% each. And we had a business line, a different style of event we were doing in the past that we stopped doing because it wasn't really scalable.

They aim to continue to grow at same rate and breakeven in ~2 years (though this is ~1/2 later than they said earlier this year, see above):

we have a pathway to profitability revenue is growing 40 to 50%. year on year, I foresee us becoming profitable, hopefully is not a guarantee of future performance to any shareholders who are listening. But I foresee us probably becoming breakeven by early 2025.

Also, admitted:

with the exception of our editor in chief, no one else in our company had been involved in a media startup before. And so there has been a lot of learning that's had to happen over the years as we go along.

They say their second/newest fundraising has taken in:

And our second reg CF, which we're still in the midst of, we've raised about a million this time

He addressed the controversy late last year (A former employee’s complaint prompts Republican calls to investigate The China Project, an American news company | Semafor), claiming that their

we provided Ben Smith directly the editor In Chief there who wrote the article, actual email records and slat track records disproving every single claim in the employees complaint letter. And none of that made it into his reporting.

He also criticized Semafor for its own arguably deeper ties to the CCP:

there's a deep irony that developed a few months later, when semaphore announced its own partnership [ see: Why Semafor Is Launching “China and Global Business” | Semafor] with a think tank based in Beijing that is actually controlled directly by the Chinese Communist Party area. And they even say in their announcement that we're doing this partnerships so that we can be allowed to have our conference in Beijing, aka trading influenza accent.

The China Project is now focusing on selling to businesses arguing that:

we launched a subscription program, we kind of plateaued on individual subscribers, because it turns out the universe of people dedicated to cultivating China knowledge is actually fairly limited.

I am skeptical of this because their revenue is still low (even for "niche" media standards). I think the tougher challenge is that they have a lot of competition for China news coverage (with extensive reporting from the NY Times, SCMP, and WSJ, to name a few). I do think The China Project does good work but it's got a lot of deeper, more established competitors.

The CEO elaborated on how they are pursuing the B2B market:

So we pivoted to b2b that's growing very solidly. And now what we're doing is we are mining that vein further, specifically, by creating higher level value, add products and charging even more. So we've got MVP versions of two database products that we're actually already post revenue on, but way before scale, and we're looking to solve more systemic gaps in information between the US and China.

One example is its "China Newsbase":

It currently includes 64,000+ documents, including from 3rd parties, e.g., an IPVM report is listed 3rd in its search for Hikvision: