Gu Shengzu, vice-chairman of China Democratic National Construction Association, gave six suggestions concerning crowd-funding platforms and projects to promote innovation and entrepreneurship.

Internet finance are financial products combining the traditional finance industry and information technology. It has become a buzzword in China and is facing new challenges against the "new normal" backdrop in recent years.

More than 500 people from the government, banks, and high-tech corporations have attended the 2016 Internet Finance Annual Meeting last Saturday, sharing opinions on the future direction of Internet finance development.

Hosted by the China Internet Association, China E-finance Industrial Alliance, and the Committee of Internet finance of the China Internet Association, the meeting had the theme of "new drive, new face, and new progress" of Internet finance.

The six suggestions on crowd-funding put forward by Gu in the meeting are as follows:

1. It is essential for crowd-funding platforms to conduct investigation on its projects thoroughly and its crewmembers shall also carry out relevant background research. Moreover, accountability should be enhanced, in order to improve the security of crowd-funding projects.

2. Crowd-funding platforms should adopt the mode of "lead investor + followed investor", which means professional investment institutions and experienced investors take the roles of leading investor, helping identify risks, and others can follow and learn from them.

3. Carefully go through current incubators and Group Innovation Spaces (GIS) to preserve the better ones, strengthen the risk management process, and connect mass entrepreneurship with crowd-funding platforms.

GIS can make consulting centers for entrepreneurs an online service, enriching the service range and enhancing the efficiency of resource utilization.

4. Build the capital market into a pyramid. The spire of the pyramid is the main board, followed by the growth enterprise market, and crowd-funding, which corresponds to angel investment and venture capital as the bottom.

5. Push forward the credit reporting of big data, using the strength of the third-party and reducing asymmetric information. Gu said that almost all the risks come from asymmetric information, so it is necessary to build a credit reporting system online.

In this case, the third party (e.g. lawyers, accountants, and rating agencies ) can supervise crowd-funding platforms, while credit-reporting platforms are required as the basic measure to accomplish online credit reporting system.

6. Enhance the transformation of the regulatory system, especially regulations of function and risk. Gu said that the main problem arises in regulation because blind spots still remain.

"In the past, whenever we loosened our regulation there would be chaos and whenever we tighten the regulation we abandoned flexibility. We need to prevent such occasions in the future," said Guo.