Why HerCoffee Failed After One Year of Crowdfunding

Last July, Beijing’s HerCoffee made headlines—not for its coffee, but for its launch event featuring 66 women in red dresses and hundreds of celebrity guests. Fast-forward less than a year, and the same shop now faces closure. What went wrong with this much-hyped crowdfunding project?

Yes, it failed. The 66-investor-backed HerCoffee may close due to unsustainable rent, no kitchen hood (blocking food service), overextended shareholders, and lack of profit. Even if saved, its goal wasn’t profit—it was networking. But most crowdfunded ventures do need to make money to survive.

What Happened to HerCoffee?

HerCoffee opened to fanfare in 2023 with 66 female shareholder-investors and celebrity supporters. Less than a year later, co-owner Wen Rou revealed the café was considering shutting down. High rent and no ventilation hood—meaning no food prep—were key problems. Shareholders, busy with their own jobs, had little time to help run it. Despite possible closure, the group hopes to keep the community idea alive, possibly relocating.

Why Did It Struggle?

The main issues were financial and structural. First, the location’s sky-high rent ate into any potential revenue. Second, the lack of a kitchen hood prevented offering food—a common revenue booster for cafes. Third, most shareholders had full-time jobs and couldn’t contribute meaningfully to daily operations. Even if profitable, earnings were earmarked to support female entrepreneurship, not return capital. As Wen Rou put it, profitability wasn’t the original goal—but without it, sustainability suffered.

The Risks of Crowdfunding a Café

Crowdfunding may look like a low-barrier funding model, but running a café this way carries major risks. Internet law expert Zhao Zhanling highlights legal dangers: crowdfunding sits close to illegal fundraising. Many projects dodge rules around the 200-investor limit by using nominee shareholders—but that opens other risks. If your nominee sells your stake without telling you, you might never know. Legal clarity on these arrangements is still pending, though updates are expected in 2024. And while crowdfunding feels like community support, it still requires all the usual business basics: market demand, profit strategy, shareholder rights, and exit plans.

What Determines Success?

According to Weixin Financial Group’s Ma Weiqiang, most investors expect returns—even in lifestyle-focused projects. HerCoffee was atypical because it prioritised networking over income. But even non-profits usually need cash flow to stay open. The core issue isn’t the crowdfunding model itself—it’s ignoring fundamentals like rent control, operational participation, and basic café economics. Without addressing those, no amount of community spirit will keep the lights on.

Frequently Asked Questions

How many shareholders did HerCoffee have?

HerCoffee was funded by 66 individual women shareholders, who also helped promote the café through their networks. These shareholders were not professional operators, and many had limited time to contribute to daily management.

Why couldn’t HerCoffee serve food?

The café lacked a proper kitchen exhaust hood, which is legally required in China to operate a food service area. This restriction prevented HerCoffee from offering meals or even simple snacks, cutting off a typical revenue stream for cafés.

Was profit the main goal for HerCoffee?

No. According to co-owner Wen Rou, the original goal wasn’t to make money but to create a networking hub for women. Any surplus was intended to support female entrepreneurship. However, even mission-driven cafés need revenue to survive long-term.

What legal risks does crowdfunding pose for cafés?

Crowdfunding borders on illegal fundraising if not structured properly. A major issue is the 200-investor limit. To bypass this, many projects use nominee shareholders—who may transfer shares without the actual investor’s knowledge. Legal frameworks around nominee arrangements remain unclear as of 2024.

Could HerCoffee have been saved?

Potentially. The team discussed relocating to a more affordable space or finding a new operational model. However, without solving the rent, food service restrictions, and shareholder engagement issues, any restart would face similar risks.