SC selects six platforms for equity crowdfunding in Malaysia

• In: Alix Global, Ata Plus, Crowdonomic, Eureeca, pitchIN and Propellar Crowd+
• Crowdonomic says it aims to shape a uniquely Malaysian model

THE Securities Commission Malaysia (SC) has announced the approval of six registered equity crowdfunding platforms, giving small businesses and entrepreneurs greater access to capital.
 
The six platforms are Alix Global, Ata Plus, Crowdonomic, Eureeca, pitchIN and Propellar Crowd+. They are expected to start operations by the end of 2015, the SC said in a statement.
 
The equity crowdfunding (ECF) framework is an important milestone for inclusivity in the Malaysian capital market, said Ranjit Ajit Singh, SC chairman and also chair of the Malaysian Venture Capital Development Council (MVCDC).
 
“The establishment of the ECF is a component of SC’s strategy to democratise finance,” he said at the two-day Synergy and Crowdfunding Forum 2015 (SCxSC) which kicked off today (June 11).
 
“Over the years, Malaysia has developed a diversified and well-established RM2.8-trillion (US$745-billion) capital market, helping businesses to grow as well as financing long-term investments in the economy.
 
“However, for capital markets to be inclusive; small and medium enterprises (SMEs) and startups must also be able to obtain market-based financing.
 
“Hence, it is timely to further widen access through innovation in financial technologies such as ECF platforms,” he said.
 
The SC is keen to roll out ECF in Malaysia, saying an alternative funding channel like this can facilitate the growth of new small-scale enterprises which contribute significantly to the national economy.
 
In August 2014, it published a consultation paper requesting feedback, and released initial guidelines in early February under Section 34 of the Capital Markets and Services Act 2007 to introduce new requirements for the registration of ECF platforms and provide governance arrangement for the operator of such platforms.
 
A call for registration to become ECF operators was also released in February. A total of 27 applications to operate an equity crowdfunding platform in Malaysia were received from a diverse group of interested parties, both foreign and domestic, the SC said.
 
The SCxSC forum today also saw the signing of an MoU (memorandum of understanding) between Multimedia Development Corporation (MDeC) and three of the six platform operators – Crowdonomic, pitchIn and Propellar Crowd+ – to conduct programmes in funnelling ICT companies to the ECF platforms.
 
The SCxSC forum, which attracted over 800 participants, was organised in collaboration with Maybank, MDeC, Cradle Fund, Malaysian Business Angels (MBAN) and #edGY, a publication that focuses on youth entrepreneurship and startups.
 
Crowdonomic to create Malaysian model
 
In a separate statement, Singapore-headquartered South-East Asian crowdfunding platform Crowdonomic said that through the registration of electronic facilities, SC is introducing various guidelines and rules to enhance investor protection, establish clear disclosure rules, and clarify fundraising rules for businesses seeking financing.
 
“The registration is the high point of our continued engagement with regulators to help shape competitive crowdfunding policies and build fully compliant and professional businesses in the markets we operate in,” said Crowdonomic cofounder and chief executive officer Leo Shimada.
 
The Malaysian regulations adopt an inclusive approach allowing any type of investor to participate in offers with investment caps set for protection purposes, the company said.
 
The framework is unique as it will allow businesses to raise up to RM3 million (about US$800,000 within a 12-month span, and also allow investment funds to raise unlimited amounts off the platform, Crowdonomic added.
 
Equity crowdfunding is widely seen as a powerful enabler that will help startups flourish and further develop their innovations, the company said.
 
There is huge market potential in Malaysia which has more than 600,000 small and medium enterprises (SMEs) making up more than 90% of total businesses in the country, according to government agency SME Corporation Malaysia.
 
Startups are also seen to lead the way in innovation, with research (GE's 2014 Global Innovation Barometer) indicating that many believe smaller businesses (SMES and startups) are the ones driving innovation in Malaysia, Crowdonomic said.
 
Shimada said the rise of equity crowdfunding signifies the birth of a new asset class. “Equity crowdfunding is revolutionary as it allows businesses, for the first time, to leverage the full power of social media and technology to efficiently raise capital.
 
“This is particularly important as Malaysians are known to be among the most active on social media on a global scale. Startups will become more empowered to efficiently raise capital and investors can now transparently access new investment opportunities,” he added.
 
Crowdonomic said it is at “advanced stages of forming a formidable alliance of top-tier players across the corporate, venture capital, financial institution and entrepreneurial ecosystem.”
 
“Crowdonomic believes in building strong alliances across the entrepreneurial ecosystem. We are keen to explore opportunities with everyone interested in the potential of equity crowdfunding,” said Shimada.
 
“We are in discussions with multiple parties in Malaysia and the region, and we welcome opportunities to speak to more people.
 
“When it comes to equity crowdfunding, we are not content to just copy the Western model. Instead, we will be proactively paving the way to shape a unique Malaysian model,” he added.
 
Established in 2012, Crowdonomic positions itself as a regional player offering a full portfolio of crowdfunding solutions. It has offices in Singapore, Malaysia and Indonesia.
 
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