Regional crowdfunding platform Crowdo has officially launched its equity crowdfunding platform in Malaysia, following its approval as a recognised market operator by the Securities Commission (SC) in June 2015.
Leo Shimada, co-founder and chief executive officer of Crowdo, noted that the launch was timely, as the Malaysian startup scene is entering a time of exciting growth.
Goh Ching Yin, executive director for market development, Securities Commission Malaysia, had paraphrased AirAsia founder Tony Fernandes, saying that “now everyone can invest”, through equity crowdfunding (ECF). Crowdo promises that it can allow anyone to be an investor through four steps, complete with due diligence.
Shimada noted that the platform performs three types of due diligence, of the startup, the business, as well as social due diligence, which is where the platform looks at how active a potential issuer is on social media. Shimada explained that the Internet is the best place for an issuer to reach out to investors.
The platform also allows for a cooling off period of six days after an investor has put in funds, allowing the investor to recover their funds at no cost in the event they change their minds. Shimada also noted that funds will be held in an escrow account, with Crowdo not holding onto any funds. It is only after the funding is successful that the platform takes a percentage as admin fees.
Crowdo has Wedding.com.my as their first campaign, though the platform had already set up a community of 700 local companies as part of the platform. The platform also aims for Malaysia to be a flagship market for equity crowdfunding, according to Shimada, who notes that Malaysia is a frontrunner for equity crowdfunding in the region, being one of the first to legislate the form of funding.
“Malaysian investors are one of the most open to diversified investment offerings. With equity crowdfunding, which is subject to SC regulations, investors will have transparent and efficient ways to invest in startups, while small and medium enterprises (SMEs) will have better access to potential financing.
“In Malaysia, this will change the business landscape, as there is a huge pool of potential investment opportunities, with close to 650,000 SMEs comprising more than 97% of total businesses in the country,” said Shimada, adding that governments across Asia are encouraging equity crowdfunding as a means of effective early stage capital formation.
During the press conference, Shimada also noted that he believes Crowdo is distinctly placed in terms of starting an equity crowdfunding platform, due to having three years of experience of standard crowdfunding and peer-to-peer lending under its belt, along with the platform’s practice of tailoring for the local market, as well as committing themselves to the local market.
“The recent formation of the Asean Economic Community means we can anticipate a rise in regional investment flow with investment liberalisation leading to the free flow of investments and the freer movement of capital across the region.
“The Asean Comprehensive Investment Agreement further commits members to liberalise and protect cross-border investment, applying international best practices in the treatment of foreign investors and their investments. In the long term, it is anticipated that investment climates conducive to innovation will develop,” noted Shimada.
Shimada also noted that equity crowdfunding is a form of FinTech, and cannot be treated as one or the other.
“If the ECF platform is treated as a tech platform, it will fail, as there are definite elements of finance in it. If it is treated as a finance platform, it will also fail, as there is an element of tech to it. It has to be treated as FinTech,” explained Shimada.
The World Bank has identified the total market potential for crowdfunding globally outside the US to reach as high as US$96 billion (RM423.2 billion) by 2025, with the Asia-Pacific region coming in at up to US$62.91 billion in estimated potential.
KINIBIZ is also launching its own equity crowdfunding campaign, with the exercise to commence sometime this month, with the intent of growing the company, in terms of online and print at home and in the region. KINIBIZ is in collaboration with local platform operator pitchIN for this exercise, with pitchIN also one of the six operators approved by the SC. For more details or to find out how to take part in this exercise, please click here.