13 October 2018

[Crowdfunding] What is Equity Crowd Funding (ECF)?

As promised, in this month of October, we will be writing about Equity Crowd Funding (ECF). Another crowd funding method which aspiring new start up entrepreneurs can source for their business funding during initial stages. The ECF platforms provide an alternative venue for capital-raising to SMEs and innovative new businesses.

Proudly to tell you that Malaysia is the first country in ASEAN to introduce a regulatory framework to facilitate equity crowdfunding in 2015, with six registered equity crowdfunding (ECF) platform operators was fully operationalise since 2016. Good job to Securities Commission of Malaysia.

Get to know more here... ⏬⏬⏬

What's in it for SME and start-up companies?
  • An alternative source of funding and quicker access to capital at a lower cost compared to traditional banks products
  • An opportunity for start-ups and SMEs to harness the power of the crowd on the internet to raise funding
  • Start-ups and SMEs can also gauge market reception of their proposed product and/or services from response received on the ECF platform
  • And, it's a free advertising also for the companies via social medias to be promoted by ECF operators

What's in it for general public as an investor?
  • Become a shareholder of a SME and new start-up by owning some shares
  • Diversify their investments beyond the traditional asset classes
  • Investors can take up the investment block they are comfortable with
  • Access to asset class which only available to high-net worth individuals previously

Trust Account ?
Yes. Similar to P2P lending, all approved ECF platforms must have a dedicated trust account (operated by public trustee) for each of the issuer company. Monies obtained from investors are placed in a third party trust account until the appropriate disbursements are required to be made. All of the transaction was recorded in trust account to protect the interest of the investors and a certificate of ownership will be issued to all investors. This effectively avoid the misappropriation of investors' monies by ECF operators.

List of Approved ECF Operators as at May 2019:
  1. Ata Plus Sdn Bhd (www.ata-plus.com)
  2. Crowdo Malaysia Sdn Bhd (www.crowdo.com)
  3. Eureeca SEA Sdn Bhd (www.eureeca.com)
  4. FBM Crowdtech Sdn Bhd (www.fundedbyme.com)
  5. Pitch Platforms Sdn Bhd (www.equity.pitchin.my)
  6. Crowdplus Sdn Bhd (www.crowdplus.asia)
  7. Funnel Technologies Sdn Bhd (www.fundnel.com)
  8. 1337 Ventures Sdn Bhd 
  9. Ethis Ventures Sdn Bhd
  10. MyStartr Sdn Bhd 

In our next article, we will blog about each of these ECF platforms in Malaysia. Stay tune!

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