If you are an SME and are looking for capital (and not from Financial Institutions), there is some great news in that the Securities Commission Malaysia (SC) has approved 6 equity crowdfunding operators, which are expected to start by the end of 2015. The 6 are #AlixGlobal; #AtaPlus; #Crowdonomic; #Eureeca; #PitchIn; and #PropelllarCrowd+. Another landmark for Malaysians is that, Malaysia is the 1st Asia Pacific country to legislate crowdfunding operators.
To fully appreciate this significance to your SME, it is best to briefly explain what equity crowdfunding is all about. “Equity crowdfunding is the name given to the process whereby people (“the crowd”) invest in an unlisted company (a company not listed on a stock market ie. Sendirian Berhad or private companies) in exchange for shares in the company. A shareholder has partial ownership of a company and stands to profit should the company do well. The opposite is also true, so if the company fails investors can lose some, or all, of their investment”.
Why this is great news for SMEs?
- Alternative funding to financial institutions (where borrowing generally require repayment, regardless of profits);
- The size & profits of your SME is not the sole criteria (as compared to raising funds on the stock exchange);
- Funding is in the form of investment, not borrowing (this means shareholders are only paid when your company makes a profit); and
- Burden of repaying your financing is lifted (as payment is only when there are profits)
Do watch this space for more of on this topic.