Selangor Journal
Malaysian small and medium entrepreneurs (SMEs) should explore ways of raising funds via the equity crowdfunding (ECF) platform. — Picture by SELANGORKINI

Malaysian SMEs should opt for crowdfunding in raising funds

By Selangor Journal Team

SHAH ALAM, Oct 16 — Most small and medium entrepreneurs (SMEs) do not realise the opportunity and advantages in raising funds for their businesses via the equity crowdfunding (ECF) platform.

Panellists in the session “Crowd Funding SME: Raise Funds the Smart Way” in yesterday’s virtual 5th Selangor Smart City and Digital Economy Convention 2020 agreed that SMEs should approach to explore ways of raising funds with the 10 ECF operators, which have been around since 2015.

The session panellists were Ata Plus co-founder and director Elain Lockman, PitchIN co-founder and chief executive officer Sam Shafie and Mystartr founder and chief executive officer Goh Boon Peng, and moderated by Ingenious House chief executive officer William Du.

“A lot of companies and SMEs that comes to ECF platforms expect they would be provided with a lot of funding but that is not the case. We are a licensed platform that raises fund publicly and we are not venture capitalists (VC) or banks,” said Goh.

Elain said that unlike banks or other financial institutions, ECF operators understand SMEs as they themselves are entrepreneurs.

“We are entrepreneurs too and we still are. We understand the pain in fundraising. We understand that without funding, SME cannot move.

“SMEs are the key component that drives the Malaysian economy as 70 per cent of it comes from the SME community,” said Elain.

Elain said all ECF platforms are licensed and supervised by the Security Commission (SC) and to get funding on their platforms, companies must be Malaysian registered entities with the latest audited accounts. The companies must also have a minimum of 3 years business plan with a corresponding 3-year business projection.

“ECF should not be likened to the last resort option. We should be part of the businesses funding strategy. SMEs should work with us as through our platform as they can legitimately solicit funds from the public, which previously was illegal,” said Elain.

Meanwhile, Sam clarified that SMEs must understand that investors through ECF can come from anybody and not just an organisation.

“ECF consists of two stakeholders which are the issuers (the companies) and investors. Before this, companies rely on VC but now with ECF, you are not only opening up to high net worth investors but also to retail and people who are using your services or products.

“We have seen investors that help companies by promoting the companies that they are investing in because they like the services or products. This can only happen in ECF where smart business meets smart investor. This the beauty of ECF compared to the normal platforms of funding,” said Sam.

Goh said SMEs can gain more by raising funds via ECF platform instead of going through traditional ways.

“We always get our issuers to bundle their products or services to their investors which also helps the SMEs as it will turn their investors as loyal supporters. We recommended issuers to have 50 to 70 per cent of investors as their users before raising funds with us.

“A lot think ECF is only for startups but in Malaysia, most VCs already funded the better startups, but SMEs have a bigger number and are more in need of raising funds via ECF.”

“Also via ECF, companies can update their accounts as we discovered in Malaysia many SMEs have one or two companies accounts set up. Through us, they can clean up and prepare their companies to get listed for initial public offer (IPO),” he said.

Wrapping up the session, Goh said SMEs should realise that ECF is not only about fundraising but it is also to open up to a lot of people, which would in return bring in a lot of supporters like retailers to help their companies grow.

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Editor Selangor Journal