Securities Commission holds forum on crowdfunding in Malaysia

  • Sme
  • Tuesday, 30 Sep 2014

The team behind PitchIN Sdn Bhd, (from left) Kashminder; business development executive Nurul Syaqinah; and Shamsul.

The pedestal for the Statue of Liberty was made possible with the funds donated by the when publisher Joseph Pulitzer put out an appeal in his newspaper The New York World in 1885.

The effort is an example of what can be accomplished with what is now often called “crowdfunding”.

“Crowdfunding has gained strong momentum in recent years, fuelling innovation and collaboration in research, business, and society alike,” said Securities Commission (SC) chairman Datuk Ranjit Ajit Singh in his speech during the Securities Commission Synergy and Crowdfunding Forum.

The event, held on Sept 19 in the commission’s office in Bukit Kiara, Kuala Lumpur, saw over 600 participants comprising angel investors, entrepreneurs, startup owners, academics and the public.

Putting forward of an early example of crowdfunding in Malaysia, Ranjit said in 1982, a local daily launched the People’s Live Telecast Fund (PLTF) to bring live World Cup football matches to the Malaysian public.

He added that over 600 crowdfunding platforms worldwide had raised about US$5bil (RM16.3bil) last year.

“The market potential is estimated to grow to between US$90bil and US$96bil by 2025 with China and East Asia leading the way, accounting for 57% of the growth rate,” he said.

On Aug 21 this year, SC invited feedback on its proposed regulatory framework for equity crowdfunding and issued a public response paper on Sept 22.

PitchIN Sdn Bhd co-founder Kashminder Singh told Metrobiz that the platform is a way for non-listed companies, which mainly comprised small and medium enterprises (SMEs) and startups to raise funds publicly.

The company, founded with Shamsul Jafni Shafie is one of the companies that expressed an interest to develop the platform,

“Despite being open to public investors, the SC requires that the issuers comply with the Companies Act 1965,” he said.

Ranjit speaking to the audience of about 600 people at the Securities Commission Synergy and Crowdfunding Forum.
Ranjit speaking to the audience of about 600 people at the Secutiries Commission Synergy and Crowdfunding Forum.

This, would mean that the business owners or the issuers of the company would be very selective of who they want as their shareholders, which the current act restricts the number of shareholders to 50.

Shamsul added that sometimes it is not just about the money as the business owners also want to tap on the experience of the investors which would help to grow the company further.

Unlike a live stock market exchange, he added that the platform is not a process of buying shares where the owner and investor does not meet prior to the transaction.

“There will be demo days and meet the founder days where investor get to understand the person and the business they are investing in,” Sam said.

To further protect investors, they both advocate that the shareholders also have additional terms in their shareholders agreement where money are disbursed on an achieved milestone basis.

“Such investments are inherently risky. Having said that, it is an avenue for high-net-worth individuals who felt they can take the risk, and of the few startups that they invest in, one could possible be a winner and make them some money in the process,” Kashminder concluded.

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