DESPITE the challenges of the pandemic, equity crowdfunding (ECF) has continued to attract not just companies seeking funds, but also investors.
In its latest ECF Report, pitchIN reveals that 2020 has turned out to be their best performing year to-date.
A total of 36 companies raised RM59.5mil on pitchIN last year, which was more than double the RM22.7mil raised in 2019 from 19 deals.
According to the Securities Commission’s (SC) Annual Report 2020, the total capital raised in 2020 via ECF grew by 457% to RM127.73mil.
A total of 78 issuers had successfully fundraised via 80 campaigns.
PitchIN also notes that larger companies were starting to raise funds through ECF.
Some 14 companies had raised RM3mil and above on the pitchIN platform in 2020, the largest being PolicyStreet, which raised RM5.28mil during the first movement control order (MCO) last year.
A revision by the SC which now allows ECF deals to go up to RM20mil may also see larger companies going the route of ECF for their funding needs.
“There was a moment, when the first MCO was announced, that we genuinely wondered if we would be able to report anything for 2020.
“But we’re happy to note that this was not the case, and for the fourth consecutive time, we’re delighted to report that the ECF industry continued to grow in 2020, ” says pitchIN chief executive officer Sam Shafie.
He also points out that many of the companies which had raised funds through its platform had been able to adapt to the challenging market by reorganising their operations.
Meanwhile, co-founder Kashminder Singh says based on actual valuations and secondary transactions within its portfolio, the model portfolio has increased in value in 2020.
“This is seen most clearly in earlier deals where companies have had time to deploy the funds raised and reap the resultant benefits.
“According to our model, RM37,473.50 invested in 2016/17 in every deal on pitchIN is worth RM101,967 today, which is an increase in value of 172.1%.
“PitchIN looks forward to continue delivering value to investors and we have great deals lined up this year, ” he says.
Sam also notes that two companies from its platform were exploring public listings.
“Based on our interaction with founders, we understand that one company is looking at listing on the LEAP Market while another is considering an Ace market listing.
“When that happens, interest in ECF is bound to grow even more as those companies would prove ECF investments should be part of every serious investor’s portfolio, ” he says.
Going forward, pitchIN says it is on track to surpass 2020’s record performance.
Nonetheless, Sam expects the rest of the year to remain challenging as the pandemic continues to bite into business confidence. Until a strong recovery is in place, retail participation in ECF will remain subdued.
PitchIN is in the final stages of preparing its processes to enable syariah-compliant deals to be approved and hosted on the platform.
It has also applied to operate an Initial Exchange Offering (IEO) platform.
“If our application is successful, we will be well on our way towards becoming a digital investments hub.
“This will see us transformed from an equity crowdfunding platform into an integrated business and funding hub for startups and SMEs.”
The long-awaited pitchIN secondary market is also on track to launch this year.
It is expected to lead to another increase in investor participation in ECF as the secondary market will offer an exit option for investors.
To execute its expansion and new business plans, pitchIN will increase its headcount and carry out its first ever fundraising exercise in 2021.
“We plan to raise up to RM10mil from a combination of an ECF campaign on Leet Capital and institutional investors.
“This is our first ever fundraising and we will use the funds to roll out an integrated digital equity crowdfunding and secondary market platform later this year.
“While a challenging outlook remains, we are excited with the possibilities that have presented themselves, ” says Sam.