EQUITY crowdfunding (ECF) investors are starting to see early returns as liquidity continues to flow into tech-based startups.
Last week, ECF platform pitchIN saw its first exit after a group of MyCash Online investors accepted a buyout offer for their shares from venture capital (VC) firm 500 Startups. The offer, which gave them 44.2% returns over two years since the ECF deal, was made alongside an investment by 500 Startups into MYCash Online.
MyCash Online is a fintech startup that provides an online marketplace for unbanked migrants to purchase products and services online without any bank account or credit card.
Earlier this month, another ECF platform Ata Plus announced its first exit – Skolafund, an impact enterprise that crowdfunds scholarships to university students in need.
Skolafund, which fundraise on Ata Plus in February 2017, was completely acquired by one of Asia’s biggest donation crowdfunding platforms. The deal gives investors in the ECF round a return of 10%.
This development certainly bodes well for ECF as retail investors looking for an alternative investment would be more willing to consider this asset class.
“We are over the moon with this announcement not only for what it means to Skolafund, but equally to their investors that came in at the ECF round. It is Malaysia’s first exit story in ECF and this augurs well for the future of this asset class and also dispels the myth that investing in impact enterprises does not give a financial return, ” says Elain Lockman, co-founder and director of Ata Plus.
The acquisition of Skolafund will see the merger of its platform into the acquirer’s regional platform, giving the company a regional reach.
Meanwhile, pitchIN chief executive officer Sam Shafie says it is pleased to deliver its first meaningful exit to ECF investors.
“The nearly 45% returns that exiting ECF investors obtained represents excellent return-on-investment (ROI) over two years.
“Congratulations too, to MyCash Online on their recent funding and expansion into markets outside Malaysia. It is a mark of confidence for MyCash Online that the majority of ECF investors chose not to take up the offer and remain as shareholders, ” says Sam.
MyCash Online chief executive officer Mehedi Hassan is pleased that his startup was able to realise gains for ECF investors.
“MyCash Online uses the funding raised during our ECF round in 2017 to expand nationwide and establish footholds in Singapore and Australia. Our solid growth since then has placed us in a position where we are now ready to take on the world, with the funding from 500 Startups.
“To the ECF investors who have chosen to exit, I am pleased that we were able to keep our promise to deliver good ROI to investors. I assure the ECF investors who remain that we will work hard to deliver returns for them too in the future, ” he says.
PitchIN is confident that more exits will follow suit.
ECF typically gives investors access to fast growing companies at the stage when they offer the highest potential for future growth.
Malaysia is the first country in the region to regulate ECF. In 2015, the Securities Commission had introduced the regulatory framework for ECF as part of its on-going efforts to foster greater innovation in finance through the use of technology.
There are currently 10 approved ECF operators in Malaysia, namely, 1337 Ventures Sdn Bhd, Ata Plus Sdn Bhd, Crowdo Malaysia Sdn Bhd, Ethis Ventures Sdn Bhd, Eureeca SEA Sdn Bhd, FBM Crowdtech Sdn Bhd, Fundnel Technologies Sdn Bhd, MyStartr Sdn Bhd, Pitch Platforms Sdn Bhd and Crowdplus Sdn Bhd.