CrowdPlus has launched Asean’s first equity crowdfunding (ECF) platform – CrowdPlus.asia – which will apply proven venture capital (VC) investment methodologies to help startups and small and medium enterprises (SMEs) raise funds.
The platform is backed by Netrove Ventures Group which will share their know-how in VC investments as well as mentorship for founders.
CrowdPlus is one of the six licensees Securities Commission Malaysia approved for ECF in June this year.
CrowdPlus chairman Teh Kim Seng, a Malaysian, said the ECF platform will be selective about the companies who can campaign for funds on the platform.
“We will list only quality companies, based on the methodology we have developed in the past 16 years from our experience in VC investing,” he said at the launch.
“The unique feature in CrowdPlus.asia is having a group of lead investors and mentors called the Qualified Matching Investors (QMI). They are a pool of qualified investors and successful entrepreneurs who have been there, done that, across the region,” he added, noting that these investors will be able to provide insights and network for the selected companies.
CrowdPlus.asia has a team of 30 QMIs, that is growing.
In addition, CrowdPlus.asia also has a partnership with Netrove Ventures, a regional tech-based VC firm that has an extensive business history in the Asia region for more than 15 years.
The platform already has offices in five countries in Asean, by virtue of Netrove’s set-up around the region.
“The initial stage is to make Malaysia our hub for ECF. We will do marketing and business development around Asean, and invite the companies to understand the benefits of ECF on CrowdPlus.asia. We will also be working closely with MDeC and other partners to encourage regional companies to make Malaysia their domicile. They will be able to raise funds through CrowdPlus.asia and be able to enjoy benefits like tax exemptions here,” he said at a press briefing after the launch.
Another advantage of having footprint around the region is that when other markets open up for regulated ECF, CrowdPlus.asia will apply to be a licensee, making it a regional player in the sector, Teh said.
Teh said that the platform has attracted investors from Asean and fund seekers since the company was granted the ECF license.
CrowdPlus.asia will take into account the details such as the company’s incorporation, shareholders’ and director’s information as well as commercial assessment. For the investors, they will make an online submission pertaining to Anti-Money Laundering and Anti-Terrorism Financing Act.
Deputy finance minister Chua Tee Yong, who officiated the launch, said to jumpstart the ECF industry, there will be no fixed targets for the current operators.
“Being new (in the market), we are not forcing the industry. There is no target of how many companies each operator has to approve. What they should target is, when approving companies, to ensure that the risk is acceptable for investors,” he said.
Chua also alluded that the regulators may look at adding to the pool of operators, should market reception be positive.
The timeline set for all operators to launch their platforms is by the end of the first quarter of 2016.
“We approved only six operators, although we evaluated 27, because we felt that that was enough to start with. It doesn’t mean we will not open (for submissions) again but we want to see the market reaction to this initial stage of implementing ECF first,” Chua said.
Chua added that there are four aspirations tagged under the implementation of ECF in Malaysia. The first is to provide alternative market-based financing to SMEs, startups and entrepreneurs.
Another is to support innovation and new business models, to widen access to capital and business support, and lastly, to create a more dynamic and inclusive capital market.
He noted in his speech that the Malaysian government has continuously augmented access to financing for SMEs.
“In 2002, SMEs access to financing, with a total share of business loans outstanding of financial institutions was 30 percent, and it had increased to 46 percent in 2015,” he pointed out.
Chua also said that the total number of registered capital venture corporations and VC management corporations stood at 112, with MYR6.2 billion of funds.
“The government was the main source of funds in the VC industry, with a contribution of 65.9 percent or MYR4.09 billion of total committed funds,” he said.
Of those funds, 43.7 percent was channeled into pre-IPO companies, 25 percent into expansion stage companies and 24.3 percent into early stage companies. Only 7 percent went to startups at the seed stage.