Friday, January 31, 2020

Investing in non-listed growth company via equity crowdfunding

Equity crowdfunding (ECF) is something new but yet not so new in Malaysia investment market.

It provides a Securities Commission regulated platform that allows start-up companies and SME to get new capital fund through small equity investments from the public crowd by using approved online platform.

On the other hand, it provides a governed platform that allows general public to gain access to invest in share equity of non-listed companies that are on the growing track, and has the potential to become a unicorn that brings in multi-fold returns.

Previously, investment in such early stage equities of those non-listed companies is a privilege to sophisticated investors (a.k.a. rich people with millions of personal investment fund), private equity funds, angel funds, etc. Equity crowdfunding enables ordinary retail investors to participate in investment to those companies with a more affordable, smaller amount of money, as low as a few hundred ringgit.

The main advantages, which are also the disadvantages at the same time, of ECF are that:

  • The selling price of the new shares issued during a crowdfunding campaign is fixed. Even though it might be very hot-selling, the price will not go up, and even though it might be having very few investors, the price will also not go down. The price is also not affected by general investment market sentiment, or socio-political affairs. This is of advantage to the investors, as the price is solely based on fundamentals. Major events such as Wuhan virus outbreak will not shaken the offering price.
  • The shares purchased (regardless ordinary shares or preference shares) are not volatile and quite hard to resell to the other investors, until the company is public listed or there is big fund that makes offering to buy the shares from existing shareholders.

Today, there are altogether 10 Securities Commission approved equity crowdfunding platforms. Those platforms are tasked as a middleman to help start-ups or SME wanting to finance their business growth through equity crowdfunding by issuing new shares to reach their investors crowd, at the same time to help the investors to perform preliminary filtering and due-diligent to the companies to ensure their pitching and information provided are genuine and meet certain level of integrity.

Among the 10 approved ECF platforms in Malaysia, Crowplus is the first mover, but it seems that they had not gained much advantage of being the first mover. PitchIN is a market leader whereby many companies who seek for ECF and also many investors who want to look for non-listed growth companies investment are putting their trust on PitchIN. MyStartr has been an aggressive challenger that has gained traction in the Chinese speaking community beside the English speaking community.

MyStartr just launched their ECF platform in December 2019. So far, there are 2 successfully funded companies while others are on their way to reach their minimal funding target.

The first successfully funded company is Biztory which raised more than a million ringgit capital through ECF on MyStartr, and they did it within a very short period of 8 days only. Currently, funding activity of this company in MyStartr has stopped.

The second successfully funded company is Rtist, which already raised more than their minimum target of RM200,000. Currently their funding activity in MyStartr is still ongoing towards their ultimate target of 1 million ringgit. Therefore, you can still participating in their growth by becoming one of their minority shareholders through ECF, and you can make your investment there by using your credit card. The Rtist ECF closing date for this round is set on 15 February 2020.


Daddy Monster said... Reply To This Comment

Hi, we are the company Rtist that you mentioned on your article. Tq for mentioning us, do you mind adding our actual URL in the link?
Thanks alot

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