EQUITY crowdfunding (ECF) activities in Malaysia have seen an impressive growth since Securities Commission Malaysia initiated the industry in 2015, and the COVID-19 pandemic, it seemed, had not done as much damage as many would have thought.
Despite the pandemic limiting certain activities traditionally organised in fund-raising, the impact, according to Ata Plus Sdn Bhd CEO, co-founder and director Elain Lockman, was minimal seeing as to how more than 70% of the activities were done online.
“During early stages of the pandemic, we also saw a surge of interest in new investment instruments or asset classes by not just seasoned investors but also those who were exploring alternative investment options,” Lockman told FocusM.
When the pandemic hit, many people were already very comfortable with pitching and meeting investors online, she added.
“With an online pitch, you can reach numerous people that have the potential of becoming a product co-founder, user or most importantly, an investor.
Participation in online pitching helps founders spread the word about their project to a wide crowd from the comfort of one’s home. To date, we have seen much success in these online sessions and this is observed through the industry’s performance last year.”
But while herd immunity brings the possibility to of reverting to in-person fundraising activities, Lockman had no doubt that online pitches would continue to thrive.
“This is especially when reaching out to investors in multiple geographical locations and varying time zones,” she pointed out.
Meanwhile, it was previously reported that the Malaysia Co-Investment Fund (MyCIF) which is administered by the Securities Commission Malaysia (SC) has provided a matching fund where for every RM4 raised from the crowd, the Government would match RM1, up to RM1 mil for every ECF campaign.
Then, from April 16 to end-December 2020, MyCIF further increased its funding matching ratio from 1:4 to 1:2 for eligible ECF and peer-to-peer (P2P) financing campaigns to provide additional liquidity into the alternative fundraising space.
“We strongly believe that this intervention, whereby the Government co-invests with the public, may have also influenced and spurred the growth of the sector during these difficult times,” Lockman acknowledged.
To this end MyCIF has co-invested RM165 mil in 5,439 ECF and P2P financing campaigns as at end-2020. This investment has benefitted 1,197 micro, small and medium enterprises.
Meanwhile, the ECF sector’s growth is nothing short of impressive.
According to statistics from the Securities Commission Malaysia (SC), as of March 31, 2021, 193 ECF campaigns and 19,248 P2P campaigns have successfully fundraised RM243.67 mil and RM1.38 bil respectively.
FocusM noted in a related article in January 2019 that the country’s ECF platforms had raised RM32.74 mil in 2018 through 37 campaigns.
This is according to data from the SC.
Fast forward to the present whereby Ata Plus’s Lockman pointed out that the number of successful campaigns and successful issuers on ECF platforms had grown by leaps and bounds in the previous year despite the pandemic.
“In 2020, there was a 172% increase in successful campaigns compared to the previous year, while the number of issuers rose 170%. The total number of successful issuers rose to 183 in 2020,” she said.
As to what this means for the ECF sector, Lockman believes that the outlook for the ECF sector will continue to be bright especially with the various measures and incentives established by the Government last year.
“COVID-19 pandemic aside, the sector has been fortunate having enjoyed a flourishing 2020, as we believe this will continue in 2021. There was no real tunnel and no bleakness as the industry has always been fortunate to be in the light.” – August 3, 2021.
