THE Malaysia Digital Economy Corporation (MDEC) has announced partnerships with seven crowdfunding operators to help entrepreneurs tide over the economic challenges brought on by the Covid-19 pandemic by introducing alternative financing to ease cash flow.
This is MDEC’s second funding facilitation initiative led by its Global Growth Acceleration Division, following its launch of Meet Your Match Malaysia, a virtual investor-matching initiative with KK Fund Pte Ltd.
In this second funding initiative, MDEC is supported by the Registered Digital Market Association (RDMA) with members comprising Equity Crowdfunding (ECF) and Peer-to-Peer Financing (P2P) operators that are registered with the Securities Commission of Malaysia. ECF enables groups of investors to fund businesses by taking up stakes in the investee companies, whereas P2P involves funds being lent at a fixed interest rate over a fixed tenure.
According to RDMA, the seven partners are Ata Plus, CapBay, Crowdplus Asia, Eureeca, Funding Societies, microLEAP and pitchIN.
MDEC cited a recent survey by the Malaysian Global Innovation and Creativity Centre (MaGIC) which involved 239 startups. Some 35% of the respondents said they needed loans, 23.8% asked for grants or subsidies and 3.8% asked for deferment in repayments.
“We are also made aware that 74.9% of the survey respondents indicated that they were unsure or unaware of auxiliary financial support and incentives made available for entrepreneurs – a gap that MDEC is proactively pursuing to seal,” said Surina Shukri, CEO of MDEC.
She added that, while the general business community lauds the recent RM10 bil financial
lifeline for micro-entrepreneurs and small and medium enterprises (SMEs), there are also many entrepreneurs who may not be successful in obtaining government grants and other financial aid.
“As such, our Global Growth Acceleration Division has been exploring alternative financing avenues and making these options known to businesses that are struggling to stay afloat during these trying times,” said Surina.
Since its debut in June 2017 and November 2016 respectively, ECF and P2P fundraising activities in Malaysia have grown rapidly, according to MDEC. As of the end of 2019, the financing platforms had collectively raised over RM700 mil and benefited more than 8,000 micro, small and medium enterprises (MSMEs), which are underserved by the traditional financial system.
“In these unprecedented economic conditions, conventional loans with collaterals will further burden businesses whereas ECF and P2P online platforms are able to swiftly meet the critical financing needs of businesses, particularly for MSMEs,” said Elain Lockman, co-founder of Ata Plus and president of the RDMA.
MDEC will also be engaging the founders of MSC-status companies and other high net worth individuals to “pay it forward” as investors on these digital financing platforms.
“Most industry leaders have experienced turbulent times and understand the need for support, particularly through financing,” said Gopi Ganesalingam, vice-president of MDEC’s Global Growth Acceleration Division.
Entrepreneurs who wish to explore this alternative financing option may do so by submitting an expression of interest at https://malaysiadigitalhub.my/virtualfunding. This drive runs until April 24. MDEC has promised to offer priority assessment to all applicants by expeditiously screening their eligibility before submitting the profiles to the applicants’ choice of ECF/P2P operator. — April 9, 2020
