EQUITY crowdfunding (ECF) is an online mechanism for private companies to raise money from investors in exchange for equity (shares) in the company.
In Malaysia, ECF started as early as 2015 when the Securities Commission (SC) issued the first batch of licenses to six platforms which have since been gaining traction in the country.
Despite the impact of the pandemic, the pitchIN 2020 ECF Report revealed that investors continued to invest in ECF deals.
This resulted in pitchIN – a recognised market operator (RMO) by SC to offer ECF platform for start-ups and companies – recorded its best ever annual performance with 36 companies raising RM59.5 mil on pitchIN in 2020, two-folds higher than 2019 (RM22.7 mil and 19 deals).
Released on May 15, the fourth annual report since 2017 also showed that larger companies were starting to raise funds through ECF.
PolicyStreet took the record of Malaysia’s highest funded ECF deal when it remarkably raised RM5.28 mil during the first movement control order (MCO 1.0) while 14 companies raised more than RM3 mil in 2020.
For the record, pitchIN Equity went live in March 2016 and has raised over RM140 mil to-date with over 5,300 investments made into fast growing Malaysian companies.
“When the first MCO was announced, there was a moment that we genuinely wondered if we would be able to report anything for 2020,” pitchIN CEO Sam Shafie pointed out.
“But we are happy to note that this was not the case and we are delighted to report that the ECF industry continued to grow in 2020.”
According to Sam, the shift to digital solutions also brought forward quality companies with investors recognising that equity crowdfunding enables them to access deals that would otherwise not be available till later stages.
Sam further revealed that two companies were exploring public listings with others on track, too.
“Based on our interaction with founders, we understand that one company is looking at listing on the LEAP Market while another is considering an Ace market listing.
When that happens, interest in ECF is bound to grow even more as those companies would prove ECF investments should be part of every serious investor’s portfolio.”
Going forward, pitchIN is on track to surpass 2020’s record performance.
“We are confident that this year will be even better than 2020,” Sam envisioned, adding that pitchIN is currently carrying out its own fundraising exercise through a combination of an ECF campaign on Leet Capital and an institutional investor to raise RM10 mil.
Sam explained that this is the company’s first ever fundraising and that it will use the funds to roll out an integrated digital equity crowdfunding and secondary market platform later this year.
“pitchIN has also applied to operate an initial exchange offering (IEO) platform and if our application is successful, we will be well on our way towards becoming a digital investments hub,” he added. – May 18, 2021
