Singapore fintech startup gets accredited by Malaysia regulator
Crowdonomic is said to be the first and only homegrown platform to be conferred this status in South-east Asia. Six platforms – including Malaysia’s Alix Global, Ata Plus and pitchIN, Dubai’s Eureeca, and Asia-Pacific player Propellar Crowd+ – were announced by SC chairman Ranjit Ajit Singh at the SC’s Synergy and Crowdfunding (SCxSC) Forum 2015 on Thursday.
The six were selected from 27 global applicants that had responded to SC’s call for ECF operators in February, and are expected to start ECF operations by end this year.
Said Crowdonomic’s co-founder and chief executive officer Leo Shimada: “This is the high point of our continued constructive engagement with regulators to help shape competitive crowdfunding policies and build fully compliant and professional businesses in the markets we operate in. Our collaborative approach distinguishes us from many self-proclaimed crowdfunding platforms currently operating in grey areas.”
Given that ECF is a new regulated space, the accreditation process has been extremely rigorous, Mr Shimada told BT. “We hope the Monetary Authority of Singapore (MAS) will take great confidence in the fact that Singapore now has a homegrown fintech startup that is registered in a neighbouring jurisdiction and set to pave the way in overseas regulated markets. It shows that it not only has startups with the right calibre, but also exportable business models.”
When contacted, a MAS spokesman said: “MAS issued a consultation paper on proposals for securities-based crowdfunding on Feb 16. We are currently reviewing the feedback received and will publish a response paper in the later half of 2015.”
In February, Malaysia became the first South-east Asia country to announce an ECF framework and call for operator registration; it introduced the concept – which lets investors invest in companies in exchange for equity – at the first SCxSC forum last September. Notably, ECF regulations in Malaysia allow for participation by angel and retail investors, unlike in Singapore where MAS has proposed to limit ECF activity to accredited investors. In Malaysia, regulations also allow businesses to raise up to RM3 million (S$1 million) within a 12-month period and microfunds (such as venture capital funds) to raise unlimited amounts via an ECF platform.
ECF is part of SC’s strategy to democratise finance, said Mr Singh. “Over the years, Malaysia has developed a diversified, well-established RM2.8 trillion capital market, helping businesses to grow and financing long-term investments in the economy. But for capital markets to be inclusive, SMEs and startups must also be able to obtain market-based financing.”
Mr Shimada added: “ECF is revolutionary. Not only does it signify the birth of a new asset class, it allows businesses for the first time, to leverage the full power of social media and technology to efficiently raise capital. Startups will become more empowered to raise capital and investors can now transparently access new investment opportunities.”
When asked if Malaysia can offer an ECF model for Singapore, Mr Shimada said that every regulator has its own approach. “Regulators in Malaysia were constantly in touch with aspiring operators to understand the industry, and address concerns and questions that they had. We felt that it was empowering and a positive step towards strengthening the ecosystem in the long run. We hope to achieve a similar level of continuous dialogue in Singapore.”
Some other platforms here have announced plans to facilitate ECF. FundedHere – set up by Tembusu Partners’ Andy Lim, Capbridge – by Singapore Exchange and Clearbridge Accelerator, are awaiting approval from MAS. FundedHere will not apply for a Malaysia ECF licence, it will conduct ECF and crowdlending solely in Singapore, while Capbridge hopes to kickstart its pilot run soon, BT has learnt. Another player, FundedByMe, has partnered Alix Global to run the ECF platform in Malaysia. FundedByMe is a Sweden-based platform whose Asia-Pacific headquarters is in Singapore.