RMK-12: Innovative funding solutions towards Shared Prosperity

As a registered and recognised Equity Crowdfunding (ECF) operator since June 2015, Ata Plus Sdn Bhd strongly believes that the digital economy is an important driver of economic empowerment. This source of growth is still relatively new, with ample ability to expand and contribute further to Malaysia’s economy.

Economic empowerment will require the need of high-performing, agile companies; especially the small and mid-size enterprises (SMEs). Over the last 20 years, SMEs have played an important role, contributing between 30% to 40% of our nation’s Gross Domestic Product (GDP). Despite this, SMEs have been disregarded and overlooked, when it comes to access to funds/capital.

On the other hand, in the United States (US), SMEs were recognised as the backbone of the economy, and innovative fundraising models and channels implemented to facilitate their capital access. In 1913, the OTC market was introduced to provide greater liquidity to SMEs. This platform facilitates capital raising for SMEs in their growth journey, whereby businesses can be listed with minimal disclosure. As the businesses flourish and journey towards being uplifted to the main board, more disclosure requirements are imposed, for better governance and in order to gain more access to capital. In Malaysia, while SMEs are given the opportunity to raise capital from the public via the Second Board, ACE and LEAP markets; the process and requirements are cumbersome and costly.

Today, there are innovative funding instruments to raise funds for SMEs and start-ups, such as ECF and peer-to-peer(P2) platforms. We believe this trend will continue as more innovative instruments such as Tokenisation, ICOs (Initial Coin Offerings), IEOs (Initial Exchange Offerings), STOs (Security Token Offerings) and NFT (Non-Fungible Tokens) are introduced as new generation of capital raising instruments. Hence, there is a need to work closely with the regulators to ensure that the right framework and guidelines are designed. This will not only address risk management, disclosure and governance objectives but also inclusiveness.

We have seen the success in the liberalisation of the ECF guidelines over the last 5 years, with funds raised from ECF in Malaysia increasing exponentially. In 2019, it recorded a growth of 59% year-on-year and then in 2020, it was 399% year-on-year.

ECF, as a trusted borderless platform and working within regulatory confines offers alternative asset classes for various level of investors. ECF also offers investors an opportunity to select from hundreds of companies of various sizes, and invest as little as RM10. This allows greater participation of the average Malaysian in the wealth creation of these fast-growing agile companies, thus resulting in inclusiveness, leading to shared prosperity for all!

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* This article is written by Elain Lockman, Chief Executive Officer, Co-Founder and Director Ata Plus Sdn Bhd

**The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.