As the name suggests, equity crowdfunding is an act where people invest in a startup organisation that is excluded from the stock market list. The shareholder will be granted partial ownership of the company and able to gain profits if the performance goes well.
Back in the days, only the wealthy people and capitalists could invest in startup companies. The platform of equity crowdfunding has assisted in democratising the investment procedure. It directly opened a gate to a number of investors which lead to a ‘crowd’, hence equity crowdfunding.
Crowdfunding often involves small startup businesses on how they can raise money. This fundraising campaign can be a practical way for investors to understand the business idea, plan as well as the management details. As for equity crowdfunding, this campaign will allocate equity or rewards in exchange for the investment.
Investors pledge cash during the campaigns. Some crowdfunding platforms work on a win or bust situation. But it's different for equity crowdfunding, investors are free to contribute the sum pledged towards the end of the campaign even when the target was not hit.
Keep in mind that crowdfunding is not for the weak. You need to strategise your crowdfunding plan properly and know how to actively pitch your business. Of course, hitting the funding goals are going to be your top priority, but you need to continue to work hard so that investors stay engaged.
Raising money can be a tiring process but it will lead to a fulfilling end if one is determined. Crowdfunding is really not for everyone, it has both advantages and disadvantages. Before you plan to dive in further into crowdfunding, you may refer to the table below to help you decide in considering crowdfunding for your business.
|Advantages of Crowdfunding||Disadvantages of Crowdfunding|
|Business can set a goal on what amount they want to raise,
if the goal is achieved, money will be gained.
|If the goal isn’t achieved, investors will not get their money back
and the business will suffer lost.
|A successful crowdfunding projects are likely to get more
attention to the public.
|Unsuccessful ones will face risk damage and the reputation will
|By being a part of the crowdfunding process, the business
can receive feedback and new ideas on crowdfunding.
|It takes time to build up the business. It requires patience as well
as determination to get the outcome.
There are numerous crowdfunding sites in Malaysia. Below are the top 5 crowdfunding companies with a little bit of background descriptions:
Founded in 2012, pitchIN Malaysia is recognised as one of the most successful crowdfunding platforms in Southeast Asia. It held projects like Indie festival in Penang, TAPAUfest and TeeSomethingNice. pitchIN also allows Reward Crowdfunding whereby ideas are pitched to the general public and backers will gain rewards from the project owners. Equity crowdfunding is implemented by giving the opportunity for private companies to use online platforms to raise money from investors.
SkolaFund was established to cater the financial needs of underprivileged undergraduate students. It is a platform that link to the students and the potential funders who can contribute financial assistance. SkolaFund gives the opportunity to any candidates who cannot afford in pursuing their studies. The chance is given financially where they can pay tuition fees and other expenses.
For those who are into creative arts and projects, MyStartr is a good crowdfunding platform for it. Creators will be fully responsible for any projects they come up with. The projects are all created independently. The creators have to spend their time building their pages and to think of the rewards to offer backers for giving financial aid for the projects.
Established in 2013, Alix Global is an equity crowdfunding and neo-marketing platform. Alix Global is in a Joint Venture (JV) with Sweden-based FundedByMe. Its main focus is to be the leading neo-marketing solution provided in Malaysia. As it strongly holds to its plan to digitalise the conventional businesses, Alix Global has professionals who has experience and expertise to beat the level of competitiveness for local small and medium-sized enterprises.
Founded in 2015, Give.my gives the power to teachers to bring educational projects on their own. It is a platform for teachers who wish to start up creative and education-related projects that need attention. Give.my successfully pulled in instructors to raise funds from the public based on the projects that they open for.
Yes, it is. In 2015, Malaysia became the first Asean country to offer a legal platform on crowdfunding. It is a practise to raise money from the public to establish a project, typically through the internet. It was actually an amendment passed after two rounds of debates by Senators, who showed interests in protecting crowdfunding investors and companies.
It eventually passed in the Capital Markets and Services Bill 2015 at Parliament. The Malaysian government highly encouraged the use of equity crowdfunding as it would help to regulate and protect the interest of investors and companies.