Equity crowdfunding (ECF) is almost like stock investment. The money is provided in exchange for shares (equity) in the company. Its reward includes the capital gain (by selling the shares) and dividend if any while its risk is the failure of the company (bankruptcy) and losing all the invested fund. There are 6 such platforms in Malaysia according to Securities Commission Malaysia website (Link).
Equity crowdfunding platforms
| Platforms | Logo | Remarks |
|---|---|---|
| AtaPlus |  | - |
| Crowdo |  | More like a platform for P2P financing than ECF |
| Crowdplus.Asia |  | - |
| Eureeca |  | - |
| Equity.pitchIN |  | - |
| FundedByMe |  | - |
Comparison between platforms
Let’s compare the platforms. However, keep in mind that you may incur other fees such as stamp duty in the event of a successful investment. Besides that, standard bank charge may apply during the transfer of fund to the company.
| Platform | AtaPlus | Crowdo | Crowdplus. Asia | Eureeca | Equity. pitchIN | FundedByMe |
|---|---|---|---|---|---|---|
| Minimum top up | N/A | SGD 10000 | N/A | 0 | N/A | N/A |
| Minimum investment amount (RM) | Set by listed companies for funding | IDR 1000000 RM 1000 SGD 1000 USD 1000 | RM 500 | Set by listed companies for funding | Set by listed companies for funding | Set by listed companies for funding |
| Currency | RM | IDR, SGD, USD (1) | RM | AED, EUR, GBP, RM, USD | RM | EUR, RM, SEK |
| Location of deals | Malaysia | Indonesia, Malaysia (2) | Malaysia | Dubai, Jordan, Netherlands, UK (3) | Malaysia | China, Denmark, Estonia, Finland, Germany, Malaysia, Malta, Netherlands, Norway, Spain, Sweden, UK, US (4) |
| Top up fee/Transfer of fund (RM) | Standard charge by bank | |||||
| Withdrawal fee (RM) | N/A | Standard charge by bank | N/A | Standard charge by bank | N/A | N/A |
1Not sure why RM is not included in the currency listed in the member’s account.
2Majority of deals located in Dubai and Jordan.
3Majority of deals located in Indonesia.
4Majority of deals located in Sweden.
All the platforms are free to register. After a cursory review, I find that Crowdplus.Asia, Eureeca and FundedByMe have more deals than the others. However, I am not too sure about this observation. As for Crowdo, I could not find any ECF campaign when I was browsing through the platform. Those listed in this site were all debts. Do correct me if I am wrong.
Upon a successful investment, a contract note specifying the number of shares subscribed by the investor will be prepared and sent to you. This serves as the proof of investment in that company. The platform would have fulfilled its function and any future communication shall be done directly between the investors and the company.
Personal experience
Personally, I have invested in a company through FundedByMe. The interface is not hard to use and the investing process is particularly simple. However, the hard part is the transfer of fund. As the company only accepted foreign currency, I needed to use telegraphic transfer and this incurred some charges from the bank. Furthermore, there is a number of details required when executing foreign transfer and I find it to be a bit tedious. Occasionally, I have received update from the company through email and I am still holding the shares.
Advice
As with all types of investment, ECF entails risk of losing money. Just a fact from Shikhar Ghosh’s Harvard Business School study: over 50% of companies failed after 5 years and over 70% failed after 10 years in the US. Thus, make sure you understand the company and its business before pledging your money. Moreover, the time horizon for this type of investment should be long as these are mostly start-up companies which take years to turn a profit. Besides that, there is virtually no place that you can sell these shares easily.
Feel free to explore the platforms mentioned here to find the most suitable one for you.
Finally, do share with us below if you have any experience in using these platforms. Happy investing!
