Equity Crowdfunding (ECF) Malaysia – What You Need to Know
What Is Equity Crowdfunding (ECF)?
To grow a business, you need capital. Capital can be obtained in many ways.
People often mention OPM – other people''s money. That''s right. It''s one way to secure funding.
So in this article, I want to share about ECF.
ECF stands for Equity Crowdfunding. ECF is a method where business owners raise funds online from Malaysians who wish to become investors in the company.
In simple terms, anyone can invest in a company, provided they have the capital.
Wait. But you don''t even need a CDS account to invest in ECF.
Confused? Let me explain.
ECF features companies that are still in the early stages of growth – they haven''t gone for an IPO or listed on Bursa Malaysia yet. That''s the key difference.
Components of Equity Crowdfunding
ECF has 3 main components: the company owner, the ECF platform owner, and the investor.
Platform owners are known as ''market operators''.
They must first obtain approval from the Securities Commission (SC). For any investment, always verify with the SC.
On the SC website, there are 10 registered market operator platforms. Among them are:
- Leet Capital Sdn Bhd
- Ata Plus Sdn Bhd
- Crowdo Malaysia Sdn Bhd
- Ethis Ventures Sdn Bhd
- Eureeca SEA Sdn Bhd
- FBM Crowdtech Sdn Bhd
- Fundnel Technologies Sdn Bhd
- MyStartr Sdn Bhd
- Pitch Platforms Sdn Bhd
- Crowdplus Sdn Bhd
Make sure you only invest in companies under platforms approved by the SC. Ignore those not listed with the SC.
Who Can Invest in Equity Crowdfunding?
There are 3 types of investors:
- Retail Investor – someone who is neither an angel investor nor a sophisticated investor
- Angel Investor – an individual who:
1. Pays tax in Malaysia
2. Has net personal assets exceeding RM3 million or equivalent in foreign currency
3. Has gross total annual income of not less than RM180,000
4. If jointly with a spouse, gross total annual income exceeds RM250,000 in the preceding 12 months. - Sophisticated Investor
Who Can Raise Capital Through Equity Crowdfunding?
Only local private companies and limited liability partnerships are allowed to host on ECF platforms as issuers.
How Much Capital Do You Need to Invest?
The required capital depends on the issuer. Some have a minimum of RM1,800, while others require RM2,400.
You need to click on the platforms listed earlier and register an account.
After registration, you''ll be shown companies that are seeking funding.
All information about the companies is available there for you to read.
As an investor, before expressing interest in any company, read through the business info, pitch info, and financials about the company.
All investment decisions are in your hands.
Frequently Asked Questions (FAQ)
1. What is Equity Crowdfunding (ECF)?
Equity Crowdfunding (ECF) is a capital-raising method where retail investors can invest in private companies through platforms recognised by the Securities Commission Malaysia (SC).
2. What is the minimum capital to invest in ECF?
The minimum capital depends on the issuer. Typically it starts from around RM1,000 to RM2,400, depending on the campaign run by the company.
3. Is ECF investment risky?
Yes, like any other investment, ECF carries risks. The company you invest in may not succeed. Therefore, it is important to read the business info, pitch info, and financials before making a decision.
4. How do I start investing in ECF?
You need to register on an SC-recognised ECF platform such as pitchIN, Ata Plus, or MyStartr. After registering, you can browse the list of companies raising funds and choose to invest.
Interested to start investing in the stock market? Register for a CDS Account with us for guidance from beginner to advanced level. You can also download our Free Stock Market Basics Ebook for your first step.