EQUITY CROWDFUNDING (ECF)
Equity Crowdfunding (ECF) is a new form of fundraising that allows a start-up or other smaller enterprises to obtain capital through small equity investments using online portals to publicise and facilitate such offers to crowd investors.
The ECF therefore is a framework that enables start-ups and SMEs to access market-based financing through a platform registered with the SC.
For start-up and SMEs, the ECF framework will provide:
- An alternative source of funding and quicker access to capital at a lower cost compared to traditional banks products;
- An opportunity for start-ups and SMEs to harness the power of the crowd on the internet to raise funding; and
- Start-ups and SMEs can also gauge market reception of their proposed product and/or services from response received on the ECF platform.
For the investors, the ECF will enable investors to be a shareholder of such start-ups and SMEs and diversify their investments beyond the traditional asset classes. While investment opportunities are open to all investors, certain safeguards have been put in place in relation to the limit of investment as stated below:-
* Sophisticated investor refers to any person who falls within the categories of investors set out in Part 1, Schedules 6 and 7 of the Capital Markets and Services Act 2007.
# Angel investor refers to an investor that is accredited by the Malaysian Business Angels Network as an angel investor.
**Retail investor refers to persons who are not sophisticated investors.