Crowdfunding for SMEs a 'powerful' tool

Crowdfunding for SMEs a 'powerful' tool

Sinwattana Crowdfunding, an equity crowdfunding platform, is eying opportunities for fundraising among Thai startups and small and medium-sized enterprises (SMEs) amid a new regulatory environment.

The company was granted approval by the Securities and Exchange Commission (SEC) late last year and is the only equity crowdfunding platform that allows retail investors to get involved.

Other equity crowdfunding platforms, such as Live Fin Corp, a subsidiary of the Stock Exchange of Thailand, are involved with raising funds from institutional and accredited investors for startups and SME entrepreneurs.

The new SEC crowdfunding notification defines crowdfunding portals as websites, mobile apps or similar electronic media developed for offering securities for sale.

The new notification expands previous restrictions, including allowing issuers to offer "plain vanilla" debentures as well as shares, and adjusts the specific restrictions on issuing securities to retail and non-retail investors, said law firm Tilleke & Gibbins.

"Crowdfunding is a very powerful alternative finance," said Sinwattana's chief executive and founder, Hong Sin Kwek. "The World Bank has projected crowdfunding at US$96 billion by 2025. KPMG reported that the value of crowdfunding in six Asean countries this year totalled $242 million, comprising Singapore, Indonesia, the Philippines, Cambodia, Vietnam and Malaysia."

The company has three projects in progress, all of which are scheduled to launch fundraising next month.

Mutrack is among the three projects. The firm uses artificial intelligence to provide a platform that helps hospitals better understand their operations via tracking and positioning technologies.

The main challenge for the business is the information gap, as many investors are not familiar with the concept of crowdfunding, Ms Kwek said.

Pongpiti Ektheinchai, managing director of Live Fin Corp, said most Thai investors are familiar with an investment approach involving financial advisers or brokers preparing investment information and assessing business value.

Crowdfunding requires investors to have the know-how to use financial reports to evaluate companies themselves.

"If Thai investors can change their mindset to invest longer-term or donate to projects that can measure returns or benefits from donations, crowdfunding will expand at a higher rate," said Prinn Panitchpakdi, deputy leader and head of the economics team for the Democrat Party.

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