Standing out in the crowd of alternative financiers

Standing out in the crowd of alternative financiers

Hong Sin Kwek leads Sinwattana Crowdfunding's mission to help Thai startups and SMEs realise their full potential

Through her crowdfunding platform, Ms Kwek aims to put Thailand on the global map as a place where investments can flourish.
Through her crowdfunding platform, Ms Kwek aims to put Thailand on the global map as a place where investments can flourish.

Having flown 1,400 kilometres from Singapore to Bangkok with a mission to empower small businesses through online equity crowdfunding, Hong Sin Kwek came a long way to establish one of the country's licenced crowdfunding platforms, whose untapped potential is ample.

Along with Live Fin Corp, Sinwattana Crowdfunding, an equity portal operated by Phoenixict Co Ltd, is one of two crowdfunding portal operators approved by the Securities and Exchange Commission (SEC).

Equity crowdfunding is the online offering of private company securities to a group of people for investment. The mechanism enables broad groups of investors to fund startup companies and small businesses in return for equity.

The meaning behind Sinwattana comes from Ms Kwek's first name, Hong Sin, with equivalent Thai words hong (swan, the platform's emblem) and sinwattana, meaning flourishing asset. This coincides with the portal's mission to help users flourish with their business investments.

"I named the portal in the Thai language to place Thailand on the global map, with a belief that Thailand can take alternative finance to the next level," says Ms Kwek, who is founder and chief executive of Phoenixict. "I wanted a Thai name to be seen by the world as doing good."

The company was granted approval by the SEC in late 2018 and is the only equity crowdfunding platform that lets retail investors get involved.

"Our main goal is to support Thai small and medium-sized enterprises," Ms Kwek says. "In fact, a lot of Thai SMEs have amazing products and solutions, but they are slightly weak in the aspect of marketing and branding.

Hong Sin Kwek, CEO and founder of Sinwattana equity crowdfunding platform.

"One of the key reasons I am motivated and driven is because all these entrepreneurs are clear with their vision of what they want to achieve for Thailand, not so much just about their pockets. The pocket conversation is a given, but the key conversation is their vision of empowering Thailand to the next level."

Under the SEC's investment regulations for crowdfunding, investors are classified as retail investors or non-retail investors, including institutional investors, venture capitalists and angel investors.

Securities issuers are to offer no more than 100,000 baht to each retail investor per project, and the total value of securities offered to these types of investors should not amount to more than 20 million baht within the first year of offering crowdfunding securities.

Other types of investors are allowed to invest in an uncapped amount in equity crowdfunding projects.

SHEER DETERMINATION

Despite having a clear vision of her ideal crowdfunding portal, Ms Kwek's dream of establishing an online crowdfunding platform did not come easily.

In early 2012, she chanced upon crowdfunding while doing a Google search on alternative funding after being turned down by a Singaporean bank for lacking sufficient collateral. The original intention was to represent a crowdfunding platform for Asia and treat it as a distribution channel.

Ms Kwek later embarked on an equity crowdfunding pilgrimage in the US, from Silicon Valley to San Diego to New York.

"My original intention was to go there and get them [Indiegogo, an American crowdfunding website] to hire me and bring them here [Asia]," she says. "But the more I know, the more I think: why can't we do this ourselves, why do we always have to follow the West?

"I did some research and found that in the next two decades or so, wealth will reside in Asia and not the West. The West will have the technology, but spending power will be in Asia."

After officially registering as an entity in 2013, Sinwattana Crowdfunding was born. A roadmap to serve the sufficiency economy was established in 2014, followed by attaining a foreign business licence and Board of Investment approval in 2016.

2018 was the year when the licenced equity crowdfunding platform eventually materialised.

"In the pursuit of seeking the SEC's approval, there were many times that I wanted to give up because it was so tough and there was no income," Ms Kwek says. "But when I am reminded by these three keywords -- unknown, unbanked and underserved -- I tell myself that I must not give up.

"They [the SEC] tested many of our systems, and finally we came to prove our perseverance and determination."

In her view, Thailand is an ideal destination for launching an online crowdfunding platform. The country's central location in Southeast Asia and cultural uniqueness, together with the untapped potential of local SMEs, make it the perfect breeding ground for creativity and innovative ideas.

Despite these respectable attributes, SMEs need help in terms of branding and marketing in order to shine, Ms Kwek says.

Sinwattana's equity crowdfunding platform can help bridge foreign investors interested in investing in local business projects and enable face-to-face meetings between investors and fundraisers.

Through crowdfunding, SMEs have alternative funding choices, and middle-class investors are empowered with more investment options.

With sustainability entrenched as one of the important criteria for equity crowdfunding at Sinwattana, business projects raising funds via the platform have to meet the UN's sustainable development goals (SDGs).

In 2015, world leaders agreed to 17 goals for a better world by 2030. These goals have the power to end poverty, fight inequality and address the urgency of climate change.

"Each project may not be 100% aligned with SDGs, but each individual project has a soft touch on the angle of SDGs," Ms Kwek says. "The context of sustainability and sufficiency economy is not just a statement that we do it for publicity, but rather a constant, conscious practice that we put in place."

SUCCESSFUL DEAL

Harrison Butcher was Sinwattana's first successful deal for online equity crowdfunding. The steakhouse, which has its own farm and contract farming to produce cattle and feed, raised funds worth 18.6 million baht when the deal closed on Dec 30, 2019.

Harrison Butcher offers dividends equal to half its net profit, or a dividend payout ratio of 50%. There are 77 participating investors, including three foreigners and 10-12 local high-net-worth and institutional investors, with the rest made up of experienced retail investors whose maximum investment threshold is capped at 100,000 baht per person.

"Harrison Butcher is just the beginning of a journey after six years of camping in Thailand," Ms Kwek says.

For Sinwattana's second deal, Siam Namnueng, a Vietnamese restaurant in Thailand owned and operated by the Thummarosdecha family, raised funds worth 409,920 baht out of the targeted 18 million baht before the deal closed on Feb 14.

Unfortunately the deal didn't manage to pull through as expected, but it's likely to reopen because the restaurant owners are considering it, Ms Kwek says.

"These two restaurants have access to traditional finance, [but] they came to [equity] crowdfunding for a different reason," she says. "They wanted the market to know their presence. Branding and outreach is another reason they wanted to explore crowdfunding."

A third fundraising deal is under way. Set to launch on Feb 24, Wealthi is a fintech startup that developed a mobile app for informal workers and the unbanked to seek picofinance loans based on a credit score assessed by artificial intelligence.

Over 40 million baht worth of picofinance loans have been issued so far for more than 7,500 individuals, according to Wealthi. The startup operates under Suphathanarangsri Real Estate Co Ltd, a licensed picofinance operator.

More than 12 other deals are in the pipeline for equity crowdfunding on Sinwattana's platform.

"Our qualification process is very intensive," Ms Kwek says. "Three common words -- brutal, demanding and tough -- are heard from the issuers. Sometimes the issuers may not like what we are giving back, but the real ones will return. Experienced investors are hard to convince if I am not convinced."

For transparency, issuers must have a track record of 1-2 years and disclose information both before and after the crowdfunding projects are completed. For their own part, investors are encouraged to ask questions to address anything left unanswered.

"We are not in control of the issuers' businesses, but it is a long-term relationship [between us and them]," Ms Kwek says. "People say [equity crowdfunding] is not scalable, but I say it is scalable when the message gets through. The first few deals are tough, but when people see the results of these SMEs benefiting and delivering [business performance], you will see more and more people putting their money into equity crowdfunding."


BIO DATA

Hong Sin Kwek
Age: 55

EDUCATION

- Cambridge O Level
- AsiaWorks Basic and Advanced Leadership Professional Training
- THNK Creative Thought Leadership Training, Amsterdam

CAREER
- 2010-present: Global relationship o cer, Asean CIO Association
- 2013-present: Founder and CEO, Phoenixict Co Ltd
- 2012-13: Cybersecurity consultant, Boeing Singapore
- 2011-12: Business development director, Narus
- 2010-11: Business development director, Netwitness Inc
- 2000-10: Regional managing director, Quantiq International Pte Ltd

FAMILY
- Divorced, mother of two

HOBBIES
- Music, reading


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