Fundaztic and pitchIN Anticipating Take Up to go like “Hot Cakes”
(Caption for pic above L-R: Kristine Ng, CEO, Peoplender Sdn Bhd and Sam Shafie, CEO, Pitch Platforms Sdn Bhd)
In May 2015, Malaysia became the first country in Asia and the second after New Zealand, in the APAC region to introduce equity crowdfunding (ECF). The Securities Commision (SC) of Malaysia approved applications from six platforms to operate equity crowdfunding at that time, namely Ata-Plus, Crowdplus, Crowdo, Eureeca, FundedByMe and pitchIN.
After the six platforms went live, 20 campaigns were launched in 2016 on these platforms. Of these, 15 were successful, whereby a total of RM10,975,389 was raised. 2017 proved to be a breakout year and the amount raised through ECF in Malaysia jumped to RM23,393,973.
ECF became a viable source of funding by SMEs and startups. Whilst tech companies comprised the majority of successful campaigns, nevertheless, there were at least 9 non-tech campaigns in the traditional SME businesses.
Peoplender and pitchIN form an alliance via Fundaztic
It is with this backdrop that for the very first time, two crowdfunding platforms (that are regulated as Recognised Market Operators by SC) came together recently to form a formidable alliance to actualise the Fundaztic P2P Lending platform.
Fundaztic is fully owned and managed by Peoplender Sdn Bhd, which is a fintech startup registered with the SC to operate a peer-to-peer financing platform. Uniquely different, Fundaztic is the only platform that does not impose an upfront deposit to enable browsing and investments. Its “straight-through online and automated processing” system means that applicants can apply anytime, day or night, and know if they are successful within 10 minutes, unlike the protracted process under a conventional bank. This means access to both financing and investment for businesses and individuals come with low entry barriers.
The Fundaztic campaign has an initial paid-up capital of RM5 million from its existing shareholders which includes Mezzanine Ventures Sdn Bhd (100% held by Amcorp Capital Markets Sdn Bhd). Fundaztic had a soft launch on 7 July 2017 and todate, it has hosted 353 investment notes valued at RM31.1 million. 327 investment notes have been fully funded, while 13 notes are still in the process of fundraising. Fundaztic aims to achieve RM40 million worth of funding by end 2018.
PitchIN, widely acknowledged as Malaysia’s no.1 ECF platform (with 60% share of market for funds raised in Malaysia) plays host to the Fundaztic campaign. Sam Shafie, CEO of Pitch Platforms Sdn Bhd, says, “pitchIN is very selective in the campaigns that we choose to host and this is why the 22 of our campaigns that have gone live, all managed to raise the funding required and are growing their businesses as projected.”
He added, “Todate, we have raised RM25 million for these companies from more than a thousand investors. We are very pleased to form this alliance with Peoplender, as on its part, it has disbursed approximately RM28 million to over 300 SMEs with a default rate of about 1.3% only. We are happy that they have chosen to raise funds using ECF and pitchIN specifically, because it provides a strong synergistic effect for the entire alternative funding eco-system.”
Commenting on the campaign, Kristine Ng, CEO of Peoplender Sdn Bhd, said, “We are confident that the 3 million shares – the maximum allowed under the ECF Guidelines – that will be made available through this ECF, will receive overwhelming response as preliminary indication of interest is already nearing 11 million.”
The indication observed is based on the pre-marketing exercises that were conducted in the open market which attracted huge interest amongst its Elite Club members, network of affliates and potential strategic sophisticated investors. Members and investors of both Fundaztic and pitchIN will be able to indicate to both platforms their interest during the pre-marketing stage and begin investing when pitchIN puts the campaign on live mode effective 17th October 2018. Prior to investing, they are required to register on both Fundaztic and pitchIN.
The fund raised through this exercise will be utilised to further boost the platform’s offerings and resources with the aim of tripling the disbursement amount to SMEs and micro businesses by end of 2019. And in tandem with technology advancements, funds will be utilised to beef-up technology, and also security, which cannot be compromised at any point in time.
Another major innovation that Fundaztic will be coming up with would be the secondary market which allows for investors to trade their investments within the platform for early exits. This would mean that although an investor had invested in a 36 months Note, once the secondary market is available on Fundaztic, if the investor needs emergency funds, it is possible to trade the Note anytime within the funding tenure. “This feature is important as it adds flexibility to investing on Fundaztic,” explains Kristine.
Addressing the guests and media at the event, Mr. Sam Shafie, Chief Executive Officer of Pitch Platforms Sdn Bhd, added, “Based on our experience and our record of 100% success rate, we are optimistic that the 3 million shares will be snapped up within a short span of perhaps between 1 – 2 hours as Fundaztic has already established proven track records in terms of earnings growth as well as growth in their member base and Notes hosted each week.”