Equity Crowdfunding (ECF)
Equity crowdfunding is a financing model that enables businesses, particularly startups and small to medium-sized enterprises (SMEs), to raise capital by selling shares or ownership stakes in the company to a large number of individual investors, oftentimes through online platforms.
Equity crowdfunding provides an accessible way for startups and SMEs to access funding from a wide pool of investors, including those who may not typically engage in venture capital or private equity investments.
In Malaysia, the use of online crowdfunding platforms registered with the Securities Commission (SC), enables entrepreneurs and businesses to present their projects to a broader audience of potential investors such as retail investors, accredited investors, venture capitalists, and angel investors.
Investors receive shares in the company, making them shareholders. Their returns are tied to the performance and success of the business, including potential dividends and capital gains upon exit.
While equity crowdfunding has become an important part of the startup and SME funding ecosystem, it’s crucial for businesses and investors to be aware of the regulatory landscape and conduct due diligence before participating in equity crowdfunding campaigns.
