Capital raised for equity crowdfunding grows 457% in 2020

KUALA LUMPUR – The total capital raised for the equity crowdfunding grew by 457% to RM127.73 million in 2020 from RM22.92 million in 2019, with a total of 78 issuers successfully fundraised via 80 campaigns while issuers fundraising was conducted twice in 2020, reported Bernama.

The Securities Commission Malaysia (SC) said the majority of issuers were based in Kuala Lumpur or Selangor and 60% were technology-focused issuers.

“Campaign size in 2020 shifted towards larger fundraising amounts, with 84% of the campaigns raised beyond the RM500,000 mark,” the SC said in its Annual Report 2020 released Thursday.

On a sectoral basis, the top three sectors by the amount of capital raised in 2020 were “Other Service Activities” with RM38.88 million (31%), ‘Professional, Scientific, and Technical Activities’ with RM19.96 million (16%) and ‘information and Communication’ with RM18.27 million (14%), the SC said.

“In 2020, the number of campaigns for Seed funding reduced to 36% for 61% in 2019. Campaigns in Series A and onwards grew from 32% in 2019 to 50% in 2020, and 7.0% of the campaigns in 2020 involved Post Series A Funding.”

“A majority of the capital raised from the successful campaigns in 2020 was for business expansion,” it said.

For peer-to-peer (P2P) financing, SC said in 2020, the total capital raised grew by 20% to RM501.31 million, from RM418.64 million in 2019.

“A total of 1,325 issuers have successfully fundraised via 7,760 campaigns in 2020, reflecting a 6% decrease in the total number of issuers and a 39% increase in the total number of successful campaigns from 2019. A total of 63% of issuers are based in Kuala Lumpur or Selangor and 36% are technology-focused issuers,” it added.

In terms of the distribution of fundraising amount, the SC said the majority of campaigns (74%) has fundraised RM50,000 and below in 2020, with Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles sector remains the largest sector served in 2020.

In 2020, investment notes issued for micro, business and invoice financing decreased compared to 2019. The bulk of investment notes (56%) were issued for other financing types.

“A majority (77%) of the campaigns in 2020 involved shorter-term financing, with tenures of three months or less. The capital raised from successful campaigns in 2020 was mainly for working capital. The simple interest rate on P2P financing notes issued in 2020 decreased to 12.7% per annum(p.a) from 13.1% p.a in 2019,” it said.