Just two weeks ago the Monetary Authority of Singapore (MAS) proposed regulations for securities-based crowdfunding. MAS published a paper setting out proposals and clarifications to facilitate lending through crowdfunding. For starters MAS would allow accredited investors and institutional investors to invest through crowdfunding platforms. The rules also state that the platforms are able to advertise themselves but not the offerings on their platforms.
Lee Boon Ngiap, assistant managing director, Capital Markets, MAS, commented:
"These proposals seek to strike a balance between facilitating investments in start-ups and small businesses and ensuring that there are sufficient safeguards for investors. We look forward to feedback from investors and market participants on the proposals to promote a conducive and sustainable environment for securities-based crowdfunding in Singapore."
Andy Lim, founder of FundedHere, has been clear on the benefits of crowdfunding for businesses:
"Crowdfunding is the preferred fundraising platform for startups. Such companies are unlikely to receive traditional bank loans because they don't have financial assets or a business track record."
The platform will allow investors to provide seed funding to Singapore and South East Asian startups. FundedHere takes a fee of about 5% of the total funds raised. The minimum amount investors can put on the platform is S$5000. Investors have 30 days to participate in a fund raise and then have a 5 day “cooling off” period after the startups target is met when they can pull out or disinvest if they want to.
Andy Lim, who also co-founded local private equity group Tembusu Partners, added:
"As a major wealth management centre with a well recognised legal framework and rising startup scene, Singapore is an exceptional springboard for crowd funding projects in the region. FundedHere will build up an ecosystem for startups which will combine innovators, investors, mentors, talent and partners who can help bring the ideas or products to the global market."
Tembusu Partners, a large player in the financial sector, in December launched a US$100 million Singapore based private equity media fund targeted at China’s media and entertainment industry.
In Singapore crowdfunding portals are still largely rewards or donation based, but the market is starting to mature and more equity crowdfunding platforms are starting up.
Robson Lee, a corporate lawyer at ShookLin & Bok, said:
"Being a relatively new area of investment for investors here, it remains to be seen if there is a critical mass of investment schemes and investors to make such crowdfunding take root in Singapore."
Investors in Singapore are waiting for the platforms to build up a track record and prove their worth. The recent regulatory changes will help with this as will the launch of FundedHere. But it will take time for the industry to attract the interest of both businesses and investors.
