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30-01-2015, 09:56 AM
SGX, VC firm to set up crowdfunding platform for SMEs
Grace Chng
The Straits Times
Thursday, Jan 29, 2015
Fledgling firms will soon have a new option here to secure crucial funding to expand their businesses.
The Singapore Exchange (SGX) is teaming up with Clearbridge Accelerator (CBA), a high-tech venture capital (VC) firm, to set up what SGX says is a world-first crowdfunding platform by mid- year.
Crowdfunding is the fast-growing practice of attracting large numbers of potential investors by publicising a business idea online.
The yet-to-be-named platform is aimed at making it easier for start-ups and small and medium-sized enterprises (SMEs) here to meet accredited investors. The SGX and CBA inked a memorandum of understanding last week. A test run is due some time between April and June.
Industry observers welcomed the move as it will improve access to funding and open new avenues of investment.
Vickers Venture Partners managing director Jeffrey Chi said it will provide investors with liquidity in their investments, which in turn will promote further investments in start-ups.
Venture capitalist Lim Kuo-Yi of Monk's Hill Ventures said the new platform will attract new investors, especially those who "may not be aware or know how to access some of these investment opportunities".
Fund-raising will also become easier for entrepreneurs, said Mr Leo Shimada, founder of crowdfunding platform Crowdonomic, which is a rewards-based crowdfunding platform here.
Under the traditional system, it takes six to nine months to raise funds as start-ups meet about 300 investors, which get whittled down to about 10.
He said negotiations begin at this stage - a laborious process meaning entrepreneurs cannot focus on building their companies.
"This platform bridges entrepreneurs and investors. If both parties meet on this platform, like what they see and agree on a transaction, it will dramatically reduce the fund-raising time," he said.
But industry observers note the platform must also protect both investors and entrepreneurs.
The SGX-CBA partnership provides a formal structure where investors can buy equity in start-ups and SMEs, and have the shares stored in a central depository. It is a "closed" equity crowdfunding platform in that it is not open to all and sundry, but only to accredited investors.
Financial rules here do not allow equity crowdfunding campaigns aimed at individuals here.
SGX head of SME development and listings Mohamed Nasser Ismail told The Straits Times that the "closed" crowdfunding platform is the first in the world set up by a stock exchange and VC firm.
The SGX is best placed to set up this new facility, he said, because it is already involved in raising capital for SMEs through the Catalist, SGX's junior board. "It is more or less the same kind of business for us, only slightly different in that we are going out to get funding from accredited investors."
Besides, the SGX has the know-how, experience and reputation in raising capital. The platform has been constructed to provide end-to-end services, he said. "We can match companies to investors, we will check that funds will be properly allocated, and our shares depository will ensure that the shares are properly kept."
Dr Steven Fang, a partner at CBA, said: "We understand the investment risk for investors. That is why we are opening this platform to accredited investors only and to companies that have revenue streams and are profitable or near profitability."
The SGX-CBA platform also addresses an immediate need as many start-ups founded in the recent years are maturing and are ready for business expansion. Dr Fang said: "As an entrepreneur and investor, I have built companies, and we see there is a gap for funding for post-Series A investment."
Post-Series A funding refers to multi-million-dollar investments by VC firms in companies which have commercially viable products and services, but require funds to expand quickly.
Dr Fang said the new facility will help start-ups and SMEs find the "smart money", the investors who can help firms get access to markets and customers. "You can hire the best PhDs and have the best technology in the market. But without smart money, the companies will be challenged and will be put in a position of trying to catch up."
He said smart money will bring experienced managers who will mentor entrepreneurs on developing their businesses.
"By providing the funding and mentoring, we hope to accelerate the growth of these companies, which in turn could later list on SGX," he said.
Details such as the equity structure between SGX and CBA, who will lead it, how it will work and the list of investors will be announced closer to the launch date. Start-ups and SMEs which are likely to qualify must have revenue and products and services that are commercially viable. They must also be profitable or at least nearly in the black.
http://business.asiaone.com/news/sgx-vc-...tform-smes
Grace Chng
The Straits Times
Thursday, Jan 29, 2015
Fledgling firms will soon have a new option here to secure crucial funding to expand their businesses.
The Singapore Exchange (SGX) is teaming up with Clearbridge Accelerator (CBA), a high-tech venture capital (VC) firm, to set up what SGX says is a world-first crowdfunding platform by mid- year.
Crowdfunding is the fast-growing practice of attracting large numbers of potential investors by publicising a business idea online.
The yet-to-be-named platform is aimed at making it easier for start-ups and small and medium-sized enterprises (SMEs) here to meet accredited investors. The SGX and CBA inked a memorandum of understanding last week. A test run is due some time between April and June.
Industry observers welcomed the move as it will improve access to funding and open new avenues of investment.
Vickers Venture Partners managing director Jeffrey Chi said it will provide investors with liquidity in their investments, which in turn will promote further investments in start-ups.
Venture capitalist Lim Kuo-Yi of Monk's Hill Ventures said the new platform will attract new investors, especially those who "may not be aware or know how to access some of these investment opportunities".
Fund-raising will also become easier for entrepreneurs, said Mr Leo Shimada, founder of crowdfunding platform Crowdonomic, which is a rewards-based crowdfunding platform here.
Under the traditional system, it takes six to nine months to raise funds as start-ups meet about 300 investors, which get whittled down to about 10.
He said negotiations begin at this stage - a laborious process meaning entrepreneurs cannot focus on building their companies.
"This platform bridges entrepreneurs and investors. If both parties meet on this platform, like what they see and agree on a transaction, it will dramatically reduce the fund-raising time," he said.
But industry observers note the platform must also protect both investors and entrepreneurs.
The SGX-CBA partnership provides a formal structure where investors can buy equity in start-ups and SMEs, and have the shares stored in a central depository. It is a "closed" equity crowdfunding platform in that it is not open to all and sundry, but only to accredited investors.
Financial rules here do not allow equity crowdfunding campaigns aimed at individuals here.
SGX head of SME development and listings Mohamed Nasser Ismail told The Straits Times that the "closed" crowdfunding platform is the first in the world set up by a stock exchange and VC firm.
The SGX is best placed to set up this new facility, he said, because it is already involved in raising capital for SMEs through the Catalist, SGX's junior board. "It is more or less the same kind of business for us, only slightly different in that we are going out to get funding from accredited investors."
Besides, the SGX has the know-how, experience and reputation in raising capital. The platform has been constructed to provide end-to-end services, he said. "We can match companies to investors, we will check that funds will be properly allocated, and our shares depository will ensure that the shares are properly kept."
Dr Steven Fang, a partner at CBA, said: "We understand the investment risk for investors. That is why we are opening this platform to accredited investors only and to companies that have revenue streams and are profitable or near profitability."
The SGX-CBA platform also addresses an immediate need as many start-ups founded in the recent years are maturing and are ready for business expansion. Dr Fang said: "As an entrepreneur and investor, I have built companies, and we see there is a gap for funding for post-Series A investment."
Post-Series A funding refers to multi-million-dollar investments by VC firms in companies which have commercially viable products and services, but require funds to expand quickly.
Dr Fang said the new facility will help start-ups and SMEs find the "smart money", the investors who can help firms get access to markets and customers. "You can hire the best PhDs and have the best technology in the market. But without smart money, the companies will be challenged and will be put in a position of trying to catch up."
He said smart money will bring experienced managers who will mentor entrepreneurs on developing their businesses.
"By providing the funding and mentoring, we hope to accelerate the growth of these companies, which in turn could later list on SGX," he said.
Details such as the equity structure between SGX and CBA, who will lead it, how it will work and the list of investors will be announced closer to the launch date. Start-ups and SMEs which are likely to qualify must have revenue and products and services that are commercially viable. They must also be profitable or at least nearly in the black.
http://business.asiaone.com/news/sgx-vc-...tform-smes
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
