Local Crowdfunding investment in SME

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#1
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
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.
Reply
#1
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
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.
Reply
#2
(30-01-2015, 09:56 AM)Boon Wrote: 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

Very interesting article. I am wondering if it will be same kind of platform than existing crowdfunding websites like kickstarter. The biggest weakness I see in these platforms as of now is the lack of due diligence ran on the companies asking for funds. It will be really interesting to see what CBA and VC will add to the SGX platform. Hopefully they will have to run some basic due diligence before a start up can be listed. Otherwise I will stay far far away from it Wink
Reply
#2
(30-01-2015, 09:56 AM)Boon Wrote: 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

Very interesting article. I am wondering if it will be same kind of platform than existing crowdfunding websites like kickstarter. The biggest weakness I see in these platforms as of now is the lack of due diligence ran on the companies asking for funds. It will be really interesting to see what CBA and VC will add to the SGX platform. Hopefully they will have to run some basic due diligence before a start up can be listed. Otherwise I will stay far far away from it Wink
Reply
#3
A small and medium sized enterprise (SME) in Singapore raised S$150,000 in 45 minutes on Tuesday (March 1) - a new record for crowdfinancing platform MoolahSense .


The company, which does machining and metal fabrication, needed the loan to buy raw materials for inventory, MoolahSense said in a press release on Thursday (March 3).

The investors will get a yield of 18 per cent nominal interest rate per annum and are to be repaid the principal amount of their loans in 12-month installments.

Straits Times Link

Open for discussion. 
Reply
#3
A small and medium sized enterprise (SME) in Singapore raised S$150,000 in 45 minutes on Tuesday (March 1) - a new record for crowdfinancing platform MoolahSense .


The company, which does machining and metal fabrication, needed the loan to buy raw materials for inventory, MoolahSense said in a press release on Thursday (March 3).

The investors will get a yield of 18 per cent nominal interest rate per annum and are to be repaid the principal amount of their loans in 12-month installments.

Straits Times Link

Open for discussion. 
Reply
#4
Return of money more important than return on money
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
#4
Return of money more important than return on money
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
#5
(03-03-2016, 06:42 PM)opmi Wrote: Return of money more important than return on money

Well, that is always the case for every other investment.

Anyway, other than being curious about it as an alternative investment option, I wonder how will it impact local banks? Is this going to compete with them or even be a replacement of them?
Reply
#5
(03-03-2016, 06:42 PM)opmi Wrote: Return of money more important than return on money

Well, that is always the case for every other investment.

Anyway, other than being curious about it as an alternative investment option, I wonder how will it impact local banks? Is this going to compete with them or even be a replacement of them?
Reply
#6
The metal fabrication company started in 2007 and about 9 years later it requires $150K for raw materials?
They don't have money for raw material? And they cant get a bank loan with better terms?
Even the hawker that sells kopi with prudent cash management will be able to save and raise that amount in 9 years.

Proceed with care. In any case, it's great that SMEs are getting some support from local investors. It takes a whole lot of money to get something going nowadays. Less capital will mean the company is unable to get acquire the right assets and talent needed for it to succeed. Size matters and most smaller and younger companies make the mistake of overestimating their own capability, over spending and run out of cash very quickly. I have seen one that spends freely even though there is a cash crunch. I have also seen one that spends every cent like it is the last but with a significant cash horde.

Facebook is what it is today partly due to the many rounds of successful financing. It got all the money it needed to expand to what it is today.
Reply
#6
The metal fabrication company started in 2007 and about 9 years later it requires $150K for raw materials?
They don't have money for raw material? And they cant get a bank loan with better terms?
Even the hawker that sells kopi with prudent cash management will be able to save and raise that amount in 9 years.

Proceed with care. In any case, it's great that SMEs are getting some support from local investors. It takes a whole lot of money to get something going nowadays. Less capital will mean the company is unable to get acquire the right assets and talent needed for it to succeed. Size matters and most smaller and younger companies make the mistake of overestimating their own capability, over spending and run out of cash very quickly. I have seen one that spends freely even though there is a cash crunch. I have also seen one that spends every cent like it is the last but with a significant cash horde.

Facebook is what it is today partly due to the many rounds of successful financing. It got all the money it needed to expand to what it is today.
Reply
#7
Hi Big Toe,

For Moolahsense, the way they put their interest rates is a bit unique. For the metal fabrication company, while it is stated 18%, it is a nominal rate. As their loan was structured to be an equal installment monthly repayment, the effective interest rate is approximately 10%. For a company of this size, a loan of 10% is just slightly higher than what banks charge for similar size SME (8-12%). So effectively, it is around bank's rate without the hassle of pandering to Relationship Managers.
Reply
#7
Hi Big Toe,

For Moolahsense, the way they put their interest rates is a bit unique. For the metal fabrication company, while it is stated 18%, it is a nominal rate. As their loan was structured to be an equal installment monthly repayment, the effective interest rate is approximately 10%. For a company of this size, a loan of 10% is just slightly higher than what banks charge for similar size SME (8-12%). So effectively, it is around bank's rate without the hassle of pandering to Relationship Managers.
Reply
#8
(03-03-2016, 09:08 PM)marandaz Wrote:
(03-03-2016, 06:42 PM)opmi Wrote: Return of money more important than return on money

Well, that is always the case for every other investment.

Anyway, other than being curious about it as an alternative investment option, I wonder how will it impact local banks? Is this going to compete with them or even be a replacement of them?

It will be a replacement when the day comes that people don't care about counterparty risk... that's the return of money part. Otherwise there are agarwood or gold quest investments that has even better yields.

I'm actually wondering if this crowdfunding thing falls under the Chits Fund Act ie tontine or can we revive the tontine structure?
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
#8
(03-03-2016, 09:08 PM)marandaz Wrote:
(03-03-2016, 06:42 PM)opmi Wrote: Return of money more important than return on money

Well, that is always the case for every other investment.

Anyway, other than being curious about it as an alternative investment option, I wonder how will it impact local banks? Is this going to compete with them or even be a replacement of them?

It will be a replacement when the day comes that people don't care about counterparty risk... that's the return of money part. Otherwise there are agarwood or gold quest investments that has even better yields.

I'm actually wondering if this crowdfunding thing falls under the Chits Fund Act ie tontine or can we revive the tontine structure?
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
#9
On the counterparty risk, I have been noting this point and done my own digging. From about the 70-80 crowd funding done; there has been 3 cases where the business has defaulted on their obligations.

One of which principal has been fully repaid with late interest payment done as well, and the other 2 have been restructured to a longer term loan. The other 70+ crowd funding, some loans have been fully repaid on time (interest+principal) while the others have made timely repayment of the obligations. I am interested in these sector and will be monitoring them.

(Have 5 crowd funding loans in my own portfolio)
Reply
#9
On the counterparty risk, I have been noting this point and done my own digging. From about the 70-80 crowd funding done; there has been 3 cases where the business has defaulted on their obligations.

One of which principal has been fully repaid with late interest payment done as well, and the other 2 have been restructured to a longer term loan. The other 70+ crowd funding, some loans have been fully repaid on time (interest+principal) while the others have made timely repayment of the obligations. I am interested in these sector and will be monitoring them.

(Have 5 crowd funding loans in my own portfolio)
Reply
#10
This might have been posted somewhere else in the forum but just FYI for everyone:

http://www.crowdfundinsider.com/2016/02/...eled-fake/

Good to ask our parents or older folks about tontine and we will learn about the inherent risks. Nothing new under the sun.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
#10
This might have been posted somewhere else in the forum but just FYI for everyone:

http://www.crowdfundinsider.com/2016/02/...eled-fake/

Good to ask our parents or older folks about tontine and we will learn about the inherent risks. Nothing new under the sun.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply


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