How Does Equity Crowdfunding Work In Malaysia?

Written by Rebecca Shamasundari Illustration by Sara de Souza

This article is sponsored by Securities Commission Malaysia, under its InvestSmart initiative

Raising money can be the toughest part of starting and sustaining a business. No matter how brilliant your business idea is, execution will not happen without the funds.

If you do not have a truckload of cash sitting in your bank account, the next best thing is to look for investors. However, suitable investors are not easy to come by these days.

Which is why many entrepreneurs today are looking for alternative means for funding that will contribute to their financial success. One of the most popular methods of raising funds today is equity crowdfunding.

What is equity crowdfunding?

Equity crowdfunding is the process of obtaining smaller investments from a large number of people via the Internet, and in return, these investors will receive shares in the company.

Through equity crowdfunding, more people will be able to invest in businesses and start-ups that were previously only accessible to private equities and venture capitalists. For the entrepreneurs, this means it will be easier for them to launch their innovative ideas into sustainable businesses.

In Malaysia, equity crowdfunding is regulated by the Securities Commission, and we are the first country in ASEAN to enact a regulatory framework in 2015. Currently, there are six equity crowdfunding platforms registered with the Securities Commission.

With an established framework and regulated operators, more firms will be able to raise growth capital and unleash innovation using the equity crowdfunding method.

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