Equity crowdfunding is the way to invest in a startup in exchange for equity or shares in the company. The companies raising funds are at different stages of the business life cycle and may be at the early idea stage with very little traction or they may be at a stage where the startup is generating millions in revenue.
As we see fintech regulation progressing with the support from most of the governments in South East Asia, Equity Crowdfunding (ECF) is finally taking off in the region. ECF will provide an alternative funding source for entrepreneurs, startups and SMEs, in order to reduce the current gap on the traditional equity funding ecosystem, and therefore enabling a massive growth on the startup scene, and a substantial economic growth within the region.
Crowdfunding business is already over US$40 billion a year worldwide, and doubling every year, with ECF taking a big portion of the pie. As Chance Barret, CEO of Crowdfunder wrote in 2015, “If equity crowdfunding doubles every year like the rest of crowdfunding has, then it could reach US$36 billion by 2020 and surpass venture capital as the leading source of startup funding”.
Before crowdfunding, a business owner was subject to the will of individual angel investors or bank loan officers. Now it is possible to pitch a business plan to the masses. Furthermore, a successful crowdfunding round not only provides early stage business with needed cash, but it also creates a base of customers who feel as though they have a stake in the business’ success. (see The Basics of Crowdfunding,Entrepreneur)
After a decade since its birth, it is hard to imagine a world without crowdfunding in some parts of the globe where ECF has decisively driven forward many startups boost and democratized access to funding. Soon it will also be possible for international investors to participate in the growth of companies from South East Asia region with only a click. Moreover, it is estimated that in the near future Asia will surely eclipse North America to become the world leader in crowdfunding.
Considering the high relevance of SMEs in the South East Asian economy, the impact of crowdfunding in the region will be enormous in the upcoming years, probably even more than what we have seen so far in the rest of the world. At OPI Digital Group we are waiting for the regulation flag to turn green in order to launch “Raising Ventures”, the platform meant to become the reference in the region, as it’s been fully developed from the start for its specific market needs.