pitchIN’s ECF issuers chart higher revenues after fundraising

• Despite lowered market sentiments from GEI4, pitchIN raised US$3.31mil from 8 deals
• SC Malaysia expected to release eagerly awaited Secondary Market Framework by Q1

IT is considered the leading crowdfunding platform in Malaysia today and was the pioneer as well when it launched in mid 2012. “We were the pioneer crowdfunding platform in Malaysia back then. Of course, it was not legal yet when we launched but nonetheless we felt it was important for us to get the ball rolling,” said Sam Shafie, co-founder of PitchIN, when sharing the 2018 results of how the ECF platform and its companies did with the release of its Equity Crowdfunding Report 2018 covering industry statistics and snapshot reports of issuer performance.

[ED: An earlier version incorrectly described pitchIN as having broken the law when in actuality there was no specific law that prohibited Equity Crowdfunding in Malaysia. The error is regretted.]

From the time the platform received licensing and went live in March 2016, pitchIN has welcomed 24 deals to its platform and raised US$7.31 million (RM30 million).

Dip in number of campaigns due to election sentiments

According to founders Kashminder Singh and Sam, the local ECF landscape saw a dip in 2018 due to sentiments surrounding the country’s 14th general election.

The number of campaigns declined from 22 in the previous year to 14. However, the average deal size recorded a 50% growth to RM1.7 million in 2018 from RM1.1 million in 2017.

[US$1 = RM4.10]

“It was not because people didn’t have money to invest, but people were a bit careful and diligent about where to put their money. But despite that, we managed to get some quality and record-breaking deals on pitchIN,” he said

It was a very slow first half of the year. The platform hosted its first deal only at the midyear mark in June 2018, once the rhythm of the market slowly picked up. By year end, the platform had hosted eight deals and raised RM13.6 million in funding from 400 investors, which represents a 57% market share of the total ECF deals done in 2018.

[Paragraph edited for clarity.]

Issuer performance and growing investor base

The report revealed that most issuer companies recorded higher revenues after a year or two of raising funds. “At least five issuers, namely Kakitangan, WOBB, MyCash Online, QEOS LED and Signature Market have increased their revenues by four times or higher.”

Sam indicated that the crowdfunding campaigns have also served to raise awareness of the companies and attract the interest of venture capitalists. The total market capitalisation of pitchIN issuers amounts to over RM350 million when subsequent fundraising rounds are included.

Some noteworthy deals on the platform were Commerce DotAsia Ventures, which raised RM3 million via ECF and RM2 million through private placements, and P2P financing platform Fundaztic raising RM4 million in a span of 38 minutes.

As for investor profiles, 59% of them are retail investors while 28% and 13% are angel and sophisticated investors respectively. Among them, the three most active investors on pitchIN each participated in 14, 10 and 9 separate investments.

What’s in store for 2019?

The platform is looking forward to launching a secondary market for ECF once the Securities Commission of Malaysia (SC) releases the framework, which is expected in the first quarter.

“We have a team waiting for the green light to build it and once we have the framework, it will take us a few months to get it ready,” Sam shared.

Additionally, Kashminder believes the RM50 million co-investment fund allocated by the government in Budget 2019 will add more interest and liquidity to the ECF market. “Once this mechanism kicks in, the government will also invest alongside investors. That gives a lot more assurance to everyone.”

Sam sums up: “In 2019, we need to up our own game. Being the market leader, we need to introduce new things and further engage our stakeholders which include issuers and investors.”

The complete pitchIN Equity Crowdfunding Report 2018 is available for download on the pitchIN website.