FundedHere gets regulator okay to operate equity and debt crowdfunding
By Benjamin Cher March 22, 2016
- Currently, only accredited investors from Singapore allowed
- Platform expected to go live in April with 10 shortlisted startups
SINGAPORE’S crowdfunding scene is set for a boost with crowdfunding platform FundedHere being issued a Capital Markets Services licence by the Monetary Authority of Singapore (MAS).
The licence, issued on March 18, allows FundedHere to deal in securities in Singapore. It is the first crowdfunding platform to be issued such a licence in the city-state, according to chief executive officer Michael Tee.
“I’m happy to announce that FundedHere is the first equity and debt crowdfunding platform in Singapore that is operational and ready for fundraising,” he told a media briefing on March 21, adding that consultations with MAS took place over the past 12 months.
FundedHere was actually launched in March last year, after MAS had released a consultation paper setting out proposals for equity crowdfunding (ECF).
Up north, the Securities Commission Malaysia (SC) approved six ECF platforms last June, with a number having gone live already, the latest being pitchIN Equity last week.
FundedHere aims to help startups raise seed or pre-series funding through equity or debt crowdfunding, allowing companies to choose between raising capital via loans or by parting with equity.
“We are targeting to hit 1,000 accredited investors by the end of the year,” said Tee.
Accredited individual investors are defined as having S$2 million (US$1.47 million) in net personal assets, excluding their primary residence, or who earn an annual income of at least S$300,000 (US$220,000).
Corporate accredited investors are required to have at least S$10 million (US$7.35 million) in net assets.
FundedHere will only support accredited investors for now, and requires these investors to have a Singapore bank account. Tee did not rule out opening the platform to the public in the future.
“With every new venture there is an element of risk, we believe that it has to be limited to certain sophisticated investors for now,” he said.
FundedHere has also been reviewing startups for possible listing on the platform, and has screened over 100 pitches from companies “in and around Singapore,” according to Tee (pic).
It has shortlisted about 10 startups that it feels have the potential to be crowdfunded.
FundedHere is aiming for a pan-Asian reach, from South-East Asia to China, but is not particular about which industry the startups are in, according to Tee.
“We cannot dictate which area and industry we want to go into. Because this is a new industry, we cannot say, ‘Maybe a handphone manufacturer is better than someone who provides a hotel bed.’
“We want to work with everybody,” he added.
Companies looking to get on FundedHere can come from any country, but would need to be registered in Singapore, according to executive director Agnes Siaw.
Startups will be screened, of course.
“First of all, we have to look at the paid-up capital, then we have to look at whether these companies are validated, from our partners or from universities,” said Siaw.
“Thirdly, we look at the founders’ backgrounds – these are the basic criteria you have to go through before you can be on-boarded to our platform,” she added.
FundedHere said it has lined up 33 advisors, mentors and lead investors, including Baidu cofounder Lei Ming; Pacific Internet cofounder T.K. Wong; and NUS Enterprise founder Prof. Wong Poh Kam.
“Having them at FundedHere helps to provide information and knowledge on a particular industry, which helps us in on-boarding startups to our platform,” said Siaw.
Startups will have to set their own equity or interest rates for their crowdfunding campaigns, according to Tee.
“We leave it to the owner of the business and the investor to decide – the beauty of this is when the product or business is on the platform, it is public wisdom to decide what to invest in,” he said.
“We have some guidelines, but it is more or less up to them – we will ask if what they are asking is realistic, we can give some advice, but eventually the entrepreneur will make the decision,” he added.
Siaw (pic) said that when it comes to the startup’s valuation, FundedHere will benchmark it with similar players in the market.
“We have to make sure that the valuation is not too far away from other players in the same industry,” she said.
FundedHere charges a 3%-8% fee for a successful equity or debt crowdfunding campaign, depending on whether it is debt or equity crowdfunding.
“We can also take shares in an equity crowdfunding campaign – that is up for negotiation,” said Tee, adding that FundedHere will take a hands-off approach to its investments, if any.
Accredited investors can invest as little as S$5,000 (US$3,600) into startups listed on the platform.
“We don’t want to break down the investment into smaller fragments because of administrative overheads, and if you invest $200 in a startup, you will get 0.02% –which is insignificant, and you don’t want to monitor that as well,” said Tee.
“You really want to have half a per cent or 1% in something at least,” he added.
A startup’s investor pitch deck is often a closely guarded asset, only viewed by interested investors and kept from the prying eyes of the public.
FundedHere will not force startups to put up their pitch deck on the platform when running their crowdfunding campaign, according to Tee.
“Each case is different, but the entrepreneur has to decide,” he added.
View from startups
Startups in Singapore are looking forward to this alternative fundraising channel.
“We decided to give FundedHere a try because we are concurrently talking to individual investors as well, and we are trying to expedite the process by exploring different options,” said Denova Sciences cofounder and chief executive officer Daniel Tan.
“Because FundedHere manages all the investors and only picks out the interested ones, it is a time-saver as well,” he added.
Saving time also resonated with Couper cofounder Jimmy Lui, who said that his startup already has some venture funds and government grants in its coffers.
“We were at this demo day in SMU (Singapore Management University) when they [FundedHere] came to me, and I thought we should try this since it was interesting and crowdfunding was an ‘in’ thing as well,” he said.
“It kind of saves our time – we don’t have to go to VCs (venture capitalists) one by one; we can just put it in one place and everyone can see it straight away,” he added.
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