- Expecting to be profitable after three years, building a partner ecosystem
- Keen to especially help socially responsible and ethical Malaysian businesses
HAVING got over their shock nine months ago at seeing Securities Commission Malaysia (SC) approving six companies, instead of the expected four, to run and manage equity crowdfunding (ECF) platforms in the country, the cofounders of Ata Plus Sdn Bhd put their heads down and got down to work on getting their platform ready.
That platform was announced yesterday (March 1). The Ata Plus team – Elaine Lockman, her husband Kyri Andreou, and well-known Malaysian technology entrepreneur and cofounder of Internet pioneer Skali.net, Aimi Aizal Nasharuddin – know it won’t be an easy journey and are prepared for the long haul.
“We have a very conservative target of being profitable after three years, but this doesn’t mean it can’t happen earlier,” says Elaine, speaking to Digital News Asia (DNA) recently, before the platform was officially launched.
At the same time, Ata Plus is also talking to a private company to invest in it. That company, which Ata Plus declines to name since talks are on-going, sees synergy in what Ata Plus is doing with its ECF platform with its own plans to provide market access to entrepreneurs.
Well aware that the ECF market is still nascent, as witnessed by the lukewarm response to the two platforms that have already launched, Crowdo and CrowdPlus.asia, Ata Plus is working on building an ecosystem of partners that it believes will help it stand out as the platform for small and medium businesses to partner with.
It says it already has 29 such partners on board. They will help businesses in every step of their funding period, and beyond.
“Our partners provide support in the areas of deal flow, screening, investment administration and entrepreneurial development,” says Elaine.
“Collectively, they help manage risks and improve compliance for investors, while providing valuable assistance for businesses to grow,” she declares.
These partners include research and consultancy firm Frost & Sullivan, Ministry of Finance agency Cradle Fund (which handles startups), national ICT custodian Multimedia Development Corp, Teraju (the Malaysian Government’s Bumiputera Agenda Steering Unit) and SME Corp (a government agency dedicated to SMEs).
While its business model is reliant mostly on the ECF business, Ata Plus already has an eye on other mutually inclusive instruments such as debt and reward crowdfunding.
“We think the existing ECF platforms have to be able to offer these types of instruments as well,” argues Andreou.
“After all, for some companies, a hybrid between equity and debt and reward crowdfunding might be the solution, rather than having to just give up equity for the funding they are seeking,” he adds.
The struggles of pitchIN, which pioneered reward crowdfunding in Malaysia, have not deterred Ata Plus.
“We believe that as a regulated company, we have an advantage in attracting SMEs which want to explore this route,” says Andreou, who sees yet another advantage of being a regulated ECF platform within a market that is the first in South-East Asia to have a regulated crowdfunding framework.
“As a first-mover advantage market, and with the SC framework accepting Limited Liabilities companies as well onto our platform, we are potentially looking at SMEs from within the region to check out Malaysia’s ECF platforms to raise funding,” he adds.
pitchIN is also one of the six ECF platforms approved by the SC.
For Ata Plus, the seeds for success would lay in being able to demonstrate that its platform is highly transparent – that the companies it selects to offer to investors are compliant – while offering investors a strong suite of risk management tools.
“And speed is important too,” says Elaine, who personally crafted the assessment criteria for companies wishing to use the Ata Plus platform.
“In the first 12 months, we will deliberately set a higher bar for companies to qualify as we want to ensure, as much as possible, that the early investors have a good experience with companies with solid track records and passionate entrepreneurs.
“This ensures that the all-important word-of-mouth factor comes into play,” she adds.
Although it is not part of the rulebook for its platform, Ata Plus is also focused on creating a thriving ecosystem for socially responsible and ethical Malaysian businesses to build a mutual relationship with investors.
This philosophical backbone of the platform and its potential to reward good, transparent corporate behaviour has both Andreou and Elaine excited.
“With everything in life going digital, we are undergoing a major shift as everything becomes more transparent, especially corporate behavior,” says Andreou.
“And I think investors want to back and support entrepreneurs who are doing things right,” he adds.
Andreou predicts that ‘how you do it’ is going to become more important than ‘what you do.’ He believes that digital platforms like Ata Plus, by selecting companies eligible to be on its ECF platform, can help bring investors to the right type of companies that they wish to support.
Bringing these two parties together then creates a mutually reinforcing loop which rewards good corporate behaviour and attracts more similarly-leaning investors, he argues.
But first Ata Plus, along with the other ECF platforms, must survive the early lean years until investors warm to this type of investment mechanism.
SC selects six platforms for equity crowdfunding in Malaysia
KiniBiz opts for equity crowdfunding with pitchIN
Crowdo launches, unfazed by other ECF platforms
Regional equity crowdfunding platform launched
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