MDEC partners ECF & P2P platforms to promote alternative financing to MSMEs for COVID-19 cash flow relief

  • Partners seven ECF and P2P platforms to promote alternative financing
  • Drive begins 9 April until 24 April 2020, priority assessment to all applicants

Surina Shukri (left), MDEC chief executive officer and Gopi Ganesalingam, MDEC’s Global Growth Acceleration Division vice president.

The COVID-19 pandemic is bringing about huge economic challenges. To this end, the Malaysia Digital Economy Corporation (MDEC) today announced a partnership with seven crowdfunding operators to help entrepreneurs brace through this difficult time.

This will be MDEC’s second funding facilitation initiative led by its Global Growth Acceleration Division, following the launch of Meet Your Match Malaysia, a virtual investor-matching initiative with KK Fund Pte. Ltd. which has drawn 90 global investors and 75 promising local startups looking to raise close to US$100 million in investments.

This time around, MDEC is supported by the Registered Digital Market Association (RDMA), with members comprising equity crowdfunding (EC) and peer-to-peer financing (P2P) operators that are registered by the Securities Commission of Malaysia.

In brief, ECF enables groups of investors to fund businesses by taking up stakes in the investee companies for investment, whereas P2P involves funds being lent at an interest rate over a fixed tenure (without a financial institution in between).

Entrepreneurs looking to explore this alternative financing option can do so by submitting an expression of interest at https://malaysiadigitalhub.my/virtualfunding. This drive begins today until 24 April 2020. MDEC will offer priority assessment to all applicants by expeditiously screening their eligibility before submitting the profiles to the applicants’ choice of ECF/P2P operator.

“Further to encouraging entrepreneurs to leverage on ECF and P2P platforms, our division will also be engaging the founders of MSC-status companies and other high-net-worth-individuals to pay-it-forward as investors on these digital financing platforms. Most industry leaders have experienced turbulent times and understand the need for support, particularly through financing,” says Gopi Ganesalingam, MDEC’s Global Growth Acceleration Division vice president.

The seven ECF and P2P operators that have offered their support to the alternative funding awareness drive are Ata Plus, CapBay, Crowdplus Asia, Eureeca, Funding Societies, microLEAP and pitchIN.

“In these unprecedented economic conditions, conventional loans with collaterals will further burden businesses whereas ECF and P2P online platforms are able to swiftly meet the critical financing needs of businesses, particularly for micro, small and medium enterprises (MSMEs),” says Ata Plus co-founder and RDMA president Elain Lockman.

According to a recent survey by The Malaysian Global Innovation and Creativity Centre (MaGIC) involving 239 startups, 35.1% of the respondents said they needed loans, 23.8% asked for grants or subsidies and 3.8% asked for deferment in repayments to tide through the COVID-19 pandemic and the resulting movement control order (MCO).

“We are also made aware that 74.9% of the survey respondents indicated that they were unsure or unaware of auxiliary financial support and incentives made available for entrepreneurs – a gap that MDEC is proactively pursuing to seal,” says Surina Shukri, MDEC chief executive officer.

“While the general business community lauds the recent RM10 billion financial lifeline for micro-entrepreneurs and SMEs, MDEC is mindful that many entrepreneurs may not be successful in obtaining government grants and other financial aid. As such, our Global Growth Acceleration Division has been relentlessly exploring alternative financing avenues and making these options known to businesses that are struggling to stay afloat during these trying times,” she adds.

At any rate, ECF and P2P fundraising activities in Malaysia have grown rapidly since their respective debut in June 2017 and November 2016.

As of end December 2019, the financing platforms had collectively raised over RM700 million and benefited more than 8,000 MSMEs, which are underserved by the traditional financial system.

This is part of MDEC’s ongoing campaign to help companies since the MCO enforcement. To learn more about their digital initiatives and tech relief services offered by a wide range of partnering organisations, visit their dedicated microsite.

Related stories:

MaGIC Survey: startups, social enterprises need support to ride out COVID-19 impact

MDEC partners 80 tech firms, launches #DIGITALvsCOVID campaign to mitigate COVID-19 impact on economy

MDEC’s business continuity plan kicks in to deal with COVID-19 threat

 
 
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