The Malaysia Digital Economy Corporation (MDEC) today announced a partnership with seven crowdfunding operators to help entrepreneurs tide the economic challenges brought on by the COVID-19 onslaught. This announcement follows another partnership that MDEC has done with crowdfunding platforms to raise funds for COVID-19 frontliners.
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.
“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,”
said Surina Shukri, CEO of MDEC.
“While the general business community lauds the recent RM10bil 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,”
added Surina.
This is MDEC’s second funding facilitation initiative led by its Global Growth Acceleration Division, following its successful 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 that are in a quest to raise close to USD100 million in investments.
In this second funding initiative, MDEC is supported by the Registered Digital Market Association (RDMA) with members comprising Equity Crowdfunding (ECF) and Peer-to-Peer Financing (P2P) operators that are registered by the Securities Commission of Malaysia. 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 a fixed interest rate over a fixed tenure.
Since its debut in June 2017 and November 2016 respectively, ECF and P2P fundraising activities in Malaysia have grown rapidly. As of end December 2019, the financing platforms had collectively raised over RM700 million and benefitted close more than 8,000 micro, small and medium enterprises (MSMEs), which are underserved by the traditional financial system.
“RDMA is pleased to share that seven ECF/P2P operators have come to the fore to support this alternative funding awareness drive by MDEC – 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 MSMEs,”
said Elain Lockman, cofounder of Ata Plus and president of the RDMA.
Entrepreneurs who wish to explore this alternative financing option may 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,”
said Gopi Ganesalingam, Vice President of MDEC’s Global Growth Acceleration Division.
Since the enforcement of the movement control order, MDEC has developed a dedicated microsite for its #DIGITALvsCOVID movement. Consumers, businesses and investors are advised to regularly visit https://mdec.my/digitalvscovid/ to learn more on MDEC’s digital initiatives and tech relief services offered by a wide range of organisations to mitigate the social and economic impact of COVID-19.
Featured image: Surina Shukri, CEO of MDEC and Gopi Ganesalingam, Vice President of MDEC
